The Virtual Law Office Debate: Virtually Impossible To Succeed or Not?

There’s an interesting debate over at Lee Rosen’s Divorce Discourse blog, in response to his provocatively titled-post, What the Virtual Office Advocates Aren’t Telling You. Lee argues that despite all of the buzz over virtual law offices, they’re unlikely to succeed because “there’s not much demand among clients for a virtual practice.” Lee elaborates:

A virtual lawyer isn’t what most clients are thinking of as the solution to their problem. If they want something virtual, they’re perfectly happy with services like LegalZoom.

Via comments come the dissenting views of Donna Seyle, Richard Granat and Stephanie Kimbro. Donna disputes Lee’s premise that there’s no client demand for virtual law providers, while Richard and Stephanie assert that lawyers must market virtual practices just as diligently they would traditional practices.

In my view, all sides of this argument have some merit, which is why featuring this debate is so important. First, it’s worth clarifying that virtual law platforms aren’t the problem, per se. Most clients now, or very soon will, demand a way to communicate with lawyers online, at a minimum by email, but increasingly, via a secure portal where clients can access their files on their own. The debate over virtual law practice isn’t about adding client portals, rather, it’s about whether using a virtual law platform to provide low-end unbundled legal services, either exclusively or as part of a full service practice, is a viable business model. Here are my thoughts, after the jump.

In my view, using a virtual law platform to deliver unbundled, low-end services exclusively is a tough sell.  For starters, as Lee contends, many clients would just as well use non-lawyer assisted online legal services like LegalZoom which have the added advantage of huge advertising budgets and exemption from the sorts of advertising restrictions that plague lawyers.

Second, basic laws of economics stand as a hurdle to a successful unbundled virtual law practice.  Unbundled services are low-end, and the only way to make money off low-end service  is through a volume case load. This is so whether a volume practice involves immigration law or court-appointed criminal work or unbundled incorporation.   In theory, the virtual law platform is supposed to make volume practice more profitable by automating the work, eliminating the need for an office and cutting down on face-time. But despite these cost savings and modern technology, at the end of the day, a volume practice is a volume practice, and lawyers need a find a constant stream of clients to feed the beast.  And to complicate matters, most solos stand at an inherent disadvantage when it comes to volume because they don’t have the low-end staff (e.g., an underutilized paralegal) or other benefits of economies of scale that larger “mill” practices, or a Legal Zoom type operation enjoy and that can increase the profitability of a volume shop.

So does that mean that there’s no room for virtual law practices that deliver unbundled services? Absolutely not. Remember, unbundled services represent a whole new market of clients who never had the means or desire to hire lawyers to begin with – so a virtual practice opens doors to new opportunities. In addition, providing unbundled legal services can serve other personal goals – a desire to help those who cannot afford full service, or a way to accommodate lifestyle choices.  In these situations, lawyers may be willing to sacrifice some level of income to achieve other ends.

But — don’t expect to open up a virtual law practice and have the dollars start pouring in, unless you’re prepared to invest substantial resources in extensive online marketing or you’re able to create a “referral pipeline” from courts or legal aid groups that will send a steady stream of work.  You may need to balance your virtual practice with full service practice, or  use the low-end work to build relationships with clients who might graduate to full-time service, like Upstart Legal, which I blogged about last month.

As with most discussions in the 21st century, we get so caught up in the technology, we forget that underneath many of the same principles apply. Low-end service = volume, always has, always will. Technology, efficient management and economies of scale can reduce the cost of providing volume services and make them profitable (ala Walmart) but they don’t change the laws of economics.  To the extent that any vendors have held out virtual law practices as a get-rich quick scheme (and certainly none of those I’m familiar with have done so), well, for goodness sakes: shouldn’t lawyers know better?

What are your opinions on virtual law practice platforms for unbundled services?  Do clients prefer lawyer-assisted virtual service to non-lawyer providers, and are they even aware that a lawyer-assisted option exists?  If you are using a virtual platform, has it met your expectations?  The comment section is open – so please post, or link to a post at your site that discusses these issues.