What the Virtual Office Advocates Aren’t Telling You

I’ve had the opportunity to meet with several attorneys attempting to run a virtual practice via a website and portal. In my firm, we are also experimenting with selling services online. There seems to be great interest on the part of attorneys in the concept of running a virtual firm and delivering services via phone, e-mail, and a web portal rather than conducting business in a traditional office.

I think it’s a great idea.

Unfortunately, most of the attorneys buying into the concept miss something important when they evaluate the likelihood of success of a virtual practice. They get caught up in the cool technology: the bells and whistles and the shiny objects. The thing they’re missing gets short shrift from the vendors selling the back-end services. No one is focusing on marketing.

Most attorneys interested in a virtual practice get excited about the possibilities of generating lots of revenue via the Internet and fail to think about the likelihood of actually selling the service. The vendors are thrilled to sell their hosted product and aren’t going to raise any negatives. They’re in the business of selling to lawyers, not to clients.

One of the vendors claims it offers “Everything You Need to Practice Law” in its promotional material. I beg to differ. In fact, I think the online platform is the least significant part of what you need to practice law. The web platform is a trivial part of selling your services. It’s easier to get a web platform than it is to rent an office space. Both are equally insignificant to your ultimate success: they just don’t matter very much.

What you need is clients—good clients. Having a virtual office doesn’t magically bring clients to your virtual door. In fact, in many practice areas, I don’t think there’s much demand among clients for a virtual practice. A virtual lawyer isn’t what most clients are thinking of as the solution to their problem. If they want something virtual, they’re perfectly happy with services like LegalZoom. In fact, I’ve seen a survey indicating that many clients prefer a paralegal-provided service to an attorney-provided service, even when both are offered at the same price.

If you’re going to run an online practice, you’ve first got to figure out where the clients are going to come from. That’s the most important piece of the puzzle.

I don’t entirely blame the sellers of these hosted services for leading lawyers down the path to opening unsuccessful virtual practices. The fact is that most of them refer to marketing in their sales pitch. They’re willing to talk through those issues with lawyers seeking advice. Unfortunately, most lawyers getting excited about a virtual practice aren’t all that interested in the marketing part of it. They don’t slow down long enough to ask about the marketing or the customer demand.

Most of the virtual lawyers I’ve met buy the website first and only talk to me when they realize they aren’t making any money. What they need to do is figure out the client generation element first and then open the virtual practice. Don’t put the cart in front of the horse.

In some practice areas, virtual practices might be a great idea. Just be careful that you aren’t building a service delivery system for something that doesn’t have prospective clients. Clients first, platform second.

Related articles:

  1. What’s the Truth about Virtual Law Offices?
  2. The Biggest Virtual Office Problem
  3. How To Work with a Virtual Assistant
  4. Virtual Practices Must Be More Than Online Offices
  5. Is Your Messy Office Costing You Money?

  • http://www.hardinglaw.com John Harding

    Hi Lee:

    A question about a different type of virtual law firm. Not a document preparation services, but a full service law firm system that allows clients to access pdf copies of their case files over the internet, see a calendar of events for their case, pay bills, etc.? Are you doing that? How do you create it, run it, etc?

    Regards,

    John.

    • http://www.rosen.com Lee Rosen

      John,

      We are doing it. Unfortunately, we had to build it ourselves in Lotus Notes and are now transitioning to a custom build application on force.com. It’s tough to find an works right out of the box solution. I’m hoping the cloud providers will evolve in that direction, but they’ll only do it if there’s demand for it.

      Lee

  • http://www.LawPracticeStrategy.com Donna Seyle

    Lee:

    I believe the title of your post is completely misleading. It creates the expectation that VLO vendors are either withholding information or misleading lawyers with respect to their virtual products. Neither is the case. The post is really saying that lawyers somehow conclude that practicing virtually eliminates the need to market their practice. The concept is absurd – of course you need to market a virtual practice just as much as a traditional practice. And the concept has absolutely nothing to do with VLO vendors or proponents. I doubt vendors are telling lawyers that if they buy their product, there is no need to market the practice.

    Second, you discuss only the document assembly function of a VLO. However, there are plenty of VLO platforms& practitioners that function without document assembly. Your post leads readers to believe that document assembly is the same thing as a virtual practice, or elawyering, when in fact document assembly is only one function of a virtual practice.

    Last, you make the statement that there isn’t client demand for virtual lawyering services. That is simply not true. We’re living in an online world where law clients are happy to have law services delivered virtually, and to be able to access information directly from their legal matter without needing to take time to visit their lawyer’s office or keep a pile of documents in their homes. They expect to be able to securely communicate with their lawyer online, and have access to other benefits of a virtual practice.

    I’m actually quite surprised that you’ve written this post, as you are so well respected in areas of non-traditional law practice, and I personally have learned from you through your webinars and other venues. But I think this post gives readers an incorrect view of the virtual law practice concept, as well as another reason to dismiss it when the cost-effective nature of a virtual practice is one way to address the huge access to justice challenge we have in this country.

    • http://www.rosen.com Lee Rosen

      Donna,

      Sadly, I think the only thing misleading in the virtual practice sales process is leading attorneys to believe they’re going to make a decent living based on putting up a virtual office. You say “of course you need to market a virtual practice, just as much as a traditional practice.” I can tell you from first hand experience that some buyers of virtual offices don’t understand that fact. Somehow they missed that part of the sales pitch and I’ve met them and they are struggling.

      I agree with you that document assembly is only one function of a VLO. In fact, it’s the least significant part as we see documents of all shapes and sizes being given away for free by big firms, small firms and marketing groups. There won’t be a market for documents in the near future. That new reality is coming fast.

      I didn’t say there isn’t client demand for virtual lawyering services. I think there is some demand. What I said is “in many practice areas, I don’t think there’s much demand among clients for a virtual practice” and I stand by that statement. I do, however, have reservations about the level of demand (not need, just demand) at this stage of the game in many practice areas.

      I’m sorry your surprised by the post. I’ve worked hard to serve my readers and give them an accurate feel for how to build their practices. I’ve met people who aren’t generating the profits they had hoped for from their virtual offices. I feel their pain as I grow our virtual practice. A virtual practice isn’t a pot of gold at the end of the rainbow and I’m hoping that I’ve helped a few lawyers avoid disappointment and have a realistic understanding of what’s possible. I hope no one dismisses the concept of a virtual practice. I just hope they come to it with their eyes wide open and with full knowledge of the opportunity it presents.

      Lee

  • http://www.directlaw.com Richard Granat

    A virtual law firm as we define it, is one that has a “client portal” where clients can interact with their attorneys online, view copies of their documents, pay their bills online, communicate with their lawyer in a secure space where their attorneys responses are archived and available. assemble documents through an online questionnaire, and access other digital applications. In my opinion, the benefit of using these applications is to increase law firm productivity, law firm transparency, client retention, and client acquisition — provided as you point out that a marketing strategy has to be put in place first.

    A “client portal” concept is just a tool that enables a law firm to have an interactive presence on the Web which has certain productivity and client communication benefits. It is not a substitute for a law firm developing its own unique business model and market positioning approach which identifies a group of prospects and converts them into clients. Each law firm has to figure out how to integrate these tools into their own business model. For some law firms, this concept is not relevant to the practice. For others, it can be another basis for differentiation, together with other reasons for choosing that law firm over another.

    If a law firm wants to market to web-based consumers, including members of what we now call the “connected generation” a law firm needs to have a virtual law firm platform in place, as one option for relating and working with clients, a part of their web site presentation. The cost of adding this functionality is now trivial, so there is little excuse for not trying it. We know from our own experience that there are benefits to this approach, as a complement to a traditional office-based practice.

    There will come a time, when many solos and small law firms will add an “client portal” to their web sites, to enhance their marketing efforts and the client experience for those clients that are looking for a way to work with their lawyers online. You are correct, that simply adding a “virtual law firm” capability does not make a marketing strategy, but there are online marketing strategies that can’t be executed without a virtual law firm platform in place.

    • http://www.rosen.com Lee Rosen

      Richard,

      Thanks for your input. Great points. I appreciate your presence here and always welcome your insights.

      Lee

  • http://www.virtuallawpractice.org Stephanie Kimbro

    Well, you knew I’d have to chime in on this one. Your title is totally misleading about the message in the post, but most of the content of what you wrote actually quite dead-on as far as the marketing being a critical component to making a virtual law office profitable. My virtual law office is 4.5 years old and I have a steady online client base now. That said, that first year was rough, just like it would have been if I’d hung up a shingle on a traditional law office. After making a few expensive mistakes, I finally got down the combination of online marketing and networking that it took to pull in clients.
    No, building the virtual law office website and client portal does mean that clients magically appear. And even now marketing for my practice has to be a weekly and monthly part of my practice in order to ensure that the clients continue to come in. I’ve shared this reality with every attorney who has asked me about my virtual law office, and I’ve taught the same message at CLEs I’ve given for attorneys considering it. I’ve also devoted an entire chapter of my book on the topic to marketing a virtual law practice, and I’m very clear on the realities of this form of law practice.
    That said, I’ll agree with Donna that there are so many different ways that an attorney can set up a virtual law practice: a completely web-based practice, adding it into a traditional firm structure to work with in-person clients and online clients, creating a multi-jurisdictional virtual practice, unbundling legal services or full-service representation, using document automation or assembly, focusing on working with pro se litigants, finding other innovative methods of delivering legal services online, such as what your firm has set up. There is a lot of flexibility in how attorneys set up virtual law practices, and no, not all of these structures are going to be successful right off the bat because of many different factors from type of practice area, target clients’ income levels and tech savvy, the attorney’s individual experience in law practice or generally running a business, upfront money and/or time available to devote to marketing, state bar restrictions on attorney advertising, the nature of services offered online, the size of the firm and how many attorneys and assistants they are setting up on the system, etc. The attorney’s ability to effectively market the practice to pull in online clients is the biggest factor in there. But not the only one.
    I agree with you that in the near future, legal documents will be given away more for free and it will be the guidance and attorney assistance that the clients are paying for. Look at the non-profit legal services organizations that are already working with local courts and using cloud computing applications to deliver free legal forms and automated legal guidance to online pro se individuals. (A2J, Probono.net) Some virtual law firms are also now using free online forms as a way to market their more full-representation services.
    As the public becomes more aware of virtual law offices as an alternative to the online legal services companies without attorney review, the solos and small firms opening up these practices will already be established online and prepared to handle those clients. I think if you consider the online communication and purchasing habits of our current clients and consider the upcoming generation of digitally enthusiastic clients ahead, you can see the necessity of adding some form of client portal to any law practice in the near future. I would also give my fellow attorneys more credit in being able to research the realities of this form of law practice to figure out how to do their own ROI analysis apart from any spiel that a vendor puts out there.

    • http://www.rosen.com Lee Rosen

      Stephanie,

      Thanks for adding your, as usual, helpful input and comment. I appreciate your taking the time to join in the discussion. It’s always good to hear from someone having pertinent experiences who’s willing to share.

      I differ with you on one point – I don’t think the public will, anytime soon, figure out what’s missing from the services without attorney review. The LegalZooms have the marketing muscle and are well organized. We don’t and we aren’t. I wish we could get organized, but I’m not confident that will happen.

      I heard that LegalZoom does 10% of all incorporations in the U.S. Wow.

      Lee

      • http://www.virtuallawpractice.org Stephanie Kimbro

        True. Most attorneys can’t afford to put Robert Shapiro in a t.v. ad marketing our services.

        And to add to it, LegalZoom and Rocket Lawyer (partnered with Lexis) either have out now or are developing the ability to match the consumer with the attorney who is licensed in their jurisdiction. So the attorney that pays to be part of the service gets the clients in their jurisdiction along with the auto-generated legal form that the client created using the services. So these companies providing services without attorney review are now going to have that attorney review component. Yet another development to be aware of.

        • http://www.rosen.com Lee Rosen

          Agreed.

          I’m fascinated by the attorney referral piece of this. I learned a long time ago about monetizing your waste product. I think that’s basically what LegalZoom is doing by charging attorneys for clients they can no longer use (after selling them what they think they need).

          I wonder who will win in the attorney-LegalZoom transaction. I suspect that attorneys will find they aren’t getting a good ROI on the LegalZoom clients. There is a fantastic podcast on This Week in Startups featuring the attorney that founded LegalZoom.

          Lee

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  • http://solopracticeuniversity.com Susan Cartier Liebel

    I’m participating in this debate with my new post ‘Virtual Law Office Debate…Really?’ http://buildasolopractice.solopracticeuniversity.com/2010/08/23/the-virtual-law-office-debate-really/

  • http://www.directlaw.co.uk Grahame Cohen

    No one has really emphasised the efficiency gains of using online tools especially document automation as part of the day-to-day handling of clients. Even for those clients that may not have been engaged through the web, but are more than happy to use the web as part of the process with the lawyer.

    I feel there is some kind of misconception that by having an online option means those clients have to come and engage solely online. This is just not correct. If a client calls you up, are you happy to send them an email? If the answer is yes then why not engage them online as part of your everyday process and not move your fees dramatically either (this means you give guideline prices and not listed prices on your site).

    If you have deep content in your document automation tools as we do, see/try at http://www.rapidocslawdraft.com, this leads to more profit/less time taken.

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  • http://estateplanninginfoblog.com Scott R. Zucker, Esq.

    Hello. I am a solo estate planning attorney from Northern Virginia who is considering utilizing a VLO in my practice, but have not done so yet. I believe I am the type of lawyer to whom Mr. Rosen is referring in his post, as my practice is in its early stages, although unfortunately, I am not ;) . I have great respect from afar for the online efforts of not only Mr. Rosen, but also of all of the other major commenters and their blawgs. I thought I’d share a “little guy’s” perspective to this discussion.

    First, Mr. Rosen’s point is well taken. There are too many services out there for consumers that promise the moon and only produce cheese. I know too many people personally who have been burned from a lack of due diligence. Mr. Rosen’s advice for lawyers to manage expectations is a truism.

    I also think his commentary sharing his and others’ experiences is truly a public service. We would likely all agree that this kind of discourse will add credibility to the VLO concept in that it will help proponents understand their “market” better and either respond or adjust. In a larger way, VLOs are already a response to market demand, and Mr. Rosen’s points have helped present yet another thinking point to be considered.

    Finally, in considering the VLO platform for my firm, I have spoken somewhat extensively to both Mr. Granat’s VLO company and staff, as well as Ms. Kimbro’s former company and staff. Both staffs were quite professional and forthcoming with me about the existing VLO business models, traffic, potential revenues, etc. I was also impressed with how the two firms and other VLO companies seem to have a collegial and non-competitive relationship with one another. Additionally, I was able to glean from their information gathered even before Mr. Rosen’s post that the platform itself would not yet produce self-sustaining income on its own, and certainly not without any other marketing efforts.

    Given the truth of Mr. Rosen’s interviewees who have been disappointed so far, perhaps adjustments have already been made.

    Thank you,
    Scott

    • http://www.rosen.com Lee Rosen

      Scott,

      Thanks for your comments. Unfortunately, most of the contributors to this discussion have an interest in promoting these concepts. It’s great to hear from someone that is living in the real world with real clients and with real bills to pay.

      I’m glad to hear you felt like you got the truth from the vendors and that you weren’t led astray. I’ve got an idea for making these products even more transparent – coming Monday here on Divorce Discourse.

      Thanks again,

      Lee

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  • Mike

    I have been scouring the internet for any sort of hard data regarding the profitability of a VLO, for family law in particular, including posting on several other blogs as I go looking for information. I am very convinced that a family law VLO will be significantly less profitable than a ‘brick and mortar’ office, assuming both are ran with a similar level of competence. This is because 1) if you are doing uncontested matters only there is much less billing involved, and 2) to bill at a higher rate and to acquire more clients you need to give a greater impression of credibility, which is much easier to give seated face to face over a desk with many client files neatly organized on top of it.

    However, I am more than willing to give up a significant amount of profit in order to gain the mobility of a VLO (currently even a 9-day trip is tough), the much lower stress level of uncontested work, and getting rid of my commute. I currently have a gross profit of about $90,000 and would make the leap to a VLO if I was fairly certain I could gross $35-40k in 1-2 years. I would even consider $25-30k gross since I could live in the third world while building a practice up. My first year practicing was last year in a fairly dead economy and I grossed about $50,000 so I am fairly confident in my ability to bring in business.

    Anyone care to comment on the feasibility of that, or give some hard numbers on what they make with their VLO?

    Agreeing with this article, the software you use and the cool tech gadgets don’t matter much at all. I actually started out using a SaaS program but dropped it for many reasons. I would say the absolute most important things for any practice right now are good SEO, a lot of good information on your web page, good desk-side manner, and the competence to get results and provide sound advice. Still working on that last bit as a young attorney…

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  • M.

    So how DO you generate clients for this kind of practice?

    • http://divorcediscourse.com Lee Rosen

      Thanks for asking.

      I’ll write some posts about that over the next few weeks.

      But, you do the same things you do to build any other practice. Define a market, draw their attention, make them an offer and do a good job doing the work. It’s not easy, but it’s doable. Our online practice is growing steadily and we’re working at taking it up a notch and that will help me write some good stuff on the topic.

      Lee

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