So You Want to Start a Virtual Practice? Steps for Choosing a Structure

Volume 37 Number 1

By

About the Author

Stephanie Kimbro has operated a Web-based virtual law office in North Carolina since 2006 and delivers estate planning and small-business legal services to clients online. She is the recipient of the 2009 ABA Keane Award for Excellence in eLawyering and cofounder of Virtual Law Office Technology, LLC (VLOTech), which was acquired by Total Attorneys in the fall of 2009.

STEPHANIE KIMBRO’S ABA book Virtual Law Practice: How to Deliver Legal Services Online covers how to responsibly deliver legal services online, and how to successfully operate a virtual law office. This special excerpt explains important first steps to consider before venturing into the virtual realm.

This edition of Legal Web 2.0 is excerpted from Virtual Law Practice: How to Deliver Legal Services Online by Stephanie Kimbro, available at www.ababooks.org.

First Step in Choosing a Structure

The first step to setting up a virtual law office (VLO) is to find the resources from your state bar regarding virtual law practice and other forms of e-lawyering. These resources might be in the form of ethics or advisory opinions or in the comments section of the professional rules and regulations for lawyer conduct published by your state bar. These resources may not use the term virtual law practice but may relate to the unbundling of legal services, the delivery of legal services using technology, lawyer Web sites or online advertising. If you will be practicing in multiple jurisdictions, check the bar resources of each state in which you will be practicing.

Another preliminary step in choosing the structure of your virtual law practice is to find a malpractice insurance carrier and determine how the structure you choose will fit in with the carrier’s policies. Some carriers may provide discounted rates due to the use of the virtual law practice technology to reduce malpractice risks.

Provide the carrier with a list of the malpractice checks built into the systems you use, and emphasize how the use of the technology may, in some instances, be more reliable at preventing malpractice than those methods relied upon in a traditional law practice. For example, the technology requires that certain tasks are completed, such as the conflict of interest check and completion of the formal engagement process, before permitting the attorney to proceed in the case rather than relying on office staff or members of the firm to ensure that all malpractice checks have been handled before the attorney begins work on a case. Be ready to provide the carrier with a walkthrough or explanation of your chosen virtual law practice structure as well as samples of your terms and conditions, disclaimers, and any form of engagement or retainer agreement that you will be using to establish the attorney-client relationship online. Key points to emphasize in your discussion with the carrier include jurisdiction checks to avoid unauthorized practice of law (UPL), conflict of interest checks for online as well as offline clients, and end-to-end encryption to protect client confidences.

Be sure you’ve determined the appropriate structure for your practice before gathering approvals from your state bar or obtaining a malpractice insurance policy. To do this, you should have a solid understanding of what you are trying to accomplish with your practice. (See sidebar in this issue.)

The following describes different virtual law practice structures and options—including a completely Web-based firm and integrating a virtual law office with a brick-and-mortar law office.

Integrating a Virtual Law Practice into a Traditional Law Office

There are a number of reasons why this might be advantageous. The practice might expand the client base across the jurisdictions where the lawyers are licensed to practice law, but they may also use the virtual law office to compete for local clients by marketing their online services as an amenity for clients for whom they will provide in-person consultation.

Traditional law practices in many states may now take advantage of electronic filing services and access to online dockets. Some courts are even holding virtual hearings, and some lawyers conduct virtual depositions. Adding a virtual law office to a traditional practice can easily fit into a traditional firm’s efforts to go paperless and take additional tasks related to litigation online.

Adding a virtual law office to a traditional practice may also be used as an effective marketing point for this reason: As the trend in delivering online legal services continues to spread, the general public will continue actively seeking out lawyers who have an online option for providing legal services or, at a minimum, the ability to communicate with clients online. Because the move toward virtual law practice is primarily consumer driven, lawyers may be able to use it in their marketing efforts to distinguish their practice from old-school firms that are not addressing the needs of the public seeking online options.

Completely Web-Based Virtual Law Offices

A lawyer may choose to set up a completely Web-based virtual law practice and operate that practice from a home office or any remote location where he or she may securely access the Internet. A completely Web-based practice is essentially paperless except for the items sent to the lawyer by state bar associations, insurance carriers, and marketing or other organizations that do not e-mail or use digital forms of communication. One of the pleasant surprises for many lawyers who practice law completely online is that their clients are appreciative of the opportunity to contact a lawyer at their convenience. Likewise, the lawyer has flexibility with the work schedule for his or her law practice, which helps to contribute to a greater overall quality of life. Not only do online clients find the convenience appealing, but many of them need the ability to pay for legal services online using a credit card. If the lawyer is offering fixed-fee prices or has been clear up front with the online client regarding the amount that will be paid for legal services, then the client is able to more easily budget for those services.

The completely Web-based virtual law office is easy to set up initially but may be more difficult to market than a traditional law office. There are also limitations in terms of being better suited to certain clients and practice areas. Transactions-based practices are going to be more practically suited to a completely Web-based practice. The age and sophistication level of the firm’s clientele may also be a factor. The lawyer may need to refer out prospective clients that come through the virtual law office to a full-service firm in their geographic location because the legal matter requires in-person representation.

Considering Contract Lawyers

A virtual law office may also appeal to contract lawyers who could deliver legal services online to clients in addition to their contract work. This method might also be a way for them to ease into creating their own solo practices, or if they are independent contract lawyers to use the technology to deliver their services securely to current clients as well as bill for and receive payment for services online. Some contract lawyers who conduct legal research and writing may be in an even better position to leverage the technology to provide services that span the country while at the same time obtaining online clients for legal services within the jurisdiction(s) where they are licensed. Contract lawyers may also consider joining forces to deliver legal services online through a common client portal.

Collaborating with Other Lawyers in a Virtual Law Firm

Virtual law practice may facilitate collaboration with other lawyers to deliver legal services to clients online and has the potential to create a number of unique Web-based practices. On a smaller scale, two or more lawyers may see the benefit of pooling their resources to form a firm within one or more jurisdictions. On a larger scale, many lawyers could join forces to deliver legal services online in a number of jurisdictions. Here are some examples of virtual law practices with two or more lawyers:

  • A lawyer lives in one state while another lawyer lives across the country. Both lawyers provide online legal services in the same jurisdiction. This allows a lawyer to live in one state where he or she is not licensed to practice law and also maintain a relationship with a lawyer in the state in which he or she is licensed.

  • Two or more lawyers form a single virtual law firm that spans two or more jurisdictions. The lawyers pool their resources to market the practice.

  • Several lawyers in one jurisdiction form a single virtual law firm, where each individual lawyer handles a different legal practice area. When prospective clients register with the virtual firm, the lawyers take only those clients whose legal matters pertain to that individual lawyer’s practice area and refer the others around the firm.

  • Several lawyers form a virtual law firm that covers multiple jurisdictions where the member lawyers are licensed. When prospective clients register with the virtual firm, the lawyers take only those clients who are within their jurisdiction and refer the others around the firm.

  • There is also the “wholesale legal services” model, where the virtual law firm charges an annual or monthly subscription fee to clients for access to the virtual law office and its lawyers. Clients are assigned to lawyers within their jurisdiction and provided legal services based on the package or subscription they have purchased. The lawyers in the firm collect a portion of their legal fees and a portion goes to the firm for operational expenses and to pool resources for advertising. The lawyers in the firm must carefully craft unique partnership and fee structuring agreements, and also consider malpractice insurance policies for all members as well as trust accounting and Interest on Lawyer’s Trust Accounts (IOLTA) compliance rules across multiple jurisdictions.

Several of the preceding examples would work best with a virtual law office that is integrated into a traditional, full-service law firm. Some of these situations are not that different from the arrangements made by larger, physical office law firms that maintain branches in multiple jurisdictions and whose lawyers are also licensed in more than one state. However, note that in these examples, the lawyers are retaining their clients online and delivering legal services through the client portal. This differs from law practices where they use technology to create a conglomeration of legal professionals who collaborate as a firm using the Internet. Instead, in the examples, the technology is used not only for the benefit of pooling the lawyers’ resources, but also for providing a way of working with their clients online, in addition to operating an online back-end law office.

Collaborating with other lawyers in a virtual law firm that covers multiple jurisdictions raises unique ethics issues. Many of the concerns will be similar to those of a large, traditional law firm that opens branches in several jurisdictions. There are myriad issues to consider, from unauthorized practice of law (UPL) in other jurisdictions, marketing and advertising rules, conflicts checking, online payment and trust accounting issues, and dissolution of the firm.

Updated Virtual Practice Resources Online

Visit the Web site www.virtual lawpracticebook.com to see updated information on ethics opinions and a categorized list of SaaS providers and products that may be used for e-lawyering and to deliver legal services online.

 

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VLO Start-up Planner: Evaluating Your Options

 

Consider the following questions when determining what type of structure you will need for your virtual practice:

Will you be providing unbundled legal services to online clients without full-service representation?

Will you be working with an existing client base and offering full-service representation as well as online representation?

Will your practice have a combination of online clients and in-person clients, both needing access to the VLO?

Do you want to provide strictly transactional legal services, such as wills, advance directives, and small business setup documents?

Do you want to communicate with clients online through more interactive discussions, such as real time or IM chat, and provide forms of legal advice in addition to legal document drafting?

Will your firm be a multijurisdictional solo practice, or will you be working with other lawyers online to combine resources across jurisdictions?

What law practice management tools are most critical for your practice to take online?

What administrative tasks would you need to handle through your VLO?

Will you need to integrate your existing law office software into the VLO or have a way to synchronize or export from one system to another?

Would you like to collaborate with other lawyers or virtual assistants online, or will access be limited to lawyers and online clients?

VLO Start-up Checklist: Putting It Together

 

Research your state bar's rules and regulations regarding virtual law practice and offering unbundled legal services online.

Discuss your virtual law practice with your malpractice insurance carrier. Ask about discounted rates due to the use of technology to reduce malpractice risks.

Register a virtual law practice Web site domain. Check if your state bar requires registration of the URL name or has restrictions on domain name selection.

Retain a Web site developer to create a virtual law office Web site. Make sure your site content complies with any Web site rules or regulations set up by your state bar. Consider finding a developer with support available to make changes and regular updates to your site.

Make sure that any part of your Web site that handles confidential information is protected by an SSL certificate.

Establish an account with a credit card processing company to use for your online payments. Ensure that this arrangement complies with your state bar's trust accounting and IOLTA rules. If your site is designed to retain credit card information (not recommended), you must ensure that it is PCI compliant.

Draft the terms and conditions, including a privacy statement, for use for your general Web site and any clickwrap agreement or disclaimers used for your secure site. These need to be easily accessible to the public for reference on your site.

Consider incorporating your virtual law office as a PLLC, LLC or other entity depending on the state where you will be conducting business and the management structure you've chosen.

Obtain all city and state privilege licenses for your practice.

If you are starting from scratch, educate yourself about starting your own law practice. Review law practice management blogs. Join listservs and forums managed by state bar practice areas to learn from a collective source of experienced professionals.

Write a business plan and have a strategy in place. If you are integrating a virtual law office into a traditional practice, consider writing a separate plan with goals specifically for the online portion of your practice and describe how those goals will be integrated into your firm's overall business strategy.

—Stephanie Kimbro