When it comes to running solo or small practice law firms, things must be managed effectively, and overhead costs are kept as low as possible. The legal industry traditionally seeks precedence in the past - seeking guidance from past cases and law; However, in an attempt to remain competitive in an ever-changing world, law firms are looking to more innovative efforts, such as establishing virtual law firms.
The concept of virtual law firms was established for lawyers to provide services to their clients through various forms of technological communication, such as video and webchat. The virtual law firm trend doesn’t seem to be going anywhere either, with clients being thrilled by the ease of communication, and attorneys and law firms appreciating the reduction in overhead costs.
As law practice management company PracticePantherpoints out, virtual law firms have allowed solo or small practice law firms more options in getting things off the ground:
“In the days before the Internet, the overhead costs for a solo lawyer starting their own practice were pretty daunting. Some of the expenses, such as building rental, hiring staff, and buying office equipment, would require a new lawyer to take out thousands of dollars in loans. The first year or two of any new practice would be stressful for an attorney based only on the need to pay those initial overhead costs.
However, in the Internet age, there is now such a thing called the virtual law firm that lowers overhead costs and makes things easier on clients and attorneys. While some lawyers avoid calling their law firms virtual and prefer the term cloud-based law firm, the point is still to save the lawyer or firm money by not requiring a brick and mortar location to do business.”
Overhead cost reductions aren’t the only law firms like the idea of virtual law firms:
- Flexibility - Many attorneys and law firm owners appreciate the flexibility that comes with virtual law firms. With most virtual law firms comes more flexibility and control over hours worked.
- Growth - Virtual law firm owners appreciate the fact that growth can be more easily achieved due to lower overhead costs and enhanced hiring capability due to the elimination of location constraints.
- Enhanced Client Reach - With no brick and mortar law office restrictions, attorneys who work for virtual law firms enjoy being able to reach clients wherever they might be.
- Eco-Friendly - A serious reduction in paper usage is probable with virtual law offices.
Although the running of a virtual law firm has its perks and allows for some aspects of the legal industry to be made easier, it requires different efforts to get it started and running efficiently. In this article, we'll take a look at what goes into getting started and how to run a virtual law firm.
Starting a Virtual Law Firm
The steps to starting a virtual law firm differ from those required to start a traditional brick and mortar one. Below are some of the key elements needed to begin.
Speak to Others With Experience
Wise business owners, in any industry, choose to consult with those who have more experience than them - especially when exploring options or preparing to start a new business. The first step to beginning a new virtual law firm should always be speaking with others already in the business; Doing this can be helpful in the scope of learning what to expect, i.e., schedules, costs, and common problems.
Determine the Scope of Practice
These days, more law firms than not are specializing in particular areas of law rather than offering a broad range of legal services. By choosing a legal specialty, law firms can maintain a more competitive edge from narrowing their focus and marketing efforts. Before jumping headfirst into starting a new law firm, several important factors should be considered to determine what area will be specialized in:
- Consider legal interests and experience
- Research legal trends
- Consider the longevity of interest in a specialty
- Take a Yale self-assessment quiz
Set a Budget
While virtual law firms will definitely save money on overall costs, there will still be necessary spending to be considered. It’s important to set a realistic and affordable budget for starting the business. Here are some things to consider when setting a budget:
- Tech purchases, such as computers and phones
- Website building and maintenance costs
- Law firm management software costs
- Phone and communication costs
- License and business registration costs
- Potential employee costs
Obtain Necessary Licenses
Running any business usually comes with certain licensure requirements - state, federal, or even specific to the type of service or product required. Licenses must be applied for and procured before business is conducted and too much effort is placed into getting a new law firm off the ground. Due to the nature of virtual law firms, considerations should also be taken for states in which clients may be served.
Choose Communication Options
Virtual law firms are based entirely on communicating not in person. Primary communication outlets must be outlined right from the start. How will law firm attorneys communicate with clients? Most virtual law firms will use a variety of different communication options, such as email, phone, webchat, and video chat. While not options will need to be offered, a virtual law firm must be accessible to clients and available as needed. Communication options should only be chosen that can be regularly and consistently monitored; For instance, if attorneys won’t be available to monitor online web chats during business hours, then this option should not be offered.
Build a Website
Because virtual law offices are entirely internet-based, it’s essential that a solid and user-friendly website is designed and maintained; This can essentially be considered the center of a virtual law firm’s business structure. This portion of beginning a virtual law firm will most likely take up the biggest chunk of initial budget costs but will be well worth it. Hiring a website design company that has experience in building both legal and e-commerce sites can prove helpful in conceptualizing and implementing a functioning design for the firm.
Decide on Client Location Focus
Considering where a law firm will focus its efforts can be tricky as there are a lot of things to take into account. Consider the following:
- Demand - Within the locational range that’s being focused on, is there an actual demand for the type of legal practice being offered? For instance, if a law firm specializes in agricultural support, it’s probably not the best idea to target client growth in New York City. Different cities, states, and areas feature unique demands; law firms must provide services that are needed.
- Competition - It can prove relatively frustrating for businesses to try and breakthrough an already saturated market. When determining what locations to offer legal services in, it’s important to consider how many other firms, both virtual and brick and mortar, are already doing so.
- In-Person Needs - While the majority of a virtual law firm’s meetings with clients should be online or through phone, certain scopes of practice can require in-person meetings or representation. This should be considered when determining where services will be offered as it could result in quite a bit of travel, possibly placing undue burden and expenses upon the firm.
The legal industry itself has been forced to be relatively flexible to fit in with client needs and new business practices. When running a company based online and offering virtual services, it can be especially important to maintain preparedness and a willingness to change as needed. Client and industry needs can be expected to change at a moment's notice, and the successful virtual law firm will both anticipate these changes and be willing to change as needed.
Solo and small practice law firms can be more susceptible to change and should be prepared to pivot in a different direction at a moment's notice. When smaller law firms experience industry changes in demand, it can prove more challenging to handle due to typically more limitations with financial resources and other capacities.
Set Pricing Structures
Pricing legal services these days can prove more challenging than before. It’s important to consider what type of price structure will work best for the virtual law firm business model and the types of legal services offered. Types of pricing structures to consider include:
- Contingency - Depending on the type of legal service provided, sometimes it makes sense for law firms to offer services on a contingency basis. This means that clients will not be charged for legal services unless the case is won or a favorable settlement is in place. This is a common pricing structure for lawsuit-based legal work, such as accident or discrimination cases.
- Hourly - When hourly billing is practiced, the effort spent working on cases or items for clients is billed according to the amount of time clocked. This is a relatively common way to bill for legal services, especially when there is ongoing work for one client.
- Fixed Fee - When a preset fee for work provided is charged upfront or upon completion of legal services, it’s called a fixed fee. Fixed fee pricing structures are often used for services such as the establishment of wills.
- Retainer - This type of pricing structure is typically put in place for expected ongoing legal work. Essentially, work that is expected at some point later is paid for upfront and at a preset and fixed price.
Some combination of all the pricing structures mentioned above may be used. No matter how pricing is determined, however, it’s imperative that pricing is set to remain both competitive and simultaneously focused on financial growth. Clients tend to price compare more often these days, which means it’s more important than ever for law firms to maintain awareness of the pricing their competitors are offering; However, there should be a strict limit set in place for price reductions to prevent too much financial loss.
Choose Law Firm Management Software
Having the right legal practice management software is essential for every law firm, but especially for virtually run law firms. Important day-to-day functions of a law firm can be managed and organized through management software, such as:
- Time tracking
- Client billing
- Document storage and sharing
- Legal team collaboration options
Choosing the law firm management software used is an important decision to be made. It’s crucial that integration options with software and services used are possible and that the unique features required by individual law firms are offered. When the right law firm management software is utilized, it can make streamlining legal processes much easier and more efficient.
Make Hiring Decisions
Not every virtual law firm is going to consider hiring employees right off the bat. Some virtual law firms will choose to remain solo practices for quite some time; However, it’s important that all law firms, especially when just beginning, consider standard job roles required to run a successful law firm and determine if it makes more sense to hire help. While it may be easier for some law firm owners and employees to wear multiple hats, it may not be so easy for others. Below are some of the most common job roles found within a law firm:
- Attorneys - Legal professionals, licensed to practice law, who handle and resolve client caseloads.
- Paralegals - Legal professionals who generally handle legal research and provide assistance to attorneys.
- Virtual Assistant - Virtual assistants are becoming more popular and can perform key admin and technical roles remotely from their homes.
- Accounting Professionals - Hired accounting professionals can handle the functions of accounts receivable, accounts payable, payroll, and collections.
- Administrative - Things like office management, phone answering and routing, scheduling, company events, mail, and more can be handled by administrative staff.
- Human Resources - Often necessary when there are multiple employees within a law firm; Human resources employees can negotiate salaries and assist in resolving employee issues or disputes. Human resources staff are also often key in ensuring important company policies are implemented and maintained.
- IT - Law firms, especially virtual law firms, require more technical support than ever before. Many companies opt to hire outside IT support, but depending on the size of the law firm and technical requirements, it sometimes makes sense to dedicate an employee or department to handle IT needs.
Choose Technology Options
The choice of technology options used for a virtual law firm is an important one. Because this business will rely so heavily on virtual communication and work, the right devices must be used.
- Computers - Computer selection is important since the majority of work will be done in this manner. Virtual law firm owners will need to consider things like portability if remotely employed attorneys and staff will be provided with company computers, and how reliable the computer will need to be for daily tasks to be completed.
- Phones - Reliable communication with clients is essential to a virtual law firm’s functionality. When choosing the type of phone systems being used, owners will need to consider what works best to accommodate communication needs with clients and between staff. Common business phone options to choose from will include VoIP phones, multi-line phones, cloud phones, and PBX phones.
- Webcams - If video chatting and conferencing with clients and between staff is important, webcam options will need to be considered. Most laptops come with built-in webcams these days, but it may be a better option to utilize a dedicated webcam for efficient communication; Not all laptops offer great video or sound quality options.
- Internet - The internet service and method used will be important to conducting day to day business and client communication. These days, companies are often opting for cable internet due to it’s faster connection capabilities and increased up-time; however other options such as DSL and satellite internet are also available.
Address Security and Data Storage
Secure communication and storage of sensitive data is a key portion of any law firm. Clients expect privacy and discretion at all times. When running a virtual law firm, data and communications will most often be digitally stored, both locally and through cloud services; While convenient, law firms must consider how to protect client data and securely communicate to remain in compliance. Below are some essentials to consider:
- Antivirus Software - Updated antivirus software should be installed on all business devices to protect against spam, hacking attempts, viruses, phishing, and ransomware attempts. Law firms are increasingly becoming victim of these issues and should maintain defense efforts in this area at all times.
- Data Backup - A plan for regular data backup should be in place with any law firm, but especially with virtual ones. Human error, data theft, unintentional loss - at least one of these incidents will happen at one time or another and should be prepared for physical data backups.
- Reputable Cloud Services - Cloud services, such as G-Suite or Clio, have made day-to-day functions of law firms much easier and more efficient. While inevitably, cloud software and services will be used, it is important to choose those companies that offer enhanced security options and protection.
Running a Virtual Law Firm
Once the virtual law firm is up and running, the work doesn’t end there. Virtual law firms take regular maintenance and effort to ensure they run successfully and have a chance at growing. Below are a few aspects that should be considered to promote efficiency and success:
Outline Expectations and Create an SOP
If the virtual law firm has employees, expectations must be outlined and detailed to promote compliance and seamlessness. Aspects such as communication efforts, time tracking, billing, case handling, etc. should be handled uniformly throughout the firm. Many companies choose to create standard operating procedures (SOPs) to outline expectations. By taking this step, virtual law firms can maintain control of how business is conducted and promote business organization and growth.
Develop a Marketing Strategy
Marketing, especially for online companies, is strategically important to their success. After all, with the elimination of locality with brick and mortar locations, clients will have difficulty knowing a law firm exists if they don’t advertise and market themselves properly. Developing a marketing plan and strategy will prove to be a key aspect of both growing and maintaining a successful virtual law firm. Marketing tools, such as pay per click (PPC) ads, email campaigns, legal directory listings, etc. should be considered and utilized.
Nurture and Grow Client Base
When virtual law firms have obtained clients, they need to be nurtured to ensure continued service is provided, and growth should be nurtured and promoted using tools such as customer relationship management (CRM) software. CRM software allows law firms to effectively organize, communicate, advertise to, and seek to convert leads into clients.
Invest in Business Insurance
Due to the nature of legal work, law firms must protect themselves and their clients should a problem arise. By purchasing business insurance, law firms can ensure that extra support is provided in the case of issues to prevent detrimental loss. Because there is a lot of different options and types of business insurance coverage to choose from, an insurance company that specializes in e-commerce and within the legal industry should be consulted with.
The legal world is changing, and quickly. The development of virtual law firms is one way that the legal industry has adapted to fit client needs and maintain a competitive edge. When implemented properly and with care, law firm owners can see great success with the virtual law firm business model.