Printer Friendly An Office Can Be Virtual, but Client Service Can’t Options

[Editor]

All law firms have one thing in common: a finite limit to discretionary spending. Non-discretionary spending (payment of debt obligations, utilities and taxes) is mandatory. Anything else can be considered discretionary spending, or overhead, in the common term.

All money spent on overhead can, in some way, be reduced if necessary. Money may be spent for leases and staffing according to certain parameters, but the parameters can be modified or even eliminated if necessary if it does not serve a business purpose.

The combination of painful recession, advancing technology and lawyer “quality of life” expectations have created a growing trend favoring one form of overhead reduction: conducting a legal practice primarily through the Internet.

For a lawyer in a larger firm, the phenomenon is labeled telecommuting; for a solo practitioner it involves the establishment of a virtual office. In either instance the concept is the same: minimal expenditures on physical office space; contact with clients or professional colleagues largely by e-mail, through the Web or over the phone; and use of online “virtual assistants” at another remote location for staff support.

Caveats and Considerations

One does not have to do much searching to see that Canadian lawyers in nearly every province have embraced the virtual office idea. There would seem no formal ethical prohibition to having a virtual office.

Chapter II of the Canadian Bar Association’s Rules of Professional Conduct (dealing with competence and quality of service) does contain a commentary that conduct that does not meet the required quality of service includes “failure to maintain office staff and facilities adequate to the lawyer’s practice.” And of course a virtual law office must maintain every lawyer’s responsibility to keep client files secure and client information confidential.

Such caveats illustrate that the attractions of a virtual office must be balanced by consideration of their limitations. In a firm of any size, the attractions of telecommuting center around greater time flexibility, but some lawyers are typically more equal than others when the firm decides to accept a telecommuting arrangement. Senior lawyers and transactional lawyers generally get more flexibility than associates and litigators. Client reactions and client service always are voiced as primary concerns, as they should be. If an important client expects the personal touch in an office visit, no amount of time efficiency can or should outweigh it.

Personal touch matters within the firm too. Lawyers who are together physically in an office environment share a camaraderie that shapes the development of a firm culture. Many factors come into play: the exchange of ideas, the guidance, the learning, the education of one lawyer by another. These are vital to a successful law firm, and to business judgment.

As a former law firm partner and COO, I can walk through an unfamiliar firm and get a sense of whether they’re making money or not, whether they’re serving the client well or not, even if I don’t know a thing about their practice. That comes from years of working in a physical setting, not a virtual one.

Overhead Reduction

Some firms may view telecommuting arrangements by lawyers as a way to reduce office overhead, but telecommuting must be viewed in tandem with space expenses. If office space is no longer used for at least 20 per cent of the time, someone else must use the space while the telecommuting lawyer is absent. Otherwise the firm will eat the expense and thus incur a greater cost for off-site operations. If a firm turns to telecommuting to reduce overhead, the office space it uses should similarly be reduced.

Similar considerations apply to the use of virtual staff support. Digital and electronic technology makes available highly educated talent, whether halfway around the world or in a nearby city, allowing law firms to reduce by up to 80 per cent the cost of:

• Transcription of voice files from depositions, trials and hearings
• Accounting support in the preparation of timesheets and billing materials
• Data entry for marketing, conflicts and contact management
• Litigation support graphics
• Legal research, including case citation summaries and patent searches
• Review, and due diligence of business documents
• Secretarial services.

Such work may be produced remotely and delivered electronically, but as always the individual lawyer for whom it is produced bears full responsibility for quality and completeness.

The Accessibility Issue

The limits of a virtual office are different for solos. Technology has conspired with traditional attitudes to make many solo practitioners believe they truly can go it alone. The flexibility offered by voicemail, e-mail and other electronic tools is real, but it can become dangerous when used as a replacement for direct client contact.

If lawyers are perceived as inaccessible, fees become an issue and client complaints are a problem. The nature of one's practice and the intention of the lawyer to be "super-connected" to respond quickly are essential to answering the visibility question. Clients may be more inclined to flexibility about where a solo practice is if they have the assurance that they can always get in touch when they need to. However, remember the warning – virtual offices may be acceptable, virtual lawyers are not.

The bottom line on whether a virtual office makes sense is whether it accommodates client service and client communication. Nothing should be allowed to disrupt the means by which the lawyer learns the intent and desires and wants of the client. No matter what technology makes possible, it is not the answer if it makes life more difficult for the client.

Virtual Models

For the largest clients, the cost saving from a virtual lawyer with minimal office or staff overhead may outweigh any dilution of personal contact. Two articles from 2008 bear this out.

The Wall Street Journal reported on New York-based Axiom Global, Inc., which built a virtual firm catering to corporate clients by hiring at discounted rates lawyers who formerly commanded top rates at major firms. The lawyers are employed by Axiom but typically work from home and receive benefits (but no pay) between assignments. Similarly, the American Bar Association Journal described a venture called Virtual Law Partners. The firm employs lawyers who work at home, charge lower billing rates, and get 85% of what they bill.

Again, however, the devil in the details is how well the client is served by such arrangements. A recent article by Law360 described the U.S. Patent & Trademark Office’s so-called “hoteling program,” which allows up to a quarter of its patent examiners with at least two years of experience to work from home while checking in at the office one day a week.

The program has apparently improved examiner retention and cut some costs, yet the article notes that a number of intellectual property lawyers complain that it’s difficult to arrange in-person interviews with these examiners, and that (because they are more senior practitioners) younger examiners back at the office have less guidance and fewer skilled hands to call on for help.

It should also be noted, parenthetically, that in 2006, HP, the presumptive “father” of telecommuting/teleworking, pulled the plug. They stopped teleworking, telling their far-flung network of IT workers that they had to report to the HP office closest to their homes at least four days per week, or be terminated. The company culture could no longer be maintained without physical presence. They found that productivity and collaboration suffered.

Virtual Impact

Such an example illustrates yet again that telecommuting or a virtual office has more than one bottom line impact. The financial bottom line may be improved, but the client service bottom line could be jeopardized.

Lawyers always need to ensure that clients fully understand and accept the quality of service they receive. When that happens, fees are not an issue and client complaints are not a problem. When that doesn’t happen, lawyers are at best seen as a cost (no matter how minimal their office expenses) and a “necessary evil.” At worst, the lawyer becomes the problem.

Without our clients, we have no reason to exist as lawyers. Our profession would be obsolete. We must find out not only what our clients need, but also what they want. We must respect them, communicate with them and be available to them as they want and need. A major differentiating factor for most clients is the "care and feeding" offered by lawyers.

If, however, service demands can be met, the virtual law office could ultimately be the salvation of the legal profession. Travel agents … stock brokers … librarians … print journalists … these are just a few of the once respected and efficient “middleman” professions that are increasingly endangered by recession and by customers with access to the Internet.

The issue is the customer’s evaluation of cost versus benefit. With incomes shrinking and access to information on the Internet expanding, the temptation is great for people to assume they cannot afford a lawyer, and that they can do just a good a job for themselves using what they find on the Web.

If lawyers themselves embody the efficiency and low cost of the Internet, and bring creativity, judgment and experience to the table, they will maintain their position in the affairs of business and the community – whether or not that position is a virtual one.

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