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Lawyers' definitions of virtual practice vary, but not when it comes to finding success

By G.M. Filisko

April 1, 2014, 10:30 am CDT

Talk about a classic dinghy-among-the-battleships dilemma: Large law firms are lurching toward even greater mass every year. In 2013, and for the first time, the National Law Journal 250 list of the nation’s largest firms included two breaking the 4,000-lawyer barrier. Three more had more than 2,000 lawyers, and an additional 17 topped 1,000.

So it’s inconceivable that solos and small firms with merely an online presence could stay afloat surrounded by such battleships, right?

Well, they do. Thousands of lawyers now connect with clients exclusively, or primarily, in the virtual world. And they make a healthy living doing it. They’ve largely been navigating uncharted waters, but that’s changing too. In 2009, the ABA eLawyering Task Force issued suggested minimum requirements for virtual lawyers. It followed up in 2011 with guidelines for the use of cloud computing. By observing each new wave of guidelines and incorporating emerging best practices—along with their own personal lessons—virtual lawyers are reshaping their own corner of the practice.

WHO BELONGS?

Though the number of lawyers who say their practice is virtual dropped from 7 percent in 2012 to 5 percent in 2013, according to the 2013 ABA Legal Technology Survey Report, 7 percent of solos consider their practice virtual, as do 6 percent of firms with between two and eight lawyers.

Dig further and the survey highlights a touchy and hotly debated subject in the virtual legal world—who actually is a virtual lawyer. Lawyers who called their practice virtual were also asked what were the defining characteristics of their virtual practice. Fifty-eight percent said it was the lack of a traditional physical office. Fifty-two percent said it was “minimal in-person contact with clients”; 46 percent said “use of Web-based tools for client interaction”; 18 percent identified “use of a secure client portal/extranet”; 18 percent identified “offering unbundled legal services”; and 3 percent hit the “other” button.

William McNeil is among the majority who identified a lack of a traditional office. “There are a lot of ways to define it,” he says. “Mine is not being tied down to an office you have to go to every single day.”

Before McNeil retired from his Paw Paw, Mich., practice last July to focus exclusively on vLawyer Consulting, the Orlando, Fla.-based legal marketing and virtual-law consulting business he’d been building for five years, he didn’t pay for full-time office space. Instead, he worked out of a home office and connected with clients through technology. In what he calls a paradigm shift, McNeil had to meet personally with clients only 10 to 15 times during 15 years of criminal defense work. When that was necessary it was in a shared office, a coffee shop or wherever it worked.

Richard Granat, co-chair of the ABA eLawyering Task Force and president and CEO of DirectLaw Inc., supports the more strict definition adopted by the task force.

“Just because you work at home and use email and meet a client at Starbucks, that doesn’t make you a virtual lawyer,” contends Granat, who started the first virtual law firm in 2003 in Maryland. “That makes you more of a mobile lawyer.” He now provides a range of services for other virtual practices from his home base in Palm Beach Gardens, Fla. “What we mean is a very specific definition where clients can connect securely and confidentially with the e-lawyer online. That means lawyers have to have as part of their website architecture the ability for clients to sign on with a user name and password in what we call a client portal. If you’re going to have clients pay bills online, upload documents online and get legal advice online, they have to do it in an Internet space that’s secure. Any data going from the client to the lawyer has to be encrypted, and the only way to get encrypted data is through this secure portal concept. It requires a logon.”

Implicit in that definition is that virtual lawyers offer unbundled legal services. “Classically, virtual lawyering refers as much to the unbundled services you might find through a Web portal,” explains Marcus Roland, a virtual solo since 2007 at Roland Legal in Lexington, Ky., who focuses primarily on workers’ compensation defense. “A lot of people think of virtual lawyering as dealing with clients through a Web portal where clients submit a request for the lawyer to do a service, like creating a document or answering a legal question, and they pay you through the Web portal. You never meet them. That’s 100 percent virtual.

“I don’t do that,” adds Roland, who works back to back with a part-time assistant in a spare bedroom in his home. “What I consider virtual is being able to push off resources to some e- or cloud-based service,” he explains. “I replaced a receptionist, a file clerk and a separate office-space lease with virtual services. … I don’t use a fax machine; I use an Internet-based fax service. I use email and my phone calls get routed directly to the number wherever I’m at. I’m paperless, too. … If I have my iPad and iPhone with me, I can pretty much transact any type of business. I don’t need the physical setting—that’s my definition of virtual.”

Then there are those who reject the terminology altogether. “You hear ‘virtual firm’ and ‘virtual lawyers’ and think they’re not real lawyers,” says Benjamin Lieber, managing partner of Potomac Law Group, a Washington, D.C., firm with more than 40 lawyers who telecommute from home but occasionally come into the firm’s offices for staff or client meetings. “Real lawyers come in and work terrible hours. They’re not as committed if they’re not sitting together and working in that traditional, big-firm environment. But ours is a firm that has lawyers working mostly through telecommuting. It’s non-brick-and-mortar, just like virtual banks. That’s the main distinguishing feature for me.”

BLURRED LINES

The who-belongs debate may seem rather abstract, but the distinctions matter in everyday practice. “For a true virtual practice where you’re delivering services from start to finish online, a lot more ethics issues come into play, and there are other best practices that come up,” says Stephanie Kimbro, director of online services at the Burton Law Firm in Wilmington, N.C.

She operated an exclusively Web-based estate planning practice, Kimbro Legal Services, for seven years. Kimbro is a member of the ABA Standing Committee on the Delivery of Legal Services and chair of the ABA Law Practice Division’s Ethics and Professional Responsibility Committee.

Perhaps the most fundamental issue is whether lawyers are meeting ethics standards when it comes to client confidentiality. Granat argues that without a secure portal—cloud-based storage systems like Dropbox and Box fit the definition—lawyers fall short.

“When you look at small firms, a very small percentage use a client portal,” he says. “I’d say less than 2 to 3 percent. But when you go on Bank of America’s website, Charles Schwab’s site or Amazon.com, you’re in a client portal. Even when you’re on a Facebook page, that’s a client portal. The legal profession is behind every other service industry in creating a facility where the lawyer can relate to clients online. As you have a younger gen-eration that has the Internet in their DNA, they expect their lawyers to be online just like they do everything else online.”

Though only a fraction of small and solo firms meet that standard, the numbers are growing. Thirty-one percent of lawyers in the 2013 ABA technology survey reported using cloud-based software and services, up from 21 percent in 2012.

Granat also argues best practices call for encryption of email with confidential client information or attachments. But he recognizes that email encryption is virtually nonexistent in the legal world.

That’s because it’s unrealistic and fails to accommodate the realities of everyday practice, retorts McNeil, who says he’s gone toe to toe with opponents on this issue during panel discussions.

“When I’m asked to speak on ethics panels, I’m typically the only lawyer who’s actually in the trenches operating my definition of a virtual office,” explains McNeil, who serves on the technology advisory board of the University of Michigan Law School’s Institute of Continuing Legal Education. “Experts who claim email should be encrypted simply do themselves and the profession a disservice. The National Security Agency and the government are hacked all the time. Am I to expect a rinky-dink encryption program will really keep someone out if they’re hell-bent on getting information? “In fact, I argue old-school ways of practicing law with paper files and offices with file cabinets are less secure than using Dropbox and virtual office space. I don’t have papers and files with clients’ names all over my desk for anyone—like the cleaning staff—to see.”

Commercial email services properly set up to ensure maximum security are sufficient to protect client confidentiality, McNeil says. “Business Gmail is a very good option,” he explains. “I use a two-step verification for Gmail; anytime I log in from a nontrusted device or computer, I have to enter a code sent to me by text message. Are you going to tell a new lawyer who has no money he or she can’t use Gmail to conduct business? It’s just not realistic.”

Solely connecting with clients online raises its own challenges. The most fundamental is making sure your state permits your version of a virtual practice.

A small minority of states require lawyers to have physical office space, Kimbro explains. Others require a physical address, though in some cases a post office box meets that standard. Still others only require litigators to have a physical address so courts can contact them.

“Every state bar seems to be going through the process of re-evaluating this issue,” says Kimbro. “New Jersey has been the strictest and most protectionist. It had what’s called a bona fide office rule, which meant lawyers must have a place where clients can show up to meet the attorney from 9 a.m. to 5 p.m. and where the lawyer’s books can be audited.”

In January 2013 the state’s highest court loosened those rules. Lawyers there don’t need a fixed physical office, but they must ensure prompt and reliable communication and accessibility, and designate a location for deliveries, service of process, and audits of files and records on short notice.

The most common rule is the one adopted by North Carolina. Under it, lawyers who don’t have a traditional office must state in advertising that office meetings are by appointment only. “The best practice is to be honest on your website,” Kimbro says. “Say: ‘I only deliver services online.’ “

A related issue arose with Lieber’s business cards. “We have a Washington, D.C., address and some lawyers in Virginia who aren’t licensed in D.C.,” he says. “That could be construed as misleading, so we have to be careful to drop an asterisk in a way big firms generally wouldn’t have to on their business cards.”

UNIQUE MATTERS

“How do you know you’re really dealing with the person clients say they are?” asks Granat. “Maybe you get an email from a child who wants you to do a power of attorney to manage an elderly parent’s assets. Normally the person who hires the lawyer to do that is the parent. What if it’s an imposter? That’s a form of identity theft. I’ve never had an issue like that, but you have to be careful.”

Asking for proof of identity would discourage the average Internet client, Granat says. Instead, he uses an email authentication method. “When potential clients register for my site,” he explains, “they have to affirmatively click on an email we send them attesting they’re the person who owns that email address. Also, if they have to get something notarized, I ask them to send me a copy of the signature page so I know they’re who they said they were.”

Granat also physically contacts potential clients when his internal alarms are tripped. “If I think there’s something not quite right about an email communication, I pick up the phone or Skype with the person,” he says. “If something feels wrong, I’ll pull back and not represent the client.”

You also need to check clients’ bona fides to be certain you’re not violating unauthorized-practice-of-law rules. “With true virtual offices, you run a higher risk of UPL,” Kimbro notes. “We do a jurisdiction check. You have to see what state the client registers online under. If it’s not the state where we’re licensed, then we look at the legal matter. If it’s governed by the law in our jurisdiction, then we can handle it.”

Ethics rules on unbundling services and limited-scope engagements can also come into play. Before you begin representing clients, you should have checklists and processes for unbundling, explains Kimbro. You must also use a limited-scope engagement agreement very clearly defining the unbundled service being provided.

Clients also have to expressly consent to the unbundling, she says, and their consent has to be reasonable. “One of the methods virtual lawyers use to establish that attorney-client relationship is a click-wrap agreement,” Kimbro says. “You’re telling clients: ‘Click here to accept the terms of this agreement.’ Courts have held those are binding and enforceable contracts.”

The completion of the project requires a similar process. “I deliver the work to clients online with very detailed instructions, a checklist for them to go through, and educational handouts on things like where to store the documents,” adds Kimbro. “I also send a termination letter, which is another best practice for unbundling.”

A big mistake is agreeing to represent a client whose case or personality isn’t suited for a virtual arrangement. McNeil primarily handled DUIs, but he says criminal cases involving allegations of rape and white-collar crimes may not be suitable for a virtual practice.

“You can’t serve a client who’s not capable of working with a lawyer online for one of a variety of reasons,” Granat adds. “There are certain clients where this mode of delivering legal services isn’t totally appropriate. One is the client’s language challenge. For those clients, you really need to work with them on a face-to-face basis.”

LESSONS FROM THE TRENCHES

And then there are the fundamentals virtual lawyers have developed on their own, including the must-have tech tools and most sensible work practices.

“You have to equip lawyers with what they need to get the job done,” says Lieber of multilawyer virtual firms. “You need to invest in legal research resources like Lexis and Westlaw, time-entry systems and email programs. A lot of the touch points are electronic, so you have to make sure all that is seamless. Lawyers aren’t always tech-savvy, so you also have to take the time to make sure they’re comfortable with what you give them.”

McNeil agrees the right tools are critical: “I don’t care if you put it in your car or home office, but you must have a powerful, all-in-one or a sheet-fed scanner that can do multiple documents. It’s necessary to be more efficient and for storing documents. That’s part of the virtual law practice paradigm shift. If you’re doing old school and keeping 4-inch-thick files, you’d better have a big basement. Most of my stuff is paperless in Dropbox and triple-backed-up.”

Another absolute must is electronic invoicing, says McNeil, who uses FreshBooks. He can create invoices in a matter of minutes and accept online and credit card payments. He also recommends an Internet fax service like MyFax or RingCentral. “That allows me to upload any document I’ve designed and fax it right from my computer as long as I have an Internet connection,” he explains. “I’ll get a lead from my website. I’ll call the potential client, close them on the phone, and send a fee agreement and invoice within five minutes. The client will pay the fee online and then I can fax my appearance to most courts. I’m usually paid, with my appearance faxed, within a half-hour of that phone call.”

Roland would add to the tech list serious shredding capability. “Nothing goes in my regular trash,” he says. “I have a locked shredding container for documents I’ve scanned and discarded onsite, and it’s picked up once a month. I can stand and watch the service come right to my house.”

The tech tools sound expensive, and startup costs are where virtual lawyers take the biggest hit. Roland estimates he initially invested about $4,000 on hardware and software. But Roland and McNeil say they’re saving a bundle on brick-and-mortar operations. Both say their overhead is less than $1,000 per month. “I get my phone and answering service for about $25 a month, and my e-fax cost is about the same,” Roland says. “If I were looking at rent at a place like Office Suites Plus, where they have a receptionist and mail services, I’d be paying $300 to $400 a month. I do have an assistant who I have to pay extra for. “And I do pay malpractice insurance, which is probably my biggest expense. But I’ve found no difference in my malpractice insurance rates because I work virtually. All they really care about if you’re solo is whether you have a backup attorney and whether there’s someone else who checks your calendaring system, which I do.”

Yet all those tools can’t conquer the sense of isolation that can come from working virtually. Lieber has frequent lunches with his attorneys in order to combat that. “They love working on a flexible schedule, but the downside is you’re not really around other people too much,” he explains. “It can be tough to not have that interaction of walking down to the water cooler or going to lunch every day.”

That separation isn’t good for Lieber’s firm, either. “The biggest drawback is trying to build a sense of community,” he says. “The lawyers are all mini-islands of their own. I don’t want them to think we’re just a marketing umbrella. I want them to feel they’re part of a firm with the same identity, shared values and a sense of purpose. It’s hard to foster that.

“You see the importance of this in cross-selling,” adds Lieber. “Let’s say one of our employment lawyers is with a client who says, ‘I’ve been weighed down with a big corporate matter.’ The employment lawyer won’t know we have three corporate lawyers if he’s never met them. That makes it harder for him to say, ‘You should talk to Bill, one of our corporate experts.’ “We have lunches, happy hours and big events. That’s a continuing challenge.”

The ultimate best practice may be to remember that creating a virtual firm isn’t a way to give yourself a pass on marketing. “A professional website is an absolute must—absolutely, without question,” McNeil says. “Almost all my leads come from websites. If you’re going to be a virtual attorney and you’re not going to have that brick-and-mortar where you’re trying to schmooze, you’d better have leads coming in from the Internet.”

Lieber agrees on marketing matters, though his focus is on personal networking. “Be prepared for a tough road ahead mentally,” he says. “You have to be patient. I didn’t just go to some general counsel’s office and get a signed engagement letter. It takes months and months and even years to build a business. “Even if you’re virtual, you still have to get out there and network. If you’re happiest just doing legal work and aren’t really comfortable developing business, there’s a role for people like that at big firms,” he says. “When you’re out on your own, you can’t just sit back and do that.”