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Building a Virtual Law Firm
Changes and Opportunities

by Joe Kashi
January 2004

Let’s start with this question: what is a “virtual law firm?” I believe that it is a law firm that:
  1. Has a stable core group of attorneys;
  2. Has established collaborative relationships with other, specialized law firms that possess expertise that’s occasionally needed;
  3. Is glued together with appropriate computer and telecommunications technology; and,
  4. Expands and reduces personnel as needed.

Frankly, there is nothing new, or even frightening, about the virtual law firm, provided you use due care. Indeed, most attorneys have already had at least some experience working in a “virtual” law firm setting, often without even realizing it. For example, attorneys regularly associate with, and work closely with, local counsel in other states or distant cities as the need arises. They also regularly associate with other attorneys who have known expertise in specialized areas like mass torts, maritime law, or labor law. It’s common for several law firms scattered across the country to join forces on major cases, such as tobacco litigation or the Exxon Valdez litigation, that are too big for any single law firm.

Attorneys also regularly work with professional and paraprofessional staff who either telecommute or otherwise work off-premises. We are comfortable working with temporary contract investigators, court reporters, attorneys, expert witnesses and researchers whom we may not physically meet very often, if at all. Likewise, in large corporate legal departments, government agencies and national law firms, we often have little physical contact with co-workers upon whom we depend and with whom we frequently work.

In a very real sense, the voice telephone and later the fax machine were the first transitions away from working exclusively with people whom we typically met face to face. Over the next several years, however, efficient long distance collaboration among attorneys who may never physically meet will likely dramatically increase as Internet technologies finally make the process fast, easy, and efficient. I’ll examine several possible models of how attorneys can leverage new technology to realize the "virtual law firm" as a viable means of organizing law practices.

Here are some of the changes and opportunities that I anticipate as we transition toward a virtual law firm environment.

Providing Non-Legal Services

We’ll likely see a virtual law firm that thrives by offering a passel of subsidiary services that are needed by our clients but are perhaps somewhat outside the boundaries of traditional law practice, such as general consulting, risk management, technology, preparation of non-litigation exhibits, and similar services as part of our overall client services. The services that we might offer are limited only by our imaginations and by applicable ethical and statutory standards.

Here are just a few examples that readily come to mind. CaseShare, a spin-off of Holland and Hart, Denver, now provides extranet services and specialized database programming to companies across the country. Its sister affiliate, Persuasion Strategies, provides computer graphics, jury consulting, and other technology services, not only to litigators but also to non-litigation technology clients.

I can foresee specialized construction law firms, or their subsidiaries, providing more operational services such as project management. Construction claim law firms are already advising their clients how to structure transactions, are writing the contracts for all of the involved parties, and are helping their clients ride herd upon lagging contractors and vendors. It’s only a small step, a step with manageable ethical concerns, for that law firm to hire professional engineers and the other specialized personnel necessary to fully flesh out the ability to help a client inspect and oversee a project from inception through the final claims process. As it is, most of our clients contact us whenever they hit a snag in their business dealings.

As attorneys become comfortable working in a virtual environment, my sense is that we will see several trends arising from the desirability of attorneys becoming more expert in the substantive businesses whom they serve. In addition, the successful attorney must become even more computer-literate because this is the only way that he or she can successfully coordinate the virtual team and effectively bring to bear all of the cooperating disciplines upon the client’s problems.

Legal Practice Will Become More Specialized

We’ll likely see even further specialization of legal practice, with law firms focusing upon those areas of practice where they have real substantive knowledge. Thus, we may see more boutique practices emerging and successfully competing. In fact, I suspect that law firms will be competitive in more specialized areas of law only to the extent that they likewise develop specialized practice groups. Generalist attorneys will have an increasingly difficult time competing for high quality business when an already highly competitive environment becomes even more so, and they will face more difficult competition finding quality work as unspecialized solo or small firm practitioners.

Hiring and Traing Employees

We may see a premium placed upon hiring attorneys with substantive specialized backgrounds in technical disciplines, engineering, accounting and finance, and possibly some social sciences. Such attorneys will (a.) be able to better understand the overall scope of the client’s objectives and problems; (b.) avoid the need to first become educated in depth about the client’s line of business; (c.) be better able to communicate with the client; and, (d.) be better able to effectively coordinate and combine the efforts of the different disciplines needed to solve the client’s problem.

For example, a law firm with a construction claims practice may seek out attorneys with a construction or civil engineering background because such attorneys already know what to look for, speak the specialized language used by the client’s project managers, engineers, and workmen, and have a much greater ability to understand the nuances of a substantively complicated area of practice.

Quality control and the training of associates will become even more important, but also more difficult, in the virtual law firm. We’ll lose some of our ability to informally and efficiently review intermediate work and discuss it with staff, attorneys, and experts who are not physically located in our offices. Mentoring will become more difficult. I believe that quality control issues are an under appreciated problem arising in connection with virtual law firms.

The traditional law firm placed great emphasis upon grooming promising attorneys and staff for the long haul, training less experienced staff, and gradually giving them more authority as they gained experience and ability. Generally, the more experienced senior attorneys understood, and could do, everything assigned to new staff, and thus could effectively mentor and supervise less experienced staff. Senior partners met with the client and set strategy, often being the only persons who really understood the Big Picture. Small portions of a matter, along with explicit directions, were given piecemeal to less senior staff. Later, as information slowly worked its way to senior attorneys, the efforts of many junior people were gradually combined and sharpened by more experienced senior associates and junior partners. Ultimately, the finished product arrived back on the desk of the partner in charge of the case, who theoretically checked the work for quality and judgment.

The days of the generic junior attorney and staffer are gone along with the pencil-and-paper era. We need to hire and retain better-trained, technically adept staff, many of whom must have skills that most lawyers currently comprehend only with difficulty. Such employees are in high demand and very mobile. Rather than directing such employees in detail, we need to motivate and lead them. We’ll need to adapt our management style to a more collegial, democratic approach that better suits an increasingly professional staff.

We now require employees who are comfortable working with advanced computer systems and who can readily learn new techniques and approaches. Because advanced technology requires advanced skills, we'll have to invest a substantial amount of time money in training employees to a mix of constantly evolving skills through specialized outside trainers. And, rather than training new staff, the senior partners will need to take the same training themselves. Employees with specialized knowledge are no longer interchangeable and, unless we maintain a professionally rewarding place of employment, employee mobility will increase as law firms compete for better-educated, more productive paraprofessional staff.

The virtual law firm has some real staffing advantages. Although there is a strong premium upon highly knowledgeable senior staff, routine clerical chores such as filing and low-level data entry, conversely, either disappear or become simpler and require less case-specific knowledge. That allows a firm to be less dependant upon highly experienced and costly clerical employees.

The Internet is Forcing Law Firms to Restructure

Internet-based legal applications are not yet able to fully compete with the features, stability, and maturity of tried-and-true desktop applications. Until then, performance and security issues will limit the range of features. However, when that day arrives in the near future, and as mainstream web-based legal applications mature, they’ll clearly influence not only how we practice law but also how we organize our law firms, or should I say our practice associations. One thing is sure, though: traditional law firm structure will change greatly.

Mainstream use of Internet-based legal practice systems will force law firms to change into radically different, flexible practice associations that respond more quickly to market and technological changes. Future law firms will likely adopt a more flexible and democratic horizontal structure that facilitates the quick and efficient flow of critical information, something that's critical to the quick parry and thrust of almost any law practice. Further, almost every other industry has found that flexible business structures also lend themselves to better profit margins.

I've identified below several possible models of how the forward-looking law firm might consider structuring itself. Thus, like the U.S. military, law firms--particularly litigators--need to "re-engineer" their operations to emphasize excellent internal communications and fast, precision delivery by a small, often ad hoc team. Information has always been power, metaphorically, but it’s now king.

Why are a law firm's structure and internal communications becoming so important? In the paper-and-pencil era, we used the brute force of many associates and paralegals to manually collect and process the vast amount of information required by any significant litigation or transaction. Because the raw data could not be readily analyzed by a single person in the pencil-and-paper era, we resorted to extensively summarizing the data.

We added intermediate layers to supervise employees and to control the quality of the paperwork as it gradually flowed to the ultimate users. Nasty surprises resulted in court or negotiations when our summaries did not match our evidence. Potentially important raw data and research, and a coherent overview of the entire matter, was often blurred or lost in the process.

Information may get to the decision makers too late. Staffing costs have become prohibitively expensive and clients have become less willing to pay such costs. Continuing to insert several potentially superfluous layers of associates and junior partners between the senior litigator and those gathering the raw data simply causes critical information to move too slowly. Too many intermediate lawyers and clerical staff not only reduce the firm's productivity and responsiveness but badly hurt its overhead, increasing costs to the point where either profits or competitiveness are stifled.

To some decreasing extent, traditional law firms continue to employ these vertical "channels" as the primary conduits for information flow within a firm. But those sorts of law firms are expensive, counter-productive anachronisms in an era where a fast Internet connection makes a paralegal on the other side of the continent almost as accessible as one down the hall. As a result, an Internet-based virtual law firm can leverage the effectiveness of a few highly competent staff, regardless of where they live. As we enter the era of web-hosted document-imaging files, we don’t even need to be overly concerned about where the paper files, if any, are located.

There are several possible structural solutions, most of which use networking technology to flatten a law firm's overall structure, allowing freer electronic communication between all personnel, regardless of rank, seniority, or geographical location.

One approach may be to form small ad hoc action teams. Such teams would form and dissolve in response to individual projects or to specific aspects of a very large case, with their results quickly available to the ultimate decision makers. These teams should include professionals already knowledgeable in specialized areas, to ensure a competent immediate response. Action teams should have their own budgets and their choice of the firm's personnel. The team's members would cooperatively process and share information through remote networking technologies. This approach might be particularly useful in medium-to-large litigation firms. Web-hosted applications are particularly useful to this sort of action team.

Another solution might be to form a separate, highly specialized boutique firm that already has the specialized knowledge, research, and forms to work quick-breaking projects. Our economy's increasing demand for fast action leaves little time to become acquainted with a new practice area after taking on a project. Here, the premium on specialization probably places this option beyond the immediate reach of most general practitioners unless they are already well known in a particular area of practice and getting referrals from less-specialized counsel. Small, specialized firms would joint-venture as needed with other similar firms possessing complementary expertise, again an option made feasible primarily by Internet technology.

Most commonly, the law firm of the future will likely tend toward the virtual law firm, combining a small permanent core group similar to military cadres or large construction contractors, drawing upon contract professionals and paraprofessional staff as necessary for particular projects. This firm's ability to maintain a broad network of cooperating joint venture partners with expertise in different areas of the law will be crucial to future growth into new areas of practice when existing practice areas stagnate.

I believe that this model will prove the most feasible for the average small-to-medium law firm of the future. This approach will only work efficiently if and when the data, documents, and case management and collaborative technology are immediately available across the Internet in a responsive, high-bandwidth technological environment. Although practicing with people we rarely meet physically may seem unnerving, upon reflection we see that we do it all of the time using plain, old-fashioned telephone service. The only difference is that Internet technology makes the process smoother and more efficient. One possible advantage to this structure, compared to the preceding two law firm structural models, is that the core group will already be familiar with working with each other, reducing possible personal clashes, startup times, and initial confusion.

Another possible intermediate solution might be to generally retain the same vertical law firm structure but flatten it by reducing the number of intermediate lawyers and paraprofessionals who actually research, process, and summarize data, and also by reducing clerical staff. Instead, we'll involve senior lawyers directly with processing and using the raw data through advanced technology. We can minimize the burden upon senior lawyers through the use of a few associates and paraprofessionals who develop raw information and then input it into advanced document assembly, case management and litigation support programs. These programs help key lawyers find evidentiary items quickly and spot critical information and important patterns. And, easily-accessed online and CD-ROM legal research materials allow the senior litigator to quickly research questions at his or her desk rather than relying upon library searches by associates. The quality of litigation may even improve as information flows more smoothly to the end user and as intermediate overhead costs decrease.

Not all, nor even many, of these thoughts about structuring a virtual law firm will be directly applicable to your situation. However, cost-effective technology is pushing the entire economy, and thus law firms, to become much more streamlined and efficient. Making the leap is now more a question of changing our mindset and working habits than a technological issue.

Most likely, a slimmed-down traditional law firm structural model will hybridize with the pure Internet-based virtual law firm to produce an intermediate law firm model that has both solidity and flexibility, a model that I believe will retain long term viability.

Regardless of which approach is taken, we'll see law firms adopting a more horizontal structure that emphasizes networking, document imaging, and electronic communication. Expect to see radically different law firms that feature reduced litigation staffing, lower overhead, and reductions in the number of clerical staff, associates, and mid-level partners. There’s little future in simply hunkering down and waiting for the asteroid to hit.


Joseph Kashi is an attorney and litigator living in Soldotna, Alaska, who is active in the Law Practice Management Section and a technology editor for Law Practice Today. He has written regularly on legal technology for the Law Practice Management Section, Law Office Computing magazine and other publications since 1990. He received his B.S. and M.S. degrees from MIT in 1973 and his J.D. from Georgetown University in 1976, and is admitted to practice in Alaska, Pennsylvania, the Ninth Circuit, and the U.S. Supreme Court.