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The Siren’s Song of the Unlaw Firm: Will Today’s New Business Models Help Solos…or End Their Careers?

by Carolyn Elefant on January 25, 2013 · 0 comments

in Business Models, Ethics & Malpractice Issues, Trends

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Photo of money trap courtesy of Shutterstock

Call it the un-law firm.  As big law crumbles and some solos struggle to compete with national non-lawyer providers like Legal Zoom, new business models for law firms are cropping up to fill the void.  From Virtual Law Partners  and  Rimon Legal  to branded networks of solos and franchise offices, alternatives to the standard law firm business model abound, providing more options than ever to lawyers seeking to leave a firm but who don’t necessarily want to go it alone.

In theory, a branded network or affiliated group of lawyers who share costs but eat what they kill offers the best of both worlds.  Lawyers benefit from an established brand, potential steady work flow, reduced costs associate with economies of scale.  A network approach also allows lawyers  to assure potential client of back up and eliminates some of the isolation that can come with working alone.

Of course, like anything new in the legal profession, these models raise ethics and malpractice issues.  Without appropriate disclaimers, lawyers who hold themselves out as participating in a firm but who are actually independent may find themselves liable for other participants’ malpractice through rules of imputed partnership.  Likewise, lawyers can’t claim to be part of an affiliated group unless there are regular, ongoing communications between them. Finally, lawyers need to consider conflicts rules and ensure that any compensation arrangements don’t violate fee splitting rules.  Still, if properly structured with sensitivity to ethical parameters, these risks can be managed.  

On the other hand, without adequate due diligence, participation in one of these un-law firm type of structures can end a lawyer’s career.  For example, some of these organizations will refer marginal cases to participating lawyers that may put them at risk of sanction, or overload them with work that can’t possibly be competently handled for the amount they’re being paid.  I’ve blogged about these dangers repeatedly before; recall, the Ohio lawyers who risked their law licenses for $125 a pop  or the lawyer who lost her license because she was so overloaded with work that she defaulted on dozens of cases dumped on her by the mothership.  I just came across another recent example, of all places at Rob Cashman’s Torrentlawyer , which described how a national copyright troll firm let its local counsel take the fall  for frivolous positions developed and advanced by the firm.

No doubt, there’s an undeniable appeal to the siren’s song of the unlaw firms – they’re sexy, they’re trendy, they’re the future.  I have no doubt that some of these models will offer new graduates or struggling solos a safe place to land while improving the quality of legal service delivered to clients.

At the same time, many of these other  business models are nothing more than a shiny new front for a pyramid scheme; a way for a couple of lawyers (or even non-lawyers) at the top of the food chain to make money off the backs of desperate lawyers without incurring the cost of training, malpractice insurance or the other benefits that an employer would provide (it’s no wonder these new models can undercut the cost of traditional practices).   At the very least, lawyers considering participation in an affiliated network model should heed the advice they’d give clients and hire counsel to review the terms of the arrangement before putting their licenses and livelihood on the line.

Photo of money trap courtesy of Shutterstock

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