Virtual law firm or chambers practice?

Tim Summers of Temple Bright LLP explains the difference…

As the legal services market is shaken up by deregulation, advances in technology and changing client expectations, barriers to entry have been lowered and there is something of a gold rush. A disruptive crowd has entered this sector once dominated by tradition and hierarchies – the venerable profession that was not really seen as a “market” at all.

Some of these new entrants are not lawyers. Assorted business people are seizing the moment. There are now online providers of template commercial agreements, websites where law firms can bid and franchises offering firm branding. Meanwhile some practitioners are exploring new business models which enable them to offer their services in a different way.

In the latter category is the “virtual law firm”. With the advent of greater bandwidth and good practice management software, this is a relatively simple model to operate. There is a central entity which provides a regulated body and insurance. The lawyers contract with this entity as self-employed consultants and run their own practice, generally working from home and using the internet to access the firm’s resources. The aim is for lawyers to spend their time on chargeable activity and not the bureaucratic burdens of the sole practitioner.

The model has proved popular with some. These lawyers may appreciate the release from big firm expectations, greater autonomy and the flexibility which the virtual law firm affords. Moreover, virtual law firms normally allow their lawyers to take home the majority of their fee income while paying a percentage towards the firm’s management.

However, lawyers should ask some penetrating questions before signing up. In particular, to what extent is the organisation actually a firm, and not just an administrative hub for sole practitioners? To be called a “firm” surely requires some qualities which are non-negotiable: a client-facing brand and message that are more than the sum of the firm’s parts; clients who choose the firm and not just individuals within it; a characteristic culture; the ability to pitch and work in teams.

To put it another way, how much does the virtual law firm contribute to the quality and volume of its lawyers’ instructions? If the firm is little more than a provider of some basic resources and a network, candidates should consider whether their financial contribution gives them good value for money – particularly once established processes make it easy for the firm to “plug in” new lawyers. This question is all the more pertinent where such firms specify that the lawyers joining them should bring a client following. What value is the firm providing to lawyers in return for a substantial share of the fees they are being asked to bring?

In fact, for virtual law firms intent on growing quickly, there is a potential conflict of interest between the firm’s owners and its lawyers. The owners may wish to add on, as quickly as possible, new lawyers who can promise a following – as this will mean more income going into the centre. However individual lawyers should wish to build a sustainable practice of their own: an aim which, by contrast, is best served by the firm growing in a controlled way, with a clear-sighted and careful development of its client-facing brand and sector and practice area focus.

If a firm’s management is not rigorous about recruitment and embraces practice areas which are peripheral, the lawyers will be less able both to win new clients and to retain them. It should be a warning sign if a firm’s main message appears to be lawyer-facing (e.g. lifestyle), if most of its news is about hires and firm growth rather than clients and deals, or if a large proportion of the lawyers joining the firm are not building a long term career there but move on quickly. It is a paradox, but on reflection obvious, that lawyers operating on a self-employed model are best served by a firm whose main message is not aimed at the legal sector, but at clients.

And so, finally: what is the firm’s real target market – clients, or lawyers? This is a fair question when the lawyers effectively pay the firm. Is the primary aim of the firm to get more lawyers, whether or not it helps those lawyers already there? Does the firm insist that new joiners bring a following because the firm has little cohesion or collective work-winning capacity of its own? If so, there will be a ceiling on its ability to compete for big ticket work against substantial firms.

An alternative model which shares some structural attributes with the virtual law firm but seeks to address these concerns is the “chambers practice”. This model similarly promises its lawyers greater autonomy and freedom from bureaucracy, but combines these with many of the best features of a traditional firm. Its focus is uncompromisingly on quality, with the aim of making the firm a machine for winning new work and doing it well.

What features of the traditional firm does the chambers practice preserve to achieve its aim?

First, the firm will be based in physical offices where every lawyer has a desk. Personal meetings are the best way for relationships and business to develop, and the office will be the hub of the firm’s activity (although attendance every day is unlikely to be mandatory). Secondly, the firm will have a clear client-facing message. Its marketing may describe a cohesive way of working; it may have sector specialism; there will be no irrelevant practice areas. Thirdly, and as a result, there will be a distinctive firm culture. Having been selected carefully, the lawyers will be encouraged to share contacts, refer business and work in teams. So although these lawyers will not profit-share, their approach will be strongly collegiate.

Why the name? The firm’s solicitors are self-employed like barristers in chambers and there is a similar emphasis on specialist expertise. However such a firm also retains the character of a single practice in that its lawyers will habitually team up on transactions. There is no boast of any “virtual” credentials as this looks more like a message to lawyers than to clients (to whom it may suggest something unreal). The firm’s structure, involving experienced lawyers working in teams with reduced overheads, is adopted not to allow disillusioned practitioners to work from home but because it is the best way of keeping the firm’s promises to clients.

As technology advances, a rigorous focus on client needs will be vital in preserving a role for lawyers. The chambers model will make sense to those of us who seek greater autonomy and efficiency, enabled by technology, while remaining serious about being lawyers. The model allows us to offer our expertise to clients in an attractive and sustainable way, working with skilled and committed colleagues within a vibrant, non-virtual culture and community.

Tim Summers is a founder member of leading chambers practice Temple Bright LLP.