The virtual law firm: Much like “big data” and “the cloud” the virtual law firm is an ambiguous concept. From our perspective, we define the virtual law firm as a business model comprised of a unique collection of senior attorneys who share resources in an effort to reduce overhead and expand their portfolio of services.
The concept is intriguing. In any competitive industry, smaller businesses develop disruptive business models in an effort to capture market share from their larger competitors and create stakeholder value.
Not all virtual law firms accomplish this ideal
As such, we classify virtual law firms into two groups:
- A loose confederation of solo practitioners. Growth is up to the individual lawyer, and firm-level strategy is primarily focused on low overhead rates and a shared expense structure.
- Virtual law firms that are managed as cohesive business endeavors-aspiring to grow & increase profits per
The first can represent career suicide for lawyers aspiring to achieve an increasing stream of compensation and retirement security. The latter, if properly managed, can serve as a vehicle for increasing compensation over the long-term and provide a wider-array of career opportunities should the lawyer elect to move-on or retire.
Why your virtual law firm might be career suicide:
To further elaborate on why some virtual law firms represent “career suicide”, it is helpful to investigate why these businesses are established. Virtual law firms have become an increasingly obvious method by which disenfranchised senior attorneys can start their own businesses. The primary goals are often to:
- Achieve a level of compensation commensurate with “their old firm”
- Bill fewer hours and enjoy a higher quality work/life balance
- Establish a more positive culture than they experienced while working for their former employer
- Reduce administrative headaches often associated with larger law practices
- Share resources with their colleagues and develop partnerships with other law firms in an effort to expand services
In principle, this is a good business model. In fact, the first three goals are often achievable with limited business planning. However, problems arise when too much emphasis is placed on the last two ideals:
- Reducing administrative headaches
- Sharing resources & developing partnerships with other law firms
Every good law firm (virtual, or not) needs an appropriate amount of internal infrastructure and firm-level strategy. Just because you manage a virtual law firm doesn’t mean that everyone is absolved from having a:
- Solid business plan
- Cohesive marketing strategy
- Talent-acquisition & growth plan
- Succinct set of critical financial goals
- Law firm management framework by which to gauge business performance and simplify the decision-making process.
Running a virtual law firm does not absolve everyone from having to manage a law firm
If an appropriate level of focus isn’t placed on the law firm management principles listed above, the virtual firm becomes a loose confederation of solo practitioners: capping earnings potential, limiting career mobility, and failing to provide a long-term exit or retirement strategy.
Is this a bad thing? It depends on your career goals. If your objective is to practice law as a solo, enjoy some cost-sharing, and absolve yourself from having to do things like develop your own website, then joining a virtual law firm may very-well allow you to do what you love (practice law) and free yourself from the administrative and cultural burdens provided by traditional law firms.
But if your career goals are more ambitious, then joining a virtual law firm could be career suicide. Why? Some virtual law firms aren’t cohesive business endeavors that seek to achieve firm-level growth and improving profits per partner. Everyone is left to run his/her individual book of business. No one taps-into the “power of the team”.
- You will still find yourself hustling for business, just as you would have as a partner at a traditional law firm. Unless your virtual law firm has a cohesive marketing and lead generation strategy, you “eat-what-you-kill”. Prudently-developed virtual law firms have marketing and lead generation strategies that allow each lawyer to achieve a higher level of growth and partner compensation. Individual lawyers are empowered by the collective brand and marketing power of the law firm.
- Growth will be lower. Virtual law firms that don’t have a firm-level talent acquisition and growth strategy risk growing profits per partner at lower rates. Ten attorneys each employing their own business strategy is less effective than ten attorneys collectively executing a firm-level strategy for growth and improving profits per partner.
- You won’t have an exit / retirement strategy. Does your virtual law firm provide you with an appropriate exit or retirement strategy, or are these objectives rendered unnecessary because everyone is young and your law firm is “virtual”?
- Lack of infrastructure can lead to inadequate law firm management tools, making each lawyer less-efficient and retarding firm-level growth.
If any of these problems persist, your virtual law firm could quickly become career-suicide for some of your lawyers. Why? Your prime talent may leave for “greener pastures” – other virtual law firms that provide them with better vehicles for growth and increasing compensation. Moreover, if every lawyer’s book of business is lower than it would be if your virtual law firm was managed as a cohesive business endeavor, you may become less attractive to alternative employers who decide to hire and compensate you based on your economic track record.
The solution: Build the best virtual law firm
Talent will stay, you’ll make more money, and you will be able to work in a virtual environment that is empowered by the “power of the team”. There is a plethora of successful virtual law firms that take law firm management very seriously. They:
- Have a solid strategic plan
- Develop a cohesive talent acquisition strategy
- Share resources and expenses in innovative ways
- Employ innovative compensation plans
- Have a premier set of technology tools that foster law firm growth, efficiency, and profitability
- Place keen focus on achieving pre-determined goals for growth and profits per partner
- Provide an exit strategy for lawyers as they approach retirement
Every Virtual Law Firm is Different: Your strategic plan should be too
Just like their traditional law firm competitors, every virtual law firm is unique. Each is comprised of a unique group of lawyers that form a distinct culture. Running a virtual law firm as a cohesive business endeavor doesn’t mean mirroring the business model of traditional law firms. Rather, it means accomplishing the law firm management functions above in a manner that preserves the primary benefits of working in a virtual law firm.
Our law firm consulting solutions improve cash flow and profits per partner by developing a custom portfolio of strategies that focus on five key areas of the law firm. Virtual law firms can substantially increase profits per partner by focusing on:
Boost profit & growth with Business Performance Planning
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