How Virtual Law Firms Attract and Keep Great Legal Talent

The Demographic Landscape of Law

The recent Law Society of BC Report on the Retention of Women in Law Task Force notes as follows:
• Women have been entering the legal profession in BC in numbers equal to or greater than men for more than a decade, yet represent only about 34% of all practicing lawyers in the province and only about 29% of lawyers in full-time private practice; and
• the legal profession in BC is aging and there will be a net reduction in the number of practicing lawyers – a looming shortage – as older lawyers retire without a corresponding increase in younger lawyers joining the profession.

The February 2007 cover story of California Lawyer magazine was entitled “We’re Outta Here: Why Women are Leaving Big Firms.” The article noted the serious issue of high attrition rates from the legal profession:

“The past few years have witnessed the highest levels of associate attrition ever documented, with an average annual attrition rate for both sexes of 19 percent, as recently reported by the NALP Foundation for Law Career Research and Education. Within five years of entering a firm, more than three-quarters of associates leave. Female associates were nearly twice as likely as males to depart to pursue a better work/life balance.”

The article’s key quote was:

“If law firms want to get the best and brightest young women to join them and stay, they will likely need to change radically and adopt different definitions of sacrifice and partnership.”

On December 20, 2009, the Economist ran an article entitled “Female Power”, headlining that “across the rich world more women are working than ever before. Coping with this change will be one of the great challenges of the coming decades.” The article notes that despite almost equal representation in the workforce, women still represent lower percentages of professional firm partnerships, upper management and CEO positions. Interestingly, the author states that:

“the biggest reason why women remain frustrated is more profound: many women are forced to choose between motherhood and careers. Childless women in corporate America earn almost as much as men. Mothers with partners earn less and single mothers much less. The cost of motherhood is particularly steep for fast-track women. Traditionally “female” jobs such as teaching mix well with motherhood because wages do not rise much with experience and hours are relatively light. But at successful firms wages rise steeply and schedules are demanding. Future bosses are expected to have worked in several departments and countries. Professional-services firms have an up-or-out system which rewards the most dedicated with lucrative partnerships. The reason for the income gap may thus be the opposite of prejudice. It is that women are judged by exactly the same standards as men.”

Women, 50% or more of law school graduates, are leaving the profession in droves, just as law firms are beginning to face a shortage of qualified lawyers to serve their clients with the retirement of baby boomers. This is not unique to law: a combination of an ageing workforce and a more skill-dependent economy means that all industries will have to make better use of their female employees in the “war for talent”.

It’s not just women who are seeking greater work life balance from employers to enable them to juggle the demands of child rearing with a professional career. Millenials, even in this recession, still value work-life balance above all else when listing top characteristics of an ideal employer. Men increasingly are taking a more significant role in raising children and seek to pursue other interests concurrent with paid employment.

The Personal Wellness Landscape of Law (Or Lack Thereof)

The current economic recession has had a significant adverse impact on clients, including the financial services, real estate, high tech sectors, that are the foundation of revenue for many law firms. Law firms big and small have responded through aggressive cost reductions, including lowering associate salaries and laying off significant numbers of staff. There have been approximately 14,000 US lawyer and legal staff jobs lost since the beginning of 2008, and US law firms shed approximately 4600 lawyers in 2009 alone.

In addition to the current economic realities, longer term financial pressures are at play. The cost to litigate an issue in court often exceeds the amount in dispute. Legal services are increasingly only available to individuals who are very low income through legal aid or who are very high income and can afford high hourly rates. Small businesses increasingly find that legal services are beyond their budgets. General counsels of large companies and financial institutions are facing significant internal demands to rein in legal costs. General counsels are responding with competitive bidding processes, demanding flat fees, unbundling complex tasks such as litigation and outsourcing lower level tasks such as document review to overseas providers.

On top of financial pressures, law firms are grappling with technological changes and new competitors that are altering the business landscape. The democratization of information and access to forms through the internet has altered the playing field between lawyers and clients. Non-lawyer competitors are taking an increasing share of the traditional marketplace, particularly in the more commoditized areas of law such as wills, simple business agreements, divorce applications and real estate transactions.

Increasingly competitive pressures and a rapidly changing profession are resulting in all time high rates of dissatisfaction among lawyers. Research shows law to be the occupation most susceptible to clinical depression. (Johns Hopkins University; 1990) Legal professionals are now three times more likely to be diagnosed with depression than the general population.

Substance abuse among lawyers is rampant. While 10% of the general adult population is alcohol-dependant, among lawyers practicing from 2-20 years, the number jumps to 18%. For those practicing more than 20 years the number is 25%. Many of these individuals are both depressed and chemically dependant.

With economic, technological and demographic forces putting increasing pressure on the traditional law firm business model and lawyers themselves, virtual law firms provide one solution of how lawyers cannot only survive but thrive now and in the future.

How a Virtual Law Firm Structure Enables Heritage Law to Attract and Retain Lawyer Talent

In response to the challenges facing the profession as noted above, we have built a firm culture predicated on balance and flexibility with applied technological solutions to facilitate it, which has enabled Heritage Law to access top talent and retain it.

Well known examples of virtual firms such as Virtual Law Partners, FSB Legal Counsel and Rimon Law Group all have similar business models. They recruit senior lawyers with an established corporate client base, cut their large law firm hourly rates by 25-50% and permit the lawyers to keep most of what they bill. The lawyers work remotely and access a centralized, cloud-based infrastructure with centralized branding, administration and management. The lawyers collaborate through in person meetings if possible and via technology such as VoIP phones, video conferencing and email as required. A technology enabled association of autonomous lawyers with similar goals, these firms essentially operate financially more as collectives than traditional law firms.

Our business model differs from Virtual Law Partners et al as our clients are primarily individuals, and we practice in the areas of wills and estates and family law. We do have a traditional office, shared with another law firm, with standard reception, a boardroom and administrative support on site. Lawyers can work from the bricks and mortar office or from their home offices, at their option. Lawyers and staff are contractors and earn a percentage of billed time and flat fees. Our lawyers were mid level associates who left larger firms looking for greater work-life balance. After meeting minimum billable targets, the lawyers and staff determine the amount of their earnings by how much they choose to work.

How it Works – Technology

I have commented on our technology set up here.

How it Works – Schedule

Each of the staff set general guidelines of the days and hours they are available to work so the firm can plan around accepting and allocating new client files. The overriding concept is that everyone is a professional whose goal it is to provide excellent client service. Provided that client work is completed in a timely and efficient manner and sufficient notice is given of absences and time off, lawyers and staff are welcome to structure their individual schedules as they see fit. Lawyers bear final responsibility for client files and supervise staff to ensure that clients are served well. We schedule regular firm meetings and social events to maintain collegiality and firm culture.

The autonomy and flexibility of the work environment suits our staff, who have a self directed and pro-active work style. The flexible work environment has enabled Heritage Law to have access to and hire highly skilled staff, to the benefit of both the firm and clients alike.

Conclusion

Law is an honoured, ancient profession, but it is also a business facing increasingly competitive pressures. Virtual law firms are one solution towards attracting, retaining and supporting lawyers in the profession.