Summary: Are you considering leaving your current firm and joining a virtual law firm? Make sure you ask yourself these important questions first.

  • Traditional law firms are outdated.
  • Meanwhile, virtual law firms have increased in popularity.
  • Virtual law firms have little to no overhead.
  • With little to no overhead, attorneys can make more money at virtual law firms.
  • Still, there are pros and cons to virtual law firms.
 
Are Virtual Firms

Lately, I have been speaking with lots of partners (1) who have gone to virtual law firms and wanted out, (2) who formerly worked in virtual law firms, and (3) who are considering working in virtual law firms. I also have been speaking with some virtual law firms themselves.
 
A. Harrison Barnes
Harrison Barnes

The “pitch” of most virtual law firms is that the “traditional” law firm model is outdated. Virtual law firms tell their “recruits” that they do not need to come into the office, can keep more of the money they bill, and can still do high-quality work for their clients. In return for bringing everyone under their umbrella—a website, client billing, and (some) “shared technology”—the virtual law firm will take a smaller percentage of the money coming in than a traditional law firm would.

Let’s do the math here. For an attorney with a $1,000,000 book of business, the math can look amazing:
 
  • Virtual law firm:                            $650,000 to $850,000
  • Traditional law firm:                      $300,000 to $650,000

From the standpoint of a virtual law firm, it seems like a great deal as well. In fact, recently I had several attorneys pitch the idea of me helping them start virtual law firms, with me providing the attorneys.

“There is no overhead. All we need to do is build a website and send out bills and take a percentage of the money. If the attorneys stop billing, they do not get paid and do not cost us anything. You can recruit attorneys with business, and we will make millions.”

Let’s do the math for the virtual law firm. For every $1,000,000 that is billed and comes in:
 
Virtual law firm: Almost no overhead. Profit is almost all the “cut” of the attorney’s billings it takes
Traditional law firm: Tons of overhead. Office space, associates, paralegals, administrative staff, partner draws and expense accounts. Profit is whatever is left over after all expenses.

That is overly simplistic; however, at its essence this is true. It is no wonder why this business model is catching on and becoming so popular among entrepreneurial attorneys looking to build businesses. To many, it seems like the ideal business because there are hardly any fixed costs.
 
I want to note that I have spoken with several virtual law firms and find the majority of the people in them to be very nice. I also have spoken with many attorneys who have gone that route and find these attorneys to be nice people as well. My goal here is not to upset virtual law firms, the attorneys who work in them, or people considering this as a career choice. My goal is simply to point out that there are both strong positives and negatives associated with going the virtual law firm route, and attorneys should consider the pros and cons before making the switch to a virtual law firm.

One of the most important things to understand about most non-virtual law firms is that they are products of decades and decades of evolution, where numerous people have come together and, over time, have figured out a business model that takes care of their needs through thick and thin.
 
  • They have associates, counsel, and staff to make them more efficient and help them get work done (and help partners make more money).
  • They pay draws to support partners in slow times as well as good times.
  • They have big brands in the legal market to help assure clients they are going to get good service.
  • They have office space where their attorneys come to work each day (to assure their efficiency, organization, and more).
  • They have face-to-face interaction, which helps support the social nature of most people.

Here are twenty questions that attorneys considering joining a virtual law firm should ask:
 
  1. “Do clients know this is a virtual law firm and take it seriously?”

The Pessimistic View

Most clients will quickly figure out that they are dealing with a virtual law firm—if they do not already know this. The websites of most virtual law firm say nothing about the law firm being virtual, but most clients rapidly figure this out. Whereas before a client may have been dealing with an attorney at a well-known law firm (or one with which the client was comfortable), once a lawyer joins a virtual law firm the client is suddenly faced with uncertainty.

If you are considering joining a virtual law firm, it is important to ask if your clients are going to care about this or not. Let’s be honest: A virtual law firm, where all the attorneys are working at home, is not going to inspire the same level of confidence as a law firm with offices in major cities around the country teeming with associates, paralegals, and other staff members.

Alternatively, think about it this way: If you were at a major law firm and representing your client, and there was a virtual law firm on the other side, wouldn’t you consider telling your client that “a virtual law firm is representing them.” Making this comment to your client would likely result in some chuckles on both sides. Your client would feel secure that it is in good hands while the other side may not be.

Part of being represented by any law firm is perception. Big law firms charge more for their services not just because they are more top heavy, but because their names and reputations carry a great deal of power. It means something to clients when there is a well-known law firm with an army of support on the other side—and it influences opposing counsel as well. In contrast, the virtual law firm does not carry this same sort of power and probably never will. Major clients will not like this.

Lawyers are notoriously poor business people. Most attorneys presume that their relationship is with their client and that their client has no interest in the brand of the law firm they are with. In many cases, the brand may not be the most important thing, but most clients are quite interested in the brand of the law firm they are using. Clients are concerned about the brand of a law firm because the brand means something.

When a lawyer tells a potential client that he or she is considering leaving a major firm to join a virtual one, the response of the client is more-often-than-not along the lines of “Of course, we will support you wherever you go.” The client does not want to seem shallow and state that brand means nothing to it—so the client does not do this. Instead, the client will often fire the attorney after the attorney has been at the new law firm for a short time, or at the first available opportunity.

Does this always happen? Of course not. Nevertheless, this is something I have seen happen more times than I can count. When this happens, the attorney is often left without his or her largest client (or best client) and is in a position where he or she now has very little work. Not only does the attorney not have much income to speak of, but the attorney also cannot go back to a major law firm.

The Optimistic View

Many law firm clients will not care if you are with a virtual law firm or not. These clients may have a relationship with just you, for example, and this may be the most important thing to them. They may like the idea that your virtual firm has a “network” of attorneys around the country with different specialties that it can draw from and will be enthusiastic about this. Most smaller clients will not be as concerned about the “brand” of their law firm as they will be about having attorneys that can represent them.

Is the type of law firm you are in important to your clients?

See the following articles for more information:
   
  1.  “Do you provide an office?”

The Pessimistic View

Virtual law firms do not provide offices. Their “pitch” to attorneys is that if they want an office, they can pay for this with their own “extra money” that they earn because they receive a much higher percentage of their billings than they might otherwise receive at a traditional law firm. While the idea of not working in an office and working in your pajamas may appeal to some attorneys (as it should), before committing to this idea it is important to consider some of the following benefits that working in an office (with other attorneys) provides:
 
  • A place with a peer group to socialize with others in a face-to-face manner, bounce ideas off of, get work from (and cross-sell), review your work, and help motivate you. Working inside an office exposes you to peers on a daily basis who can provide a variety of benefits. When you are working in an office, you are surrounded by peers who keep you socialized and motivated. This is a major benefit you are giving up by not working inside of a law firm office.
  • A place to bring your clients to go over issues, close deals, and impress them. Most clients expect to be able to meet with their attorneys in their offices. If the attorney does not have an office (and an impressive one), this detracts from the strength of the brand of the law firm.
  • A place to meet with opposing counsel on various deals and transactions. Attorneys are meeting with opposing counsel at all points in time and expect to be able to do this. The only way to do this is in an office, and traditional law firms have offices.
  • A place that is quiet, away from the disturbances of home, and where you can focus. Many attorneys like to be able to go into quiet surroundings away from home so that they can better focus on work. It is often difficult to focus in a home environment.

Clients may also be uncomfortable if work is being done at home all the time. One of the purposes of an office is to provide a place where the attorney can do uninterrupted work. Many clients do not like the idea of an expensive partner they have hired doing all of the client’s work from home.

The Optimistic View

Much day-to-day work of attorneys does not require they be in an office. Many attorneys work in practice areas that are very “solitary” in nature to begin with: patent, ERISA, tax—and many others. These practice areas often can be done quite easily from home and do not require an office environment.

Is working in an office important to you and your clients?

See the following article for more information:
   
  1. “Do you provide a draw?”

The Pessimistic View

Virtual law firms provide no guaranteed draw. Most major law firms provide compensation to all levels of their staff. The virtual law firm is purely “eat what you kill.” There is no draw. Because there is no draw, you are 100% on your own and no different from a solo practitioner in that respect—except you still need to give a percentage of what you make to the virtual law firm when you do collect it. There are no draws in virtual law firms.

The Optimistic View

Despite having no draw, the attorney keeps a higher percentage of what the attorney bills. Virtual law firm attorneys are not supporting nonproductive partners in the firm with draws. This benefits the most productive attorneys and allows them to keep more of what they are billing instead of paying for overhead. The most productive attorneys benefit from keeping a higher percentage of what they bill right away instead of paying into a pot to support others.

How important is having a steady draw to you even when you have a temporary lull in business?

See the following articles for more information:
   
  1. “What happens if my work slows down? Can I get work from other attorneys in the firm or do I have any other options?”

The Pessimistic View

If your work slows down, your income will immediately slow down as well. Without a draw, you will need to get work from other virtual law partners. If you cannot do this, you are out of luck.

In a traditional law firm, if a partner’s work slows down, the law firm may often move the partner from an equity partner to an income partner, or of counsel—these options do not exist in a virtual law firm. Because it is pure “eat what you kill,” the majority of the work that partners do needs to be their own, and there is no fallback position for partners to take when their work slows down.

Many law firms will keep unproductive partners, counsels, and others around for years (or even decades) when their work slows down, and they know that supporting them in slow times is something that could pay off in busy times. In the virtual law firm, once the work stops coming in, the partner’s income stops instantly.

The Optimistic View

Having to bring in work continually keeps the virtual law firm partner more motivated than he or she might otherwise be with a safety net. Taking away the safety net might benefit the virtual attorney. Also, the virtual attorney receives a higher percentage of his or her income and less of the money that he or she brings in goes to support unproductive partners or bureaucracy. The most productive partners make more of what they bring in and do not support a socialistic compensation system that does not fully benefit them.

What would you do in your current law firm if your work slowed down? What would do if you were in a virtual law firm?

See the following articles for more information:
   
  1. “Do you provide associates, legal secretaries, paralegals, and other support staff?”

The Pessimistic View

Virtual law firms do not provide support staff. You are the support staff! This means that the job of the partner needs to suddenly become not just being a partner but a secretary, paralegal, and associate. I am not going to even get into how drastically this differs from the role that partners traditionally have in law firms, but it is a major difference.

When I was practicing law, I felt that my secretary always kept me quite motivated. She would look out for me, look over my work, and was constantly checking over my work and assisting with various tasks. Partners in law firms feel the same way about their associates and paralegals. Without this support staff, many partners feel that they are suddenly left doing many rudimentary tasks without any support.

Suddenly, the partner inside of a virtual law firm is left doing tasks that he or she may not have been doing in decades. This means that time the virtual law firm partner might normally have spent on other (higher-level activities) now needs to be spent of a host of mundane tasks. This can cause inefficiency and resentment.

The virtual law firm’s answer to this is that if the attorney wants support, then the attorney can hire and pay for this themselves. There are issues with this, however. The partner in the virtual law firm may have zero experience with human resources and with the hiring, firing, and training necessary to keep a group of staff motivated and working properly. The human resources function provided by traditional law firms is an important one and something that is complicated and takes a lot of time to master.

The Optimistic View

Partners who do all of their work and are not feeding it downstream can potentially make more money by billing for more work and ensuring it is done right the first time.

How important is having support staff to your success as an attorney?

See the following articles for more information:
   
  1. “Since my efficiency will decrease in a virtual law firm if I have no administrative support, do I need to charge my clients my rate for this work?”

The Pessimistic View

Most clients have no interest in paying partner billing rates for work that could be just as easily done by associates. This is why associates are so busy and work so many hours inside of law firms! It is cheaper for clients to have associates do work than it is for them to have partners do work. The same goes for paralegals and other services done by law firms. Partners do the most expensive work that requires partner-level input, and associates and counsels do work further down the chain.

Unfortunately, the virtual law firm typically has no associates or others to send the work downstream to. Instead of receiving bills for a variety of people doing work (some at a much lower rate than partners), the client is suddenly getting bills for partners doing everything. Work that previously might have been built into the cost structure of the major law firm and not charged for (secretaries) suddenly finds itself part of larger bills that the virtual law firm partner is sending to his or her clients for this work.

The Optimistic View

Because they are more experienced, one can argue that partners have more of an ability to do work with increased efficiency and can save money for their clients by doing the work themselves. Partners in virtual law firms might argue that efficiency is increased when they are doing all of the work themselves.

What rate do you think your clients would be willing to pay if you joined a virtual law firm?

See the following article for more information:
   
  1.  “Do you provide computers and an IT staff?”

The Pessimistic View

Most virtual law firms provide no computers or IT staff. While most virtual law firms have a “portal” of sorts for their attorneys to work from, IT functions that partners take for granted inside of law firms no longer exist once they are part of the virtual law firm. This means that they are left on their own for purchasing their computers, telephones, software, for backing up files, dealing with tech problems and outages, and doing other things that attorneys in the average law firm take for granted.

The Optimistic View

Many virtual law firms have at least one IT person on staff. Also, most virtual law firms have sophisticated client portals that clients and attorneys can use that are developed and maintained by the virtual law firms. Also, rather than bear the cost of expensive IT support in various cities, the virtual law firm passes the savings on to its attorneys by allowing them to keep a higher percentage of the money they bill.

Is having a dedicated IT team and resources for computers and technology important to you?

See the following articles for more information:
   
  1. “Do you provide an expense account for business development?”

The Pessimistic View

There are usually no expense accounts for business development inside of virtual law firms. The virtual law firm will happily take a percentage of your billings but is not likely to invest in helping you pay for the business development activities that can generate more billings.

The Optimistic View

Rather than supporting attorneys who may “milk” the business development budgets of a traditional law firm, the virtual law firm model results in more efficiency, which is passed on to the attorneys working there in the form of a higher percentage of their collections being paid to them.

Do you prefer having a separate business development expense account for all the partners or not? Why?

See the following articles for more information:
   
  1.  “Do attorneys share work in the firm?”

The Pessimistic View

How much referring is going on in a virtual law firm is another matter. In a law firm in which people are interacting on a face-to-face basis each day, attorneys can lobby each other for work, impress each other with their work quality, go out to lunch with each other, discuss matters, and more. This sort of interaction is less likely to occur in a virtual law firm. I am not sure if “soldiers of fortune” adequately describes the virtual law firm model, but it may. When a lawyer refers a matter to another virtual lawyer, the lawyer knows that the matter may not be handled with the same level of efficiency because it will be done only by partners and not by associates and others in the firm.

Partners with business want to hold on to their clients. When they refer matters to other attorneys in their firm, they want to make sure that the other attorneys do not “milk” their clients and take advantage of their clients, because if the other attorneys do that, then the clients may fire the referring attorney or give the attorney less work in the future. If a referring attorney knows the work will be done by a partner only and does not have a close, longstanding relationship with this partner, the referring attorney may be nervous. In a pure “eat what you kill” model, there may also be a perverse incentive to bill more to someone else’s client than you might your own.

The Optimistic View

I believe that attorneys inside of virtual law firms do share work. I have heard reports of this from virtual law firms, and I believe it. I also believe that they share work because they have an incentive to do so. The virtual law firm will typically give a referral percentage to the referring attorney as an incentive. Attorneys are motivated by self-interest and money (like most people), and this sort of mechanism is something I believe facilitates referrals.

How are referrals received in your law firm? Do you feel that you would be more or less likely to give and receive referrals in a virtual law firm environment?

See the following articles for more information:
   
  1. “What is the attrition rate like in your firm?”

Attorneys who are considering virtual law firms should try and understand the attrition rate among the attorneys in the firm. This means that they need to know how long people are staying around at the firm, which gives them an indication of the kind of lawyer the model has worked for and has not worked for. If you are considering joining a virtual law firm, you should ask to speak with attorneys for whom the model has worked and not worked.

The Pessimistic View

I have seen many attorneys go to virtual law firms and end up failing. In the majority of instances, I have seen partners who have gone to virtual law firms end up losing much of their books of business. There could be many reasons for this, but when this happens, these attorneys start looking to go in-house or return to law firms.

The Optimistic View

The virtual law firm model works for many attorneys in these law firms, as evidenced by the fact that these kinds of firms seem to be growing. I would recommend anyone considering a virtual law firm speak with the attorneys for whom it is working and not working before reaching any definitive conclusions about the viability of the business model one way or another. It could work for you.

What are some ways your law firm is trying to reduce attrition? Do you think the rate of attrition is increasing or decreasing? Why?

See the following articles for more information:
   
  1. “Do attorneys in your firm make more money after they join than they did before?”

The Pessimistic View

Sadly, I have seen the following scenario play itself out with many attorneys: An attorney with a decent book of business (usually between $1 and $3-million) leaves a major law firm and joins a virtual law firm. The attorney typically does this because the attorney figures that he or she has very strong client relationships and that these relationships will survive wherever they go.

When these attorneys get to their virtual law firms, they often may make as much money initially—or they may not. The attorneys then often start to see their income fade slowly, or rapidly. In a few cases I have seen recently, major clients simply fire these attorneys (who may have had longstanding relationships) and then give the work to major law firms. I am not sure why this happens.

It may happen because
 
  • the client wants the brand of the major law firm and feels it needs this for perception purposes—it becomes more difficult to attract new clients and hold on to old ones,
  • the quality of work and support slips once the work starts being done virtually (and the attorney is not bouncing ideas around to others in the office, getting research done, and so forth), and/or
  • the bills increase (because associates and paralegals are no longer doing low-level work).

A pattern I have seen several times is that attorneys leave major law firms, their books of business dwindle, and then the attorneys have less business than before. In a few instances, I have seen attorneys go to virtual law firms with one major client and then lose this client completely.

On the surface, based on the math, it would seem that attorneys who join virtual law firms would make more money at virtual law firms than they made at major law firms. This is because they get a higher percentage of their billings. However, the virtual law firm attorneys also are missing out on the profits generated from:
 
  • Associates, paralegals, and other staff billed out.
  • Spin-off work that the partner may be giving to other departments of the firm that the partner might not be comfortable “spinning off” in a virtual law firm.

These compensation mechanisms that help generate high profits per partners (among equity partners) in law firms typically do not exist for associates and paralegals in virtual law firms, and I believe are less prevalent for spin-off work. This means that the long-term income potential is often less in a virtual law firm than in a traditional law firm.

The Optimistic View

If a partner has solid client relationships and can consistently keep 80% or more of what he or she bills out (compared with 25 to 50%) in a traditional law firm, it stands to reason that the partner is likely to earn far more money in a virtual law firm than he or she would make in a traditional law firm. As long as the business continues to flow, it stands to reason that the attorney in a virtual law firm would earn more.

What have you noticed about partners joining your law firm? After joining, do they usually end up making more money or less?

See the following articles for more information:
   
  1. “Do you offer any benefits?”

The Pessimistic View

Most virtual law firms do not offer benefits that are offered by traditional law firms. This is a downside to joining a virtual law firm, as it can mean suddenly losing benefits formerly taken for granted.

The Optimistic View

Many virtual law firms will tell you they have special relationships with insurance companies and so forth that can save their attorneys money. Since the benefits of law firms can vary so widely, any attorney considering comparing traditional law firms with a virtual law firm should simply ask questions about which is better for the attorney.

How important are law firm benefits to you?

See the following articles for more information:
   
  1. “What is the camaraderie like among the attorneys that join the firm?”

The Pessimistic View

Camaraderie is important. Most people are social animals and rely upon social environments for their sanity, growth, and reflection. People want to feel part of a tribe and being part of a tribe means having day-to-day interaction with others, seeing other people on an ongoing basis, taking part in events with fellow attorneys, and more. Most attorneys have friends at work and others with whom they associate. They speak with these attorneys and share gossip and other information and look forward to seeing them when they go to work. Attorneys get a “charge” and motivation from being around others, and this helps them become successful.

A few years ago, I met a man who had formerly operated an extremely successful company that was generating hundreds of millions of dollars a year. However, he sold the company and became depressed. He was sad that he had nothing to do and spent the next several years traveling the world trying to figure out the meaning of life and what made people successful. After spending several years doing this, he started organizing small groups of people together in various cities and sharing his findings.

What he said was something I will never forget. He said that certain environments make people ultra-successful and others do not:
 
  • Schools—think Stanford, Harvard versus the local community college;
  • Geographic locations—think Silicon Valley versus the inner city of Detroit;
  • Companies—think Google or Goldman Sachs as opposed to your local McDonald’s;
  • Families—think the Bush’s as opposed to a family you may know of with a less successful environment; and,
  • Religions—I am not touching this one with a 10-foot pole.

What these environments all share, he explained, are ways of thinking about the world, cooperating, and approaching and solving problems that are a part of how people learn. The environment you are in can often make or break you, and there is something to this.

There are certain law firms that have environments, ways of thinking, and methods of inculcating values among their members that work better than others. There are law firms where I see a lot of failure and others where I see a lot of success. It may be the screening processes that go into absorbing people into these law firms in the first place that have the most to do with why some people succeed, and others do not. However, a big part of this success is just as likely due to the actual day-to-day thinking processes in the firm. In the typical office environment, an attorney is exposed to countless and daily direct and barely perceptible signals from the law firm and its members that dictate how the attorney should work and evolve.

Most virtual law firms may say they share a database, have retreats, or something along those lines, but I am not sure how much camaraderie that this promotes. My guess is not a lot.

The Optimistic View

Many attorneys are introverts, do not need to work with others, and are better off working alone than working within the competitive and fluid social environment of a traditional law firm. If an attorney does not derive strength from the social environment of a law firm, then the attorney may be much better off without the structure of a traditional law firm. These kinds of attorneys may do better in a virtual law firm. If the attorney has his or her work, is respected by his or her clients, and is more introverted (gets motivation internally) than extroverted, the attorney will often do far better in a virtual law firm than in a traditional law firm. In fact, it is my belief that a very high percentage of attorneys are introverted and could benefit from a virtual law firm as opposed to a traditional law firm.

How important is having the camaraderie of working at a regular law firm to you?

See the following articles for more information:
   
  1.  “Does the ‘virtual’ business model work?”

The Pessimistic View

The question of whether a “virtual” sort of arrangement works is a good question for attorneys to consider. Many companies, for example, found that this was not a very good business model.

For example, Yahoo! used to allow the majority of its employees to work at home, but then ended the practice. When the company did this, it found that when people worked together as opposed to at home, they were more “collaborative” and “innovative.” (https://www.fastcompany.com/3020930/yahoo-says-that-killing-working-from-home-is-turning-out-perfectly) Hewlett Packard did the same thing with its employees and began requiring them to come into the office.

IBM recently discontinued allowing its employees to work at home as well. A Wall Street Journal article notes:
 

IBM is giving thousands of its remote workers in the U.S. a choice this week: Abandon your home workspaces and relocate to a regional office -- or leave the company. The 105-year-old technology giant is quietly dismantling its popular decades-old remote work program to bring employees back into offices, a move it says will improve collaboration and accelerate the pace of work. The changes come as IBM copes with 20 consecutive quarters of falling revenue and rising shareholder ire over Chief Executive Ginni Rometty's pay package. The company won't say how many of its 380,000 employees are affected by the policy change, which so far has been rolled out to its Watson division, software development, digital marketing, and design -- divisions that employ tens of thousands of workers. The shift is particularly surprising since the Armonk, N.Y., company has been among the business world's staunchest boosters of remote work, both for itself and its customers. IBM markets software and services for what it calls "the anytime, anywhere workforce," and its researchers have published numerous studies on the merits of remote work.




The idea of a virtual law firm is based on everyone working at home; however, companies that started this trend are finding that from a business perspective it does not work. This process hurt collaboration, creativity, productivity, and other measures. The issue then becomes: Does this apply to law firms as well?

I believe it does. If a law firm becomes less collaborative, less productive, and less creative, the quality of service it provides to its clients is likely to decrease. If the quality of service it provides to its client's decreases, the law firm will have a difficult time maintaining itself. This means that the virtual law firm will be in a situation where it is constantly recruiting new partners with business as there is attrition among partners who lose clients due to a lower quality of service. This is just a theory, of course, but I believe this is a real possibility.

The Optimistic View

The virtual law firm may be a good business model and work for some attorneys. The pitch that virtual law firms make is that with email, live chat, and phones, online collaboration is no different from working in a real law office. The traditional law firm model is dead! Whether or not an entire law firm can be built and sustain itself virtually is another matter completely. As in the cases of IBM, Yahoo!, and HP, it may take time for this to be proven either true or false.

Does the virtual law firm model seem like a viable one to you? Why or why not?

See the following articles for more information:
   
  1.  “Do I have to lower my billing rate if I go to a virtual law firm?”

The Pessimistic View

Most attorneys who go to virtual law firms end up lowering their rates. They lower their rates because they will still make more money with lower rates (because they will keep a higher percentage of their collections) and because the lower rates make the prospect of having the work done by a virtual law firm more appealing to the client.

The problem with lowering your billing rate is that when you do this, you may be “giving away” gains that it took you decades to get your clients to pay for. Suddenly dropping your billing rate may be appreciated by the client, but it may be difficult to get your rate back to where it was before—especially if you ever go back to another large law firm. Also, higher billing rates are often a sign of quality to clients—sort of like paying a lot for a piece of clothing or a car. No company wants to show up to an important litigation matter or deal with the cheaper firm.

The Optimistic View

The billing rates of many major law firms have gotten so high that it is often extremely difficult for attorneys to attract work. The only clients that can afford the stratospheric rates of major law firms are major companies themselves. Because having a book of business is so important to an attorney’s survival, attorneys are often more able to attract clients and build a book of business with a lower billing rate. The virtual law firm may offer clients more flexibility with billing rates and offer attorneys more of an ability to build books of business.

How important is keeping your billing rate the same to you?

See the following articles for more information:
   
  1. “Would I be better off being a solo practitioner, or trying to start my law firm?”

This is a very good question. Every attorney needs to do a real calculation before joining a virtual law firm about whether the attorney would be better off being a solo practitioner.

The Pessimistic View

I have spoken with countless attorneys who left major law firms and spoke with virtual law firms at some time about this decision. The majority of attorneys with good books of business who want to go out on their own choose to go out on their own rather than join a virtual law firm. They say things like:

“It makes no sense. Why would I give them a percentage of my business? I can set up a website on my own, and can get referral fees from attorneys I know in other firms if I give them work.”

If an attorney starts a solo law firm, the attorney also can grow it by hiring other attorneys, contract attorneys, and others—and grow it in the way the attorney wants.

The pitch of the virtual law firm comes down to the “peer network,” billing provided by the virtual law firm, and camaraderie with the other attorneys in the firm. Virtual law firms often promote that fact that they have an “online portal” where attorneys can share information and support each other. For an attorney with $2,000,000 in business, this “portal” could be costing them from $300,000 to $500,000 a year, and the question that needs to be asked is whether or not this is worth it. For many attorneys, this is not worth it, and they think it is absurd. Other attorneys buy into this model.

The Optimistic View

The optimistic view of the virtual law firm is that there is a law firm name, and specialists around the country, to support the firm’s attorneys. Virtual law firms allow attorneys to be part of a group of attorneys, with billing support, and a “knowledge sharing portal,” and to feel that the expense is well worth it. Many attorneys are more comfortable being part of a group than being on their own and feel that the support this group provides is worth it.

Have you ever talked to any solo practitioners? What did you learn?

See the following articles for more information:
   
  1. “Will a virtual law firm take anyone with business?”

The Pessimistic View

Regardless of how much business a partner at large, traditional law firm has, it takes traditional law firms months (and in some cases over a year) to interview, do due diligence, and hire that partner. Traditional law firms will not take anyone, and regardless of how much business an attorney has, they are likely to take their time and be very careful hiring them. A typical partner with $5-million in business may interview with ten law firms and end up starting with one of them after six or more months following the first interview. The partner may meet with ten firms, and out of those ten firms, only three may move forward after interviews—and the number could be less than that. Moreover, the attorney may approach 20 or 25 firms as part of the attorney’s search and will be lucky to get ten interviews. Traditional law firms are quite selective. They are seeking a cultural fit and a fit for the client type the attorney does work for. They care about the law school the attorney attended and about the firms the attorney has previously worked for (among other things).

Virtual law firms are interested in a book of business and will speak with most attorneys who have enough business to make it worthwhile for them. The amount of business an attorney needs could be as little as $500,000 (or less) for many virtual law firms. While I am not trying to offend anyone, from what I have witnessed, a virtual law firm (providing there are no conflicts) will interview and hire most attorneys with books of business. The initial conversation with attorneys is along the lines of “how much business do you have?” and from there the virtual law firm (if it likes the answer) will start recruiting the attorney heavily and telling the attorney all of the benefits of the firm. Initial conversations are often more about trying to get the attorney to join right away than they are about screening.

Because the bar to joining a virtual law firm is all about business, this raises the issue that there are not very developed screening processes at virtual law firms. They are absorbing attorneys and bringing them on almost entirely based on the amount of business they feel they can bring. This results in an “eat what you kill” culture that screens for this and this only. There is less effort placed on building a culture and hiring a certain personality type than there is on hiring attorneys solely for the business they have.

The Optimistic View

When it comes right down to it, although there is a lot of screening in major law firms of partners, ultimately large law firms are most concerned about a partner attorney’s portable business—which is no different from the virtual law firm. The virtual law firm is just more direct about it. While it may be much, much easier to get a job with a virtual law firm, this is also a benefit. Someone interested in a new position does not need to spend months and months interviewing before getting a new job. I have seen instances where lateral partners needed to interview with 50+ people in person in multiple offices of the law firm before getting an offer. This sort of thing does not happen in virtual law firms (but they may have many phone conversations).

How do you feel about the intense screening process often undergone by major law firms? Do you agree or disagree with this process?

See the following articles for more information:
   
  1. “Can I go back to a traditional law firm if I do not like working in a virtual law firm?”

The Pessimistic View

Like going in-house, joining academia, or making other law-firm-limiting career moves, joining a virtual law firm will create some serious issues for you if you ever want to go back to a traditional law firm. Joining a virtual law firm shows you have largely repudiated the traditional law firm and may not be a good long-term fit for a traditional law firm. You are saying you do not value the support, working in an office, and are more concerned with your immediate compensation. A move to a virtual law firm suggests you may not tolerate the need to be a team player and support the large ecosystem of a traditional law firm. Attorneys who go into alternate practice settings have an extraordinarily difficult time making it back to major law firms, and the virtual law firm is no exception.

Traditional law firms also like to hire attorneys coming from other “name brand” law firms. A virtual law firm is not considered a “name brand” law firm and partners from major law firms will look at your resume with puzzlement and say to themselves things like “that’s curious ….”. If you are making a lateral move, you typically want to join a law firm that is stronger than then one you are leaving—or one that carries an equivalent brand cachet.
This is not the most important issue, however. If you have enough business, you will almost always be able to move from a virtual law firm back to a traditional law firm. Nevertheless, this move is something that may be difficult if any of the following occur at the virtual law firm: (1) you lose business, (2) your billing rates are significantly lower, or (3) you do not have work to share with others. Each of these things may be challenged if you join a virtual law firm and make it more difficult for you to transition back to a traditional law firm.

The Optimistic View

If an attorney has enough business, the attorney will always be welcomed back to a traditional law firm. The permissiveness of lower billing rates in a virtual law firm also means that attorneys will be able to attract the sorts of clients they might not otherwise be able to. The ability to attract smaller clients and still maintain (and hopefully grow) a book of business means that the virtual law firm will potentially enable the attorney to move back to a traditional law firm in a better position than when he or she left.

Have you ever seen someone leave a virtual law firm and return to a traditional law firm? How was this transition?

See the following articles for more information:
   
  1. “Do you pay for bar dues, malpractice insurance, or for continuing legal education?”

The Pessimistic View

The answer to most of these is almost always “no.”

The Optimistic View

Not burdened with these expenses for other attorneys, more of the virtual law firm attorney’s income immediately goes to them in the form of a higher percentage of their collections. This means the attorney in a virtual law firm has more money to pay these expenses.

How important is it to you that your law firm pays for things like bar dues, malpractice insurance, or CLE classes?

See the following article for more information:
   
  1. “Do you do any advertising, branding or other activities to promote the firm’s brand?”

The Pessimistic View

A major benefit of joining most major law firms is that they have often been doing branding activities for 100+ years and have been known to companies forever. Major brands in the legal profession mean something and help to attract and retain clients.

Traditional law firms typically have marketing departments and enlist all of their attorneys in doing papers, writing promotional material, having public relations departments, and spending heavily to find speaking opportunities for their attorneys. They also advertise in newspapers and magazines, promote their law firm names to law students, and make a major, concerted effort to continue this process. Major traditional law firms are fixtures of their local legal communities, involved in pro bono work, and their attorneys are seen and known. Some even write major legal treatises. Former members of these firms become judges, general counsels, and other significant forces in the legal community. Associates trained in these firms move on to important roles in government, in-house, and in other sectors where they refer work to the firm and vice versa.

The virtual law firm is a different sort of animal. It is composed of attorneys who are all “eat what you kill” and have rejected the law firm model. Since each attorney is almost 100% out for his or herself, he or she has no incentive to support his or her peers. A committee does not decide the income of virtual law firm attorneys but, instead, is decided purely by their business. A traditional law firm would consider the attorney’s overall contribution to the firm—including marketing and other work the attorney did to help attorneys in their firm.

The Optimistic View

Attorneys get and keep business based on the quality of their relationships. Removed from the constraints of having to help the entire firm generate business, the partner in a virtual law firm can concentrate only on maintaining his or her client relationships and make sure they work.

How does your current law firm take care of its brand? How does this affect your business?

See the following articles for more information:
 

Conclusions
 
I am not sure what will happen with virtual law firms. They are expanding and will likely continue to do so because they are a business model that is so attractive to the organizers of the firm and to the attorneys who go there. One, the organizers of the firm get paid for providing much less service to their partners than the traditional law firm, and two, the attorneys working in the firm get paid more of what they generate in exchange for not requiring as much support. There is something there to benefit both sides.

The challenge for both the virtual law firm and the attorneys who join them will likely always be the same: Staying in business.
 
  • The partners who join virtual law firms need to be able to do the work, maintain the quality of the work, keep bills predictable, and maintain their clients and business—with less support, no brand, and working essentially as solo practitioners. Some may be able to pull this off and others may not. This is a sales job, and not all partners I have seen can do it. Many lose their best clients when they go to virtual law firms. Partners have a tough job. 
  • The virtual law firm needs to continually recruit and sell partners on its business model of very little support in exchange for a higher percentage. They need to sell the partners in their firm that they are providing more value than they are charging for. The virtual law firm also needs to maintain this pitch—constantly relying on recruiting to bring in more and more people. I have seen many lawyers leave virtual law firms. This is a tough job.

Ultimately, when you look at it from the perspective of the attorneys and the virtual law firm, you can see that they are both setting themselves up for an arrangement that looks like easy money but may, in fact, be some of the hardest money they have ever earned.

See the following articles for more information:
 

Share Your Thoughts
After reading this article, do you think joining a virtual law firm is right for you and your career? Why or why not?
What are some other positives of virtual law firms that you have observed?
What are some other negatives of virtual law firms that you have observed?
Share your answers to any of the above questions or your thoughts about virtual law firms in the comments below the article.


About Harrison Barnes

Harrison Barnes is the founder of BCG Attorney Search and a successful legal recruiter. Harrison is extremely committed to and passionate about the profession of legal placement. His firm BCG Attorney Search has placed thousands of attorneys. BCG Attorney Search works with attorneys to dramatically improve their careers by leaving no stone unturned in job searches and bringing out the very best in them. Harrison has placed the leaders of the nation’s top law firms, and countless associates who have gone on to lead the nation’s top law firms. There are very few firms Harrison has not made placements with. Harrison’s writings about attorney careers and placements attract millions of reads each year. He coaches and consults with law firms about how to dramatically improve their recruiting and retention efforts. His company LawCrossing has been ranked on the Inc. 500 twice. For more information, please visit Harrison Barnes’ bio.

About BCG Attorney Search

BCG Attorney Search matches attorneys and law firms with unparalleled expertise and drive, while achieving results. Known globally for its success in locating and placing attorneys in law firms of all sizes, BCG Attorney Search has placed thousands of attorneys in law firms in thousands of different law firms around the country. Unlike other legal placement firms, BCG Attorney Search brings massive resources of over 150 employees to its placement efforts locating positions and opportunities its competitors simply cannot. Every legal recruiter at BCG Attorney Search is a former successful attorney who attended a top law school, worked in top law firms and brought massive drive and commitment to their work. BCG Attorney Search legal recruiters take your legal career seriously and understand attorneys. For more information, please visit www.BCGSearch.com.