More than three years ago I wrote an article for this Newsletter extolling (in the main) the benefits of using a virtual approach to working in the digital age by virtualising legal services. The last three years have seen a further embedding of virtual law firms in the legal marketplace, with Keystone Law becoming a (more) established name, Setfords Solicitors receiving a substantial private equity injection and Excello Law apparently moving from strength to strength; my own firm, Redmans, although much smaller, has substantially increased revenue and profits.

redmansThis article looks at how my firm’s practices have changed over the last three years and gives an update on the benefits (and disadvantages) of the virtual model. It also looks at how the model of a virtual firm may have changed over this period.

The virtual model

I would define a virtual law firm as a law firm that has implemented a business model which has moved away from the traditional bricks and mortar approach, where all the firm’s services, capabilities, and labour force would generally be based in one place (or more, if there were multiple offices), to a more dispersed model where the firm’s services, capabilities, and manpower may be based in multiple places and/or outsourced to third parties. For example, the firm may have outsourced their call centre functions to a third-party provider, or they may have given up renting office space in favour of a virtual office setup, whereby the firm does not have an office but has a mailbox and the capacity to meet clients, where necessary, or they may have ceased employing solicitors and moved to a model where they engage consultants as and when necessary to undertake certain work.
The important point to note, however, is that there is no one size fits all definition of a virtual law firm – the model is fluid and has a pick and mix approach: some firms may still have a bricks and mortar office but engage consultants and outsource their call centres, others may have a virtual office model but engage their solicitors on an employer-employee relationship.

Benefits

The benefits of the virtual law firm model espoused in my previous article do still hold true: our solicitors have more freedom (in that they can work when they wish to work, as long as they get the work done) but more responsibility (there’s generally no-one to look over their shoulder to make sure they’re doing the work); the virtual law firm model vastly decreases overheads (and thereby impliedly increases profits); and allows the law firm more flexibility (you’re not tied to long, expensive office rents or service contracts, for example). Here are some of the factors involved.

Motivating employees

Not every solicitor is suited to the particular demands of the virtual law firm: some are self-motivated and will work anywhere, and with anyone, whereas others require supervision and/or a more collegial environment. Individuals have to get used, to a certain extent, to working outside of the traditional office environment and, to a large extent, on their own (in a physical sense). The firm has to make sure that the lawyers are sufficiently motivated to want to get their work done, and done well, without constant over-the-shoulder supervision. Employing lawyers in a virtual firm is therefore no easy business: you have to ensure that the individual lawyer being employed is not only self-reliant, self-motivated and able to work largely by themselves, but that they are sufficiently incentivised by the work (both the quality of the work and the financial rewards of doing their job) to do it well.

Low cost-base

One of the principal attractions of such a model is that you can base yourself nominally in an established office, with a business address, mailbox, and meeting room, but that the cost of such a system is substantially less than the cost of renting real office space. This not only means that costs are decreased over the long run but, crucially, that fledgling law firms are released to an extent from the pressure of making their business model an immediate success in order, at the very least, to pay the overheads. This innovation therefore allows for greater competition to flourish in the legal marketplace. Equally, by outsourcing services, such as call-centres and website operation, this generally decreases the cost to the business of such services, with no commensurate decrease in quality.

Flexibility

What do you do if one of your virtual offices isn’t performing as well as you’d hoped? You can close it down and open a new location elsewhere or, alternatively, devote more resources to marketing for this location. Want to expand? Open a new virtual office and market it aggressively. Is your call centre and/or telephone system becoming too expensive? If so, get some quotes from third parties (who are generally eager for your business). Need to hire more lawyers? You can do so without having to rent office space or increase existing office space. The possibilities are literally endless. Equally, if your business is not being successful in a particular area, or in general, then you generally won’t have huge cost commitments, as most of your contracts will be on a rolling basis. Your lawyers can work from pretty much anywhere with access to browser-based knowledge libraries, case management systems, and financial software.

You can spread your net

The virtual business model allows virtual law firms to expand their area of geographical operations: if you want to market your services to consumers in East London, for example, then you just have to contact a virtual office provider (there are many), set up an account, set up a virtual office in a particular location, and register the business on Google. The choice of possible locations is almost unlimited and the cost to open a new virtual office is extremely low (generally, between £50 to £60 a month).

Costs

The main area of caution in the virtual business model is ensuring that your lawyers are adequately supervised if they are not in a traditional office environment full-time, or even part-time.

However, this potential issue can be remedied by regular supervision of the files that the lawyers are in charge of, regular contact with the lawyers, by conducting regular “check-ups” with the clients to make sure that they are happy with the service that the firm is providing, and by ensuring that all of the required information is recorded on the case management system as the file progresses (eg that adequate telephone notes are taken, that documents are saved to the case management file, and that the client is regularly updated on the progress of their case).

The requirements for a virtual law firm are therefore in essence no different to that of a traditional bricks and mortar firm – they are just even more important.

How to implement your virtual firm

The main tenets of my previous article (how to do it) still hold so I won’t elaborate substantially on them, save to add one requirement (knowledge base) and to elaborate on two existing requirements (virtual office locations and marketing strategy). What you will need to set up a virtual office are:

  • a virtual office location (or multiple locations);
  • a virtual call centre;
  • a VOIP telephone system;
  • case management (potentially cloud-based);
  • a knowledge base;
  • financial management system (ideally cloud-based); and
  • a cost-effective marketing strategy.

Make sure that your existing virtual office locations are fully-functioning and marketed well (you’ll have to use a combination of on-site SEO, off-site SEO, Google Analytics, Google AdWords, and Google Locations to improve and track the performance of each individual location) but look to constantly stretch the geographical area that you are providing services to. Consider using a “creeping barrage”. For example, if you’ve got an office based in Hammersmith then consider how you can not only appeal to the core Hammersmith audience but extend this to Barnes, Chiswick, Shepherd’s Bush, Kensington etc. If you’re only based in South London then should you open virtual office locations in Central London, West London, North London etc?

One of the key requirements for a legal business is an up-to-date knowledge library, whether this is in hard copy (for example, the most recent copy of Butterworths for an employment lawyer) or available online (for example, access to LexisNexis or Practical Law). My personal experience is that textbooks are an invaluable resource but that Practical Law is indispensable to my day-to-day practice.

Marketing is (as always) crucial. Over the last three years Redmans has become much more sophisticated at practicing, developing, and analysing SEO techniques, and I can’t emphasise enough how important various Google Tools are to properly analyse how your website is (or websites are) performing. We use a combination of a commercial rank tracker, Google Analytics, Google Webmaster, Google Locations, and Google Adwords to track, analyse, and improve the performance of the firm’s marketing. They’re all free, apart from the commercial rank tracker and having to pay for the adverts managed by Google Adwords.

Final thoughts

I believe that the virtual law model firm does work, and that it will continue to work. The three other firms that I have mentioned (Setfords, Keystone Law, and Excello Law) are apparently thriving and, interestingly, have made the leap from principally virtual firms to, in part, a more traditional and established model, having all recently set up in prominent (and presumably expensive) bricks and mortar office spaces.

For our part, Redmans has undergone a steep learning curve in the adaptation to the virtual law firm business model but it has grown and strengthened, having cemented the business in various key locations and expanded to compete in other locations. This year we plan to spread our geographical coverage even wider by making forays into different areas of London, competing (mainly) with more established firms who have more established locations and reputations. The legal market place will continue to change and if you’re not too big to fail (and you have to be an extremely large firm for that to apply, as the recent demise of KWM shows) then you have to adapt to survive.

Chris Hadrill is a specialist employment solicitor and a partner at Redmans Solicitors. He is responsible, among other things, for marketing at the firm. Email chadrill@redmans.co.uk. Twitter @chrishads.

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