Tax Q & A for Small Business Owners
- May 14
- 9min read
Virtual Law Offices might seem to be a concept growing in popularity recently, but it was born back in the 1970s when Paul Fegen decided to set up ‘fully-serviced law office suites’ for practicing lawyers. By allowing multiple lawyers to benefit from the services such as mail, phones, meeting spaces, and access to the library, Fegen Suites had grown to 220 locations across 26 states by 1983. Today, virtual law offices rely heavily on technology to facilitate their operations. Given the fact that they do not require firms to incur heavy rental and overhead costs as against the case with traditional offices, disruptive events such as the 2008 recession and the more recent Covid-19 pandemic have proven to be a catalyst for the concept gaining ground. While a traditional brick-and-mortar law firm would have a standard structure, virtual law firms are flexible and nimble in their operations.
Following are the reasons why lawyers increasingly prefer to operate out of virtual offices:
Easier Communication with Clients
In traditional law firms, communication would usually be initiated through phone calls and emails, post which in-person meetings would follow to take the work forward. Most of the work in such firms is carried out in face-to-face meetings. Today, the trend is shifting to virtual offices for rent. A virtual law firm that embraces the use of bespoke software systems facilitates such meetings online.
As per the Legal Trends 2021 Report by Clio:
– 58% of clients say that the pandemic has made them realize more than ever the importance of technology
– 69% of clients say that they prefer sharing documents electronically
– 56% of clients prefer on-call video conferencing as against meeting in-person
– 65% of clients prefer electronic payments
This shift suggests that clients have had a near-permanent shift in their preferred ways of interacting with lawyers. This is primarily because of the newfound convenience and the time and cost-saving benefits that clients have discovered could be achieved through working virtually. Therefore, virtual law firms will have an advantage not just during the current pandemic times but even beyond that once the situation normalizes.
Greater Work Flexibility
Virtual Law Firms use cloud-based software to enable their work management. By doing so, such firms are unshackling lawyers from some of the rigidity of the traditional working model in the following ways:
– In traditional firms, lawyers needed to work from an office. Virtual offices, however enable them to service their clients from any location, be it home, a café, or while even on vacation (in case something urgent arises)
– The use of cutting-edge technology enables lawyers to maintain track of their work with different clients using their smartphones. Therefore, if some minor tasks have to be handled, they can complete them even while moving.
– Because operations are conducted via a digital medium, virtual law firms are not bound by limitations of geography. Clients from remote locations could choose to work with a law firm operating out of virtual office space and get their requirements handled as seamlessly as how they would be by traditional firms. Any physical mail could be communicated to the virtual office address of the law firm if the need so arises.
– Because of flexible working hours, lawyers would be keener to work with virtual law firms as against traditional ones. Therefore, virtual law firms can choose to recruit from the best legal talent available without the restrictions of geography.
Higher Profitability
Here’s a list of costs that a traditional law firm would usually incur:
– Lease or Rent
– Electricity
– IT Maintenance
– Salaries of non-core staff such as receptionists, peons, etc.
Together, such costs constitute a significant component of overall costs. A virtual law firm enables lawyers to substantially reduce the costs incurred on the above to a small fraction.
As per the Legal Trends Report cited earlier, law firms using enterprise technology such as electronic payment systems, CRMs, client portals, and so on enjoyed up to 34% more casework and were expected to have higher average revenues by up to $37,000.
The reasons behind this are easy to understand:
– Firms that relied on such software technology were better equipped to adapt to the Covid-19 disruption and could embrace an online (and later hybrid) working model easily
– Added client satisfaction due to uninterrupted service meant more clients registering for the services meaning higher revenues
– A considerable cutting-down of operating costs
The above points highlight how virtual offices are going to be a continuing trend in the legal realm in the coming future. With continually improving software technology and telecom connectivity, it would be possible to service clients without any compromise in experience over a virtual setting. Therefore, any legal firm should develop capabilities to operate virtually (or in a hybrid form at least) to stay competitive as we slowly emerge out of the pandemic-related disruption.
