Over the last few months, we have had several virtual law firms writing about their experiences; this article is an attempt to bring it all together and to assess the similarities – and the differences – between the firms. The firms covered and a note of the earlier articles are given at the end of this article.
Size of firm
At the moment, the majority of virtual firms are under 20 fee-earners. In fact, firms can vary from a sole practitioner – quite a common situation – to firms with 70 to 80 fee earners. Presumably, there is an upper limit of size, but it is not entirely obvious, at this moment, where that limit will be.
Type of clients
There seem to be three main target groups:
- The younger private client who is happy with using email and the internet, receiving text messages and paying online. These clients are looking for lower cost legal services and also appreciate the fact that they do not have to “dress up” and give up real time for visiting a traditional solicitors’ office.
- Business clients, who want a “City” quality of service but also appreciate a more personal service where they can choose their fee-earner themselves – all at greatly reduced fees.
- International clients who need UK representation, such as international divorce, business and property.
Type of work
Some virtual firms are going specifically for legal work with a UK wide, even an international, element, such as Family Law International. Others are looking for work which does not depend on frequent face to face meetings. With some of the larger virtual firms, where the lawyers are literally “anywhere”, the firm can make a virtue of the wide spread element of the fee earners and can set up client meetings almost anywhere.
Work for business clients is popular amongst virtual firms – and this has the added advantage that the fee earner can visit the client on their premises and make a virtue of their flexibility.
Legal aid work also figures quite strongly and the reduced levels of infrastructure cost can be a significant feature to surviving in this type of work.
However, I have noticed that work involving constant use of the client account seems to be less commonly undertaken by virtual firms – in particular there is not much conveyancing handled. The exception here is NetworkLaw who do handle conveyancing but they have an accountant on hand to help their consultants with the financial management of the work. Marcus O’Leary of NetworkLaw says “Although we have a mix of specialisations, it is probably best to concentrate on commercial work for normal business clients. There is no doubt that running an active client account is difficult and we have significant expense allocated to this area to ensure that it operates well – on up to about 10 completions a day”.
Social contact between fee-earners
All the firms are taking the need for social contact seriously, both to facilitate informal (but often important) discussions and also simply because most people need the comfort of a peer group. “Real” meetings seem to vary between once a week for smaller firms to once a month for larger ones. Social meetings are often combined with some kind of training, thus facilitating the acquisition of the all-important CPD.
There are very few traditional secretaries in the virtual firms I have covered. Fee earners either do their own secretarial work, possibly with voice recognition on their own PC, or they use internet-based transcription services which are now very widely available – indeed, it is a very competitive market and an excellent level of service can be obtained (24 hour support) and very good prices. In addition, some of the firms are setting up very good central banks of standard documents and forms which reduce the need for major typing input and has the additional benefit of encouraging standard procedures (across the firm) as far as possible.
Accounts, practice management and IT
There are now a number of well-established legal software companies offering “remote” practice management facilities. This means that the software, the data, and the processing are all done on the supplier’s premises and on their computers; all that the fee earners need is their own PC, with internet access, and the ability to print reports as needed. Subject to password and other security checks, the fee earners can access the firm’s data from anywhere. Key software suppliers for this are Pracctice, with the Osprey software, the Quill Pinpoint Office service and SOS with their Virtual Practices software. Generally, these services can also supply a cashier service for data entry and accounts management, if desired, or the data can be entered by someone in the virtual firm and managed online. (See the March issue for a little more on these services.)
The larger virtual firms do need significant networking facilities, probably based at the firm’s HQ and in some cases they pay for an external IT consultant to manage these. Smaller firms seem to manage without a formal IT function, partly because their requirements are less complex and possibly also because there may be at least one person in the firm with the skills needed who does in fact manage this aspect of the firm.
Incidentally, the ability, these days, to outsource the email function (see the article in this issue on hosted email by Charles Black) should provide a further simplification of the in-house IT facilities needed by a virtual firm.
Telephone, fax and post – and the official “office”
In some cases, particularly for the larger virtual firms, there is still a central HQ which receives and then transfers calls and faxes to the appropriate fee earner, sends on mail (possibly after scanning) and provides certain other administrative functions like indemnity insurance, client money laundering checks and CPD/training arrangements. In other cases, the fee earner is in direct contact with the client without any central distribution function and is probably self employed.
There does have to be a fixed “office” for Law Society purposes but this does not seem to give virtual firms any real problems. The official address can be that of the sole practitioner or senior partner as long as the necessary controls are in place.
Sharing of fees
This varies quite substantially. In some cases, the lawyers are actually employed and in others they are self employed. Payment is usually based on the value of the bills issued, eg the fee earner receives 70 per cent or 80 per cent of the fees earned, depending on how many central services are provided.
Generally, commissions are available where one fee earner brings in work which is then passed to someone else, encouraging each person to leverage their client base.
With the several major online legal services now available, this does not seem to be a problem. For fee earners used to computers and accessing legal resources online, “real” books just do not seem to be necessary. Where the virtual firms started as “ordinary” firms, however, the original physical library is probably maintained as well, at least in a basic form.
All the firms have well-designed websites which provide the information needed by a potential client and which lead to the client having confidence in the firm. Most of the firms also spend significant amounts of money with other types of advertising as well – mainly online – to increase the number of visitors to their sites. Some pay for professional marketing services, whilst others do not.
Why did they do it?
There are quite a few young mothers (and fathers) amongst the people setting up virtual firms. This style of working enables them to use the hours of the day in a non-traditional sense – daytimes may be largely taken up with the children whilst evening hours are spent on legal work.
In some cases, the impetus was simply a desire to keep a larger share of the profits! This could be the reason why quite a few traditional law firms are currently moving towards a virtual model, bit by bit. There is nothing which says you have to be all one thing or all the other – all sorts of hybrid firms are possible and I am sure will make their appearance over the years to come.
Virtual firms covered in recent issues
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