The Viable Alternative to BigLaw Has Arrived — Virtual Law

Virtual Law
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“I’m miserable. I hate the hours, the politics, the bureaucracy and everything else. But I’m making over $500K here and my clients won’t port to another firm unless it has attorneys with the same pedigree and all the practice areas that I have now. If you can find me something where they have all that AND I can have more control over my practice, rates and lifestyle, I’ll move in a minute.”

This was a request I’d heard a thousand times during my career as a legal recruiter. The year was 1999 (when $500K was pretty good money) and I was on the phone with an AmLaw 100 partner who was obviously unhappy but didn’t seem to have much in the way of choices.

The viable alternative to BigLaw has been the Holy Grail for decades.

The viable alternative to BigLaw has been the Holy Grail for decades. But where else could a partner work with Fortune 100 clients in a sophisticated practice area, and make the money made at BigLaw? We asked hundreds of BigLaw partners what would be necessary to move their practice to an alternative and eight attributes were identified:

  1. Less Overhead / More Entrepreneurial.
  2. Superior Credentials & Full-Service Capability.
  3. Command Authority Over Practice.
  4. Better Lifestyle.
  5. Better Value to Clients.
  6. Less Bureaucracy.
  7. Real Back Office, Tech and Marketing Support.
  8. Cross-Selling and “Sense of Community.”

The New Breed of Law Firm

The first firm we identified that met the above criteria was a hybrid brick & mortar / virtual law firm named Rimon Law. They started in Silicon Valley as a purely virtual firm but have since opened brick & mortar offices in seven markets. When we examined their attorney bios, we saw an abundance of top law schools and AmLaw experience, as well as full-service capabilities.

Additionally their CEO, Michael Moradzadeh confirmed that in addition to paying partner 70 percent on their work, a whopping 34.7 percent of all gross revenues result from cross-selling. This merited a campaign to identify other outliers.

Nice Firm! Won’t Work for BigLaw Partners Though

The largest and easiest to find virtual law firms and ASLPs (Alternative Legal Service Providers) looked good and paid up to 80 percent on revenues. But our due diligence showed the overwhelming majority of these firms fell into one of two categories:

  1. A collection of solo practitioners who happened to be on the same website. There was no real back office, tech or marketing support.
  2. A tech, temp or other business, that also happened to have virtual attorneys but who would never scale and compete directly with BigLaw.

While both of those models can be profitable, our data indicated these were not what BigLaw partners were seeking. After years of interviews and research, we have identified only seven firms who meet the criteria.

While this may seem to indicate the proliferation of such virtual law firms is unlikely, the opposite is true.  Virtual or hybrid firms have captured Fortune 100 clients and are managing deals and litigation in the hundreds of millions.

While this may seem to indicate the proliferation of such virtual law firms is unlikely, the opposite is true.  Virtual or hybrid firms have captured Fortune 100 clients and are managing deals and litigation in the hundreds of millions.

Not only are virtual law firms like Rimon offering brick & mortar locations but now, brick & mortar firms are expanding on a virtual basis.

Chris Wilson is a partner who left one of the largest virtual firms, to join Taylor English, a brick & mortar firm based in Atlanta. He described why he left a virtual firm but has (with management) determined the virtual platform is the best way to expand in modern times.

“I previously worked for a 150+ attorney virtual firm where there was zero marketing or IT support. That’s not going to work for most attorneys who are accustomed to the resources of BigLaw. When Taylor English decided to expand on a national basis, we decided to do so through attorneys working remotely. Lower risk and no long-term real estate obligations. This allows us to pay 80% on their book and still offer the support that comes with paralegals, associates, and all the back-office support needed to handle the largest of deals or cases.”

Warning: This Isn’t For Everybody

 Jill Williamson is a former virtual law firm attorney. While she seemed to view her former virtual law firm colleagues with genuine admiration, the platform didn’t work for her. She offers this caveat: “The virtual firm I worked at was purely performance based. (Note: there are now virtual and hybrid firms that offer draws). So it’s not enough to have a marketing plan. You have to have the clients who will port with you.”

“The virtual firm I worked at was purely performance based. (Note: there are now virtual and hybrid firms that offer draws). So it’s not enough to have a marketing plan. You have to have the clients who will port with you.”

This was repeated by every former virtual law firm attorney we spoke to, with one exception. We spoke to a partner who has a loyal client base but was clear that other factors that should be taken into consideration.

I spoke with Paula Jill Krasny, a trademark and branding lawyer, at length regarding her time spent in BigLaw, virtual law, and now a full-service, mid-size firm in Chicago, Levenfeld Pearlstein.

At one point, Ms. Krasny was recruited to help spearhead the Chicago presence of a virtual law firm. While her experience at the virtual firm was positive, she missed the in-person interaction and collaboration.

Although she could have chosen to re-enter the BigLaw ranks, she instead joined Levenfeld Pearlstein. She was attracted by the firm’s entrepreneurial and collaborative culture as well as its flexibility and camaraderie. For her, it represented the sweet spot between BigLaw and virtual law.

Of note, is the fact that of the five partners we interviewed who left virtual law firms, none of them returned to BigLaw. Without exception, they went to boutiques or elite mid-sized firms like Levenfeld Pearlstein.

In contrast, the partners at the exceptional virtual and hybrid firms were nothing less than ebullient. Susan Metcalfe is a former AmLaw 100 partner who now works at Potomac Law Group, a virtual law firm that started in Washington D.C. and has been growing nationally.

“I’m happier than I’ve ever been in my life,” she beamed. “When I was at BigLaw, I saw people who made a lot of money but were absolutely miserable. I was one of them. I was a partner and I had no control over my rates or whether I could charge based on flat fees or other alternative fee arrangements, I had to deal with unreasonably high demands in terms of conflicts, billables, grueling hours and bureaucracy, in order to feed a system that was dysfunctional.

“Here, it’s not about racking hours and stats in order to appease the committee who decides your compensation. It’s about putting real value and real relationships with clients first.”

Rimon Law Partner Lisa-Marie Monsanto focused more on the difference between Rimon and “eat-what-you-kill” virtual firms where cross-selling is non-existent. “That is simply not true at Rimon. As a finance lawyer I regularly work with and cross market my colleagues in tax, real estate, litigation, bankruptcy and intellectual property.  What is different at Rimon is that we do not have the tremendous overhead found at traditional law firms.  Our clients want excellent legal services at a reasonable cost.  They place less emphasis on large teams and Class A office space.

“On a personal level, Rimon provides a great work-life balance for many of us wanting to help aging parents and spend more time with our families.”

Clients also seem to appreciate what these new firms have to offer. Stacy Papadopoulos is the General Counsel of the American Gaming Association.

“My primary contacts (at the virtual firm) are from big law firms, often with in-house experience, who graduated from top law schools. So the quality of representation and legal product is never a question. An experienced in-house counsel knows that most of the work they send out, doesn’t require a dozen lawyers charging close to $1,000 an hour. Nowadays, I usually prefer to send work to our virtual firm as they provide a much higher level of value.”

… An experienced in-house counsel knows that most of the work they send out, doesn’t require a dozen lawyers charging close to $1,000 an hour. Nowadays, I usually prefer to send work to our virtual firm as they provide a much higher level of value.”

Ms. Papadopoulos does point out a significant weakness that is largely due to the fact that these firms are relatively nascent in their development, as compared to the 100 year old behemoths against whom they compete.

“If these new firms have an Achilles Heel, it’s that they’re not yet big enough to take on certain niche matters like antitrust or ‘Bet the Company’ litigation. However, 90% of our legal needs do not fall into those categories.”

The Takeaway: BigLaw & Mid-Market Firms Are in Trouble

Virtual and hybrid law firms truly are viable alternatives to BigLaw. With payouts ranging from 60-80 percent on business, the math isn’t tough for those with even a modicum of portable business. They are going continue capturing both premium clients and partners from BigLaw. More virtual firms will appear and more brick & mortar firms will offer remote working platforms. For BigLaw, pandora’s box has been opened and the virtual platform is what has appeared.

As the Nobel Laureate once said “The times, they are a changing.”

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Comments 7

  1. Daniel Molineri says:

    Great article!

  2. Ayven Dodd says:

    The writing and multitude of insights are to be appreciated.

  3. Scott says:

    70-80% on my portable book?? Seriously, I thought this this had to be complete BS until I Googled the firms in the article and looked around their websites. Lots of fellow Harvard and Yale grads. Lots of M&A attorneys. Wow. Who knew? Interesting read.

  4. Robert Johnson says:

    Excellent article!

  5. Paul McGregori says:

    There are two factors in play. One is the absence of traditional firm overhead (the truly virtual part) and the second is the compensation system, which is just a formulaic eat-what-you-kill. The first part (low infrastructure) is where all firms are headed. The second part works best with low-leverage practices.

    The “next-level” distinctions between these firms is: (1) are attorneys 1099 contractors or are they W-2 employees, (2) can they find a way to offer junior attorney support, and (3) do they offer benefits?

    • Frederick Shelton says:

      Thanks for your comment! While many of the firms we interviewed are indeed “eat what you kill” the outliers referenced in the article actually do more cross-selling than traditional firms (e.g. Rimon’s 34.7% figure). Having been the Exec Dir and CMO of firms, I would be hard-pressed to find a firm where over 1/3 of all revenues comes from internal introductions.

      The virtual and hybrid firms referenced in the article have attorneys who are either True Partners or Partners who are actually W-2 employees.

      As mentioned, all of the firms mentioned has either Of Counsel support, Of Counsel and Associate support or in the case of #TaylorEnglish a platform that includes the support of 70 associates. All of the firms referenced offer benefits, marketing & back office support, PLI etc…

      Thanks again for your insights. FS

  6. David J. Myers says:

    You omitted FisherBroyles, LLP, with approximately 240 attorneys in 22 offices all over the country. In 2006, I was the 12th attorney and first litigator to join. We now have almost 120 litigators and approximately 60 IP attorneys and 60 corporate attorneys. All partners (no associates), all with BigLaw, government, and/or in-house experience. Full back-office, IT, and marketing support. The same collegial/family atmosphere as when there were 12 of us.

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