Are virtual law practices the way of the future?
Competition in the legal market has perhaps never been greater, prompting lawyers and law firms to think out of the square in order to retain or capture more clients. And of the various new business models being employed, one is growing in popularity.
Virtual law practices, where practitioners largely work online from home or wherever they happen to be, have been a fixture in the United States for many years and now they are taking hold here.
On the face of it, they appear to be a win-win for lawyers and their clients.
For the lawyers, they primarily offer a good worklife balance, lower overheads and more profits. The advantages for clients are fixed fees for some services, more accessible and flexible contact with their lawyers and more personalised service.
That’s the theory, but what is the reality?
To get a feel for the pros and cons of virtual law practices, Law News spoke to two practitioners who have been at the forefront of this innovative service in New Zealand and the United States.
Michael Hunwick, a Hamilton lawyer of 30 years standing, started his virtual practice in 1993. Given his longstanding interest in new technology, it seemed a logical step to take and today he works from home as well as from shared office space in the centre of the city. He describes himself as a general practitioner with an interest in trusts and legacy planning and says a typical working day goes something like this:
“9am-10.30am – In home office answering emails from clients, drafting an agreement, setting up a settlement after receiving bank funds.
11am-11.45am – Meeting at café in town with client.
12pm-1pm – Personal time in town.
1pm-2pm – At office in town settling conveyancing matter.
2.30pm-3.30pm – Back in home office.
3.30pm-6pm – Skype meeting with client in Melbourne, some time off with my wife, more work in office.”
Mr Hunwick says the biggest drawback of a virtual practice is the way in which work can intrude on his private life.
“The cons would definitely be the ease with which your private and family time can be taken over with work. The other big drawback is the lack of social contact with other lawyers which you get when working in an office environment. You must plan time in your day to visit other lawyers for social interaction.”
Mr Hunwick says he has never been short of work since going it alone and is currently “crazy busy” with clients in many parts of New Zealand and overseas.
“My office is always available 24/7 wherever I am that has internet coverage. I use a Windows mobile which links and runs Office 365 which syncs Outlook and CMS [content management system] files. So if need be I can access and amend documents on my mobile, as it comes with Word, Excel and PDF etc. And if I need to discuss matters I can make a phone call, use Skype, email or text, all of which is captured by my CMS and saved to the client’s file.”
Mr Hunwick says he also travels with a Microsoft Surface Pro 3 equipped with Word in order to draft documents.
To reduce his workload as much as possible he outsources many of his daily tasks to virtual staff “who work like contractors doing specific jobs supporting you”.
A Nelson call centre, which has access to his calendar, not only handles all his missed calls but makes appointments on his behalf with clients, while management of his trust account is outsourced to a legal accounting company in Auckland.
“Why employ staff who can often be idle when you can contract out?” he asks.
Since the beginning of this year Mr Hunwick has run a largely paperless practice.
“I carry no card files on matters at all except my existing trust clients, and I am progressively shifting those files into Trustworks, a Cloud product designed by the creators of Xero.
“I still hold deeds, of course, for wills, power of attorney documents and similar deeds that require originals but all other paper is scanned and shredded.”
A portable scanner carried in a shoulder bag is used when travelling.
“All correspondence, where possible, is by PDF Letter with electronic signature and email or file sharing through Office 365 or Dropbox.”
So how does he attract new clients?
“It is a mix still of word of mouth, online advertising, referrals from existing clients and like-minded professionals in accounting and financial planning. I do not do any print advertising any more as the type of client I am after does not read papers, they move in social media circles and Google everything. LinkedIn and Twitter work well, as well as targeted mail-outs through MailChimp and similar programmes to existing or recent clients of the type I want or want to keep.”
Mr Hunwick says the conventional financial model used by many law firms, which sees one-third of revenue going to salaries, one-third to overheads and one-third to profits, does not apply to him. In his case, one-half goes to overheads, including virtual employees, and one-half goes to profits.
“I take a salary which is close to the profit the company makes each year. Since migrating to a virtual practice I can agree that more revenue stays within your profit column but I can certainly find plenty to spend it on that is business-related. The question is, is it essential?”
Mr Hunwick says his fees are a mix of fixed, and time and cost.
“More and more we are trying to move to a flat fee, which helps the client understand the value of the work and gives them peace of mind when dealing with us. This, in my opinion, certainly benefits clients as it also limits blow-outs that clients never seem to understand and invariably end up in cost reviews through the Law Society.”
Taking everything into consideration, he says virtual practices are the way of the future for small firms and sole practitioners who want to become more efficient, keep costs down and offer competitive fees.
While getting his virtual practice off the ground, Michael Hunwick touched base with US attorney Stacey Romberg, who opened her virtual law firm on 8 September 1999 – an anniversary that she says she “continues to celebrate”.
By then, she had been a lawyer for ten years, which included time in Washington DC writing legislation for the US Senate, followed by a spell in Seattle working in private practice and acting as a pro-tem magistrate.
Today, she still lives in Seattle, where she runs a home-based virtual practice from a spare bedroom in her house.
The practice specialises in business law, estate planning and probate, and she is assisted by an off-site team of two attorneys who provide professional advice when needed, a paralegal and two co-office administrators/legal assistants.
Ms Romberg has four important tips for lawyers thinking of following in her footsteps.
1. Select the right networking structure
In her case, she operates what is known as the “headless work station” model, where each person in her team connects their remote computer to a second individually dedicated computer, which in turn is connected to a server in her house.
Common software programmes are installed on each computer and networked through the server.
All this means she does not have to provide staff with an office, desk, monitor, keyboard or even a mouse, which is a considerable saving.
2. Choose to go paperless
Ms Romberg says many sole and small firm practitioners are moving to a paperless model, but a virtual firm must embrace it from the outset.
“Unless a document is digital your remote staff will have no way to work with it. Furthermore, most attorneys do not want their home to be slowly taken over by expanding client files. So scanning and shredding paper is a daily essential part of operating a virtual law firm.”
3. Rely on case management software
Ms Romberg says a virtual law firm with staff cannot effectively operate without using case management software.
“In a brick-and-mortar law firm, staff will personally communicate about dozens of daily issues, ranging from the attorneys’ substantive collaboration on a client matter to a request for more paper clips.
“Case management software provides a virtual law firm with an efficient way to manage those communications so as to avoid getting lost in a tangled nightmare of countless email messages, phone calls and text messages.”
4. Embrace mobile technology
“All attorneys and staff who work virtually need to be fully comfortable with smart phones, laptops and tablets, and willing to use them daily to create the most appealing options for work-life management, while enhancing responsiveness to clients and speedy inter-office communications.”
Ms Romberg told Law News that when she started her virtual practice in 1999, she was not taken seriously by other lawyers, who predicted she would not survive on a long-term basis. She concedes the early days were difficult but has since experienced “slow, steady growth” in the practice.
“As time passed, technology improved, and the recession hit, attorneys became much more cost-conscious and aware of the virtual model as a legitimate way to run a law practice. Now I’m asked to speak at continuing legal education courses to teach other lawyers how to operate virtually. A lot has changed since 1999 thankfully!”
She says, according to the American Bar Association’s 2014 Technology Report, only five per cent of US attorneys practice virtually, but she anticipates “seeing a substantial increase in that percentage over the next decade”.
“As the technology improves and public acceptance grows, running a virtual law firm is becoming an increasingly viable option.”
So how does she attract clients and what do they think of the service she offers?
“We attract them primarily through our website, as well as referrals from current and former clients, other attorneys and other business contacts.
“For some of our clients, particularly the older ones, it’s an adjustment to work with a virtual office! We send out a detailed letter at the beginning of representation explaining our virtual set-up and how we work with clients. Many clients love our virtual set-up and choose to work with us precisely because we’re virtual.”
While not spelling out what she charges clients, Ms Romberg says her rates are substantially lower than most large US law firms.
A typical working day for her involves getting up at 5am and going to the gym for an hour before starting work.
“Then I either stay at home and work, often in gym clothes or I put on my ‘lawyer clothes’ for client meetings or other business meetings. I stop work around 6pm, shut the office door and rarely work in the evenings. I truly enjoy the variety in my days as opposed to the daily routine of getting up, getting dressed, commuting and working in a downtown office.”
Ms Romberg admits that not everyone is wired to work virtually and lawyers considering making the move should ask themselves several searching questions:
- “Are you an introvert or an extrovert?”
- “Do you enjoy daily personal interactions with colleagues or do you often shut the door to your office hoping to have quiet uninterrupted work time?”
- “If you were to work at home would you consistently be able to stop working, shut the office door, and relax when it’s time for your workday to conclude?”
- “What are your personal aspirations outside of work?”
- “Would a virtual model help you achieve these goals?”
- “Take an honest look at yourself and visualise how your life might change, for better and for worse, if you were to have a home office.”
Given Stacey Romberg and Michael Hunwick’s enthusiasm for virtual law practices, it could be that such enterprises are indeed the way of the future, especially in this country where New Zealanders are always quick to embrace new technology.
Of course, this may ring alarm bells in some quarters given concerns about “car boot lawyers” expressed by Dame Margaret Bazley in her 2009 report “Transforming The Legal Aid System”. She noted that such lawyers have dispensed with offices and the structural support they offer, such as fax machines, photocopiers and administrative assistants.
“Instead these lawyers are completely mobile, with laptops and cellphones that enable them to carry on their business wherever they are. Whilst there are advantages to this, there are also downsides. Primarily these relate to the lack of a consistent and private location in which to meet clients and prepare for cases. The practice seems to be for clients to meet their lawyers for the first time on the morning of a court event, rather than preparing for the court event in advance. This cannot be in the best interests of either party or the court,” she concluded.
Clearly, Dame Margaret has some very legitimate concerns but it could be argued that technology has developed exponentially since her report was delivered and those concerns do not apply to virtual law practices. Fax machines and photocopiers, for example, are almost relics of the past whilst there is all manner of software available now which can undertake the duties of an administrative assistant.
And while it would seem that most virtual law practices are run from private homes, there are many practitioners like Michael Hunwick who also maintain an office “in town”. In fact, some even make house-calls on their clients as well, so there are ample opportunities for lawyers and clients to meet in private locations.
In the final analysis, when it comes to choosing a lawyer, it probably comes down to the old adage: “You pays your money and you takes your choice.”