Legal Ethics, New Jersey, Real Estate, Small Law Firms, Solo Practitioners

Virtual Law Offices Are a Real Issue for Small Law Firms

Brick and mortar is so last century. Nowadays, one can get an entire post-secondary education without ever leaving the comfort of home, including a law degree (no I’m not talking about Belmont) and an LLM. Then, with your degrees and fully developed agoraphobia in hand, you can move seamlessly into a fully virtual law practice and stay in your sweatpants all day — well, depending on what state you’re in.

From a reader:

Earlier this year, the NJ [Advisory Committee on Ethics] held that having a virtual office is not a bona-fide office within the meaning of the NJ Rules of Professional Conduct. This adds another significant cost to setting up your own shop since you have to rent a place all the time, not just for meetings. . . . I am not sure whether NJ is unique in this regard, but the decision seems wrong and anti-competitive to me and it is the smallest of firms which are the most likely to be effected by the rule.

New Jersey is not unique in this regard, but it is among a dying breed. Recently, its Delaware River neighbor issued an opinion that many small firm lawyers hope is yet another nail in the coffin of physical office constraints….

The recent Pennsylvania opinion (sorry no link — it’s still pay-per-view for non-PA registered lawyers) is being touted as a beacon of hope that state bars will become cognizant of the technological advances that are re-shaping the way lawyers work. Stephanie Kimbro, who maintains the extremely useful Virtual Law Practice site, gives us the nuts and bolts:

To summarize the key points of the opinion, virtual law offices are allowed in PA and may be operated from a home office, even if it is located outside the State of PA. Recognizing that attorneys with home offices may want to protect their privacy, they do not require that the VLO list a physical address in any advertisements or letterheads.

This is great for the lawyer in sweatpants, but what about clients? Shouldn’t they be able to know where to find their lawyers (and that their physical files are resting safely in a fireproof cabinet)? Maybe New Jersey had it right. After all, lawyers exist to serve their clients, correct? Perhaps — but that sentiment didn’t quell the uprising when New Jersey’s opinion came out.

Reactions to the NJ ruling by your small firm brethren were swift and decidedly negative. See, e.g., posts by small firm stalwarts Carolyn Elefant and Richard Granat; see also a post by Josh King, AVVO’s general counsel. So, perhaps the deliberate decisions of your state bar aren’t based entirely in prudence and client well-being.

Our reader pointed out that the anti-virtual stance stinks of anti-competitiveness, and Kimbro agrees:

This isn’t about protecting clients at all — because many of them actually want flexibility in their legal services and in working with their attorney. It’s about… the old regime wanting to protect their traditional ways of operating and their market share.

Granat raises this point as well: “The [NJ] Opinion reinforces the market position of established law firms who already have made an investment in physical offices and continue to offer legal services based on a high cost, bill by the hour economic model.” In other words, it helps the crusty old Biglaw firms maintain their competitive edge over smaller firms that might use a virtual model to lower overhead, thereby lowering the cost of services to the consumer.

But it’s not just the competitive edge against Biglaw that Granat worries about:

The Internet is changing the way legal services are delivered and for solos and small law firms to remain competitive with non-lawyer online legal service providers like LegalZoom, who continue to take market share from solos and small law firms. This is a blow to innovation in the delivery of legal services.

LegalZoom — which, by the way, claims to have served over 1 million customers that would otherwise be knocking on your door for wills and contracts — is your competition, whether or not you have a virtual office. But, when you factor in a consumer that is increasingly expecting the availability of online services, a virtual office becomes a very important tool in carving out your future market share. Given this, why would state bars shut the door on your virtual office?

Before you go sending your state bar a nasty letter, remember that even the outdated New Jersey rule doesn’t forbid you from having a virtual office; it just can’t be your only office. That’s nice, but why restrict virtual offices at all? Self-described “traditionalist” and small firm practitioner Brian Tannebaum offers what appears to be the minority view.

Tannebaum doesn’t care if you have a virtual office or not. His basic point is that it’s not the province of state bars to pave the road for the “slackoisie.” Or, as he later states in more eloquent fashion, state bars “are not in the business of making it easy for lawyers to define law practice just because a bunch of unemployed whiners want to practice while sipping mocha lattes at Starbucks.”

It’s an oversimplification, of course, but underlying his rhetoric is his belief that “advocates for virtual law offices just want to do what they want, claim it benefits the clients, when in reality it’s really for the convenience of the lawyer.” A related concern is that virtual offices make practicing law easier and cheaper, which theoretically lowers the bar for those wanting to get in the mix.

Tannebaum has a legitimate concern here given the sound of inevitability emanating from the thousands of new, young and computer-proficient lawyers stampeding out of law schools across the country. But virtual offices are already here. They’re not the norm yet, but they will be. In this light, I’m inclined to agree with Josh King’s thought that state bars should encourage their lawyers to innovate in a responsible manner, especially if that’s what clients want.

Where do you stand? More importantly, where do you work? Let’s hear from the virtual practitioners out there. Send me your thoughts and tips from the world of small firms and solo practices via email, or come follow me on Twitter.

P.S. The ABA is examining some issues related to the virtual law office as part of its Commission on Ethics 20/20 Working Group on the Implications of New Technologies — and wants your comments before December 15, 2010.

P.P.S. I dare someone in New Jersey to make a Fifth Amendment claim here.

Earlier: Prior ATL coverage of small law firms

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