Will Virtual Law Firms be the Next Big Thing?

Due to social-distancing measures put in place to address the spread of the novel coronavirus, many lawyers and staff have found themselves working from home. While most aren’t running virtual law firms in the strictest sense, many are now likely wondering about the benefits of not having a traditional brick-and-mortar office.

Does that mean we’ll see the legal industry shift en masse to a virtual model? The answer is not black and white.

First, some semantics. It’s important to understand the difference between a virtual firm and one that just provides some services, like a client portal, over the internet. A true virtual firm, as the term has come to be used, has no fixed brick-and-mortar space. All services are provided by attorneys and staff working remotely. It relies entirely on cloud-based software to accomplish law firm administration functions, from client intake and conflicts checks, to billing and collections.

Contrast this with firms that still have a physical office presence, and use software or outsourcing to handle some, but not all, of their processes. That’s not a virtual firm.

Virtual Firms v. Brick-and-Mortar

A 2019 article from The ABA Journal has a good rundown of the benefits of running a virtual firm. Five partners from virtual firms all had glowing things to say about the model they’ve chosen. It’s probably no surprise that they mention the savings on rent and other overhead. Using cloud-based processes, they say, also makes them more efficient.

Many virtual firms take a different approach to the financial side of their business as well. Lawyers at some virtual firms act as contractors and can work as much or as little as they want. They pay a percentage of what they collect in billings to the firm. While that may not be a model that suits everyone (particularly those used to the more stable compensation structure of the traditional law firm), it’s very attractive for parents, caregivers and those wanting a more balanced life.

Yet there are still plenty of upsides for law firms with an office. Yes, there is overhead—however, don’t underestimate the value of a physical space where attorneys and staff gather. While email, phone and videoconferencing do provide connections, we are social beings that rely on face-to-face interactions to feel secure and valued.

There’s also something to be said for the image of having an office. It conveys stability and permanence to clients that place a high value on such things. They know where you are and that you’re not going anywhere.

Think, too, about all the informal mentoring that occurs simply because partners pass associates in the halls or nod into their offices. So much institutional knowledge is transferred that way, almost unintentionally. That has benefits for strengthening firm morale, fostering connection and creating better lawyers to serve clients. Firms distinguish themselves based on their service, so that’s no small thing. Having a physical space also makes people feel less isolated and more part of a team—and everyone pulls in the same direction with the same goals.

There are definitely pros and cons to both ways of operating a law firm. On the surface, virtual may seem better, particularly from a financial point of view. But firms that ignore the intangible benefits of having people work together in the same space may do so at their peril.

A False Choice

But does it actually have to be a choice between one or the other, with no middle ground? Not really—there are plenty of ways to reap the benefits of both setups.

For example, a firm may maintain a physical office for its attorneys and select employees, while relying on a virtual back-office team to handle day-to-day stuff like operational needs, conflict checks, billing and invoicing.

Others have adopted the “hoteling” concept in which they maintain a small number of offices for a large number of attorneys. Nobody has an assigned office. Lawyers and staff reserve them in advance for when they want to be there. Often times, firms that have moved to this structure looked at how much of their office space was vacant every day and decided they could reduce the square footage and still provide a place for people to go to work.