Virtual Firms, Real Ambitions | Asian Legal Business

Are virtual law firms the next big thing? Since the COVID-19 pandemic and rise of flexible working, discussions around what the law firm of the future looks like are intensifying, and distributed firms are being offered as a compelling model. In this roundtable, leaders of such firms offer a compelling argument for office-less practices.

ALB: How does the running of a virtual law firm differ from that of a traditional law firm? As managing partner, what does the average day look like for you?

MICHAEL PIERSON, managing partner, global corporate, FisherBroyles: From a client’s perspective, our law ﬁrm operates quite similarly to other peer ﬁrms of our size: We are built to enable our partners to focus only on delivering superior legal services. During the COVID-19 pandemic, all law ﬁrms were forced to adopt a remote model, which our ﬁrm pioneered 20 years ago. I suspect that the biggest difference is in our constitution. We were speciﬁcally purpose-built as a decentralised, semi-autonomous technology-enabled ﬁrm that enables us to manage a distributed partnership from anywhere. Our formula-based compensation model allows us to manage a large, Am Law 200 ﬁrm more efficiently and effectively than others. With very lean management and a focus on applying bright-line rules, the lack of discretion in our compensation model means that our ﬁrm seeks to treat our lawyers fairly and without bias. Like most senior leaders of large organisations, my day can be spent setting strategy and communicating messaging, reviewing ﬁnancials, executing growth initiatives, interacting with the executive committee, and speaking with my practice group leaders. However, it can also involve meeting new partner candidates, speaking with fellow partners, running firmwide partnership meetings, and practicing securities law for our many clients. Most of all, my role involves making decisions that further the growth of the partnership, challenging and empowering our people to make great decisions, and problem-solving by allocating and deploying our talent. Above all, I strive to lead by example and to strike a positive tone.

DAVID REIDY, managing partner, Scale: We think of ourselves as a modern ﬁrm operating on a distributed platform. Because of the ﬂexibility of our model, we can compete for the best talent in the country–and that’s the managing partner’s ﬁrst job, to ﬁnd the best people.

“The difference comes in how you build and maintain the culture within a distributed environment and, for us, the culture itself which is deliberately distinct from that of a traditional firm. A big part of that is bringing in attorneys who want to do things in a new and more efficient way, as well as having the technology in place to allow partners to work seamlessly from anywhere.”

— Grant Walsh, Culhane Meadows

GRANT WALSH, co-founder and co-managing partner, Culhane Meadows: Running a remote-ofﬁce law ﬁrm has many of the same duties and responsibilities as a traditional law ﬁrm—we’re managing both our own practices, making sure that the ﬁrm is functioning well and that our partners are being supported, and that our clients are happy.

The difference comes in how you build and maintain the culture within a distributed environment and, for us, the culture itself which is deliberately distinct from that of a traditional ﬁrm. A big part of that is bringing in attorneys who want to do things in a new and more efﬁcient way, as well as having the technology in place to allow partners to work seamlessly with colleagues and clients from anywhere.

As for my day-to-day work, we divide up much of the operational and management duties between the ﬁve members of our leadership team. My work focuses on marketing, relationships, and recruitment, which means that I’m meeting with partners and prospective partners on a regular basis—and supporting my colleagues in their client development initiatives, too.

That means that I do a lot of travelling, but because I work from my home ofﬁce most of the time, I also get to be a big part of my kids’ lives on a regular basis. So, I may be across the country meeting a prospect early in the week, but be home to take my youngest to school and attend a soccer game with one of my older kids later in week. Having a work-life balance is really all about being able to take care of the most important thing at that moment, whether it’s spending extra time with one of my kids after they had a rough day at school, or saying good night early so that I can go tackle some urgent work e-mails once the kids are in bed. I’ve found that having the ability to integrate my work and home life gives me the ability to be better at both.

ALB: In what ways do your priorities differ from leaders of traditional law firms?

REIDY: We do not struggle with the high turnover and retention issues facing traditional ﬁrms. This allows us to focus on strategic growth, and on building teams to strengthen client relationships.

WALSH: Our entire leadership team is much more focused on the needs of our clients and our partners. We don’t have the overhead of a traditional ﬁrm and that ﬁnancial freedom means that we’re not pressuring our partners to bill a ton of hours to meet quotas, or raising our client rates every year. In fact, we operate more like a modern business, with a technology-forward approach and an emphasis on efﬁciency and value.

Another key difference is that we prioritise collaboration not competition. Many traditional ﬁrms have a culture that pits attorneys against each other for client origination or to increase proﬁts for the firm. We think that working together is a superior way to serve our clients, and it’s a much nicer atmosphere to work in.

PIERSON: Our ﬁrm does not have billable quotas, so we are free to focus on excellence and client service, responding to partner feedback, improving our ﬁrm experience, and continuing to build the next-generation law ﬁrm.

ALB: What are some common misconceptions about virtual law firms among clients as well as lawyers in private practice?

REIDY: The secret’s out about distributed ﬁrms. In the past, some clients may have wondered if the bench strength was there, in terms of stafﬁng deals and litigation, but clients have embraced our model because of the quality of our team and the value that we bring as former GCs and business owners ourselves. On the talent side, lawyers who are accustomed to handing over 60 to 70 percent of their value to a traditional law ﬁrm have realised they can build a more rewarding practice, with better economics, at Scale.

“We are often asked whether we are several hundred mini practices under one common umbrella. Nothing could be further from reality.
Our lawyers often practice in teams, and our guidance is consensus-driven by current law and up-to-date market norms. I often say that under the hood, we look and feel a lot like the large, global law firms where many of us practiced previously.”

— Michael Pierson, FisherBroyles

PIERSON: We are often asked whether we are several hundred mini practices under one common umbrella. Nothing could be further from reality. Our lawyers often practice in teams, and our guidance is consensus-driven by current law and up-to-date market norms. I often say that under the hood, we look and feel a lot like the large, global law ﬁrms where many of us practiced previously.

WALSH: The word “virtual” implies something that’s not real, but Culhane Meadows is a very real national law ﬁrm with about 70 real lawyers who serve over 700 real clients. That’s why we prefer more accurate terminology like remote, cloud-based, distributed, alternative model, or non-traditional to describe our ﬁrm. At the very beginning of work-from-home in spring 2020, there were a lot of articles about people working in their pajamas, suggesting a less-than-professional standard. However, Culhane Meadows was formed and launched from Day One to be a distributed law ﬁrm that reduces overhead, provides clients with an exceptional value proposition, and affords greater work-life balance for our attorneys. Since then, we’ve found that our clients are similarly way ahead of traditional law ﬁrms in recognising the beneﬁts of leveraging remote-work technology. Many of our clients have also adopted a digital workplace—even before COVID—and prefer the efﬁciency and ﬂexibility that it offers. So, in our experience, there hasn’t been a lot of resistance to the concept of remote work from clients.

Not having an ofﬁce to go to can be a harder concept for attorneys to grasp, especially if they’ve not been working with the technological tools that we’ve embraced.

We do a lot of one-on-one work with our new partners during onboarding to help them quickly feel comfortable working remotely from their home ofﬁce. Those tools also allow them to collaborate with other partners as easily (or more!) than if they were working down the hall from each other in a traditional brick-and-mortar ﬁrm. Partners also see very early on that the “water-cooler” aspects of working in an ofﬁce don’t disappear in a remote workplace. We have brown-bag lunches over video conference, movie nights and our partners form great relationships even though they might work across the country from their colleagues. Plus, we hold monthly in-person meetings, lunches and happy hours with our partners in each of our 11 business markets, and a four-day partner retreat in a fun destination once per year.

ALB: How is the experience different from a client’s perspective, and what kind of feedback do you receive from clients?

PIERSON: Since we have eliminated a number of overhead expenses — including real estate — our clients like that our work is partner-led at rates that are often two-thirds of our competitors. Many clients do not realise that we maintain zero physical ofﬁces.

WALSH: For most of our clients, the experience isn’t any different as we work with clients in almost all of the same ways that traditional ﬁrms do. For example, if the clients want to meet, instead of hosting them we might travel to their ofﬁces, or rent out a conference room for the day. As you can imagine, during the pandemic these small differences have been pretty insigniﬁcant.

Clients are really focused on outcomes, and we’ve learned that as long as we’re getting the work done, they don’t care about how or when that work happens. And they appreciate the efﬁciency and value that our non-traditional ﬁrm delivers.

“The BigLaw salary wars provide a headline, but the real story there is turnover…Clients understand that this does not serve their interests. They see the lack of training and experience that results from the churn, and they definitely see the rates firms have to charge to play the game. Our clients are glad Scale and other distributed firms can offer an alternative.”

— David Reidy, Scale

REIDY: Clients are rooting for us. The BigLaw salary wars provide a headline, but the real story there is turnover. The Georgetown/Reuters 2022 Report on the State of the Legal Market found that higher salaries are not increasing retention, with some ﬁrms losing a quarter of their associates just last year. Clients understand that this does not serve their interests. They see the lack of training and experience that results from the churn, and they see the rates ﬁrms have to charge to play the game. Our clients are glad Scale and other distributed ﬁrms can offer an alternative, and they know that most of our attorneys have worked in-house or served in a GC role. They know we get it.

ALB: Who is a good fit for a virtual law firm, and what kind of attributes or experience should they possess?

REIDY: We look for character, quality and experience. We receive hundreds of applications every month, and so we focus on entrepreneurial and collaborative people who are ready to reimagine the practice of law and understand that clients deserve better. Our top-tier brand allows us to focus on attorneys with the best training and credentials. And ﬁnally, we look for experience that’s relevant to our clients – whether at a prior ﬁrm, as a tech company GC, former prosecutor, or startup founder. It’s a big tent, but the common thread is experience that helps us relate to the challenges and opportunities facing our clients.

WALSH: Our partners are experienced attorneys with at least eight years of practice in-house at a large corporation or at a BigLaw firm. They know their clients, their practice area and the market they work within, and have established a book of business.

Beyond that, what we look for is someone who is a good ﬁt with our collegial culture and is looking for a change in how, when and where they work. We encourage collaboration and want partners who are eager to work with their colleagues and enjoy the beneﬁts of a supportive and diverse environment.

PIERSON: Not all ﬁrms with our model are the same so I can only speak to our standards. We have very speciﬁc hiring criteria, and all our partners are extraordinarily well-trained. Most join us with more than 10 years of experience gained in an Am Law 100 ﬁrm, large corporate department, or government agency. Most of our partners have a healthy dose of entrepreneurial spirit, and all are driven to practice at the highest level of the profession. Elite lawyers with books of business perform exceptionally well at our ﬁrm.

ALB: In terms of hiring, what do you do to attract the talent you want? Do you face challenges in terms of the novel nature of your operations?

REIDY: We attract talent by treating our lawyers as clients. We have built a ﬁrm that allows each attorney to pursue high-quality work with great clients, on a ﬂexible and tech-enabled platform. As a result, we are inundated with interest in the ﬁrm, and we can recruit in a way that serves our strategic plan, tech brand, and market position.

WALSH: It was harder before COVID. The pandemic has shown attorneys that they can still work at the top level without having to be in the ofﬁce, and many people found that they could also have a better work/life balance working remotely. So, attorneys reluctant to move to a distributed ﬁrm previously now have proof of concept that it will work for them.

Attracting talent for us is really about getting the word out about who we are and how we operate. Many of our attorneys come to us because they’ve worked with one of our partners and have seen the beneﬁts of our business model ﬁrst-hand.

We also work with recruiters, especially in an effort to reach women and other minority attorneys. Although recruitment at traditional firms is improving for diverse attorneys at the beginning of their careers, those numbers decrease steadily as attorneys progress. That means that there are fewer women and minority attorneys who have the experience we look for. Working with recruiters and being active members of organisations like the National Association of Minority and Women-owned Law Firms (NAMWOLF) and Women-Owned Law (WOL) help us to connect with a more diverse pool of experienced attorneys who might appreciate the unique appeal of Culhane Meadows, where every attorney is treated on a completely level playing ﬁeld, regardless of race, gender, orientation, or background.

PIERSON: Unbound by geography, we seek to attract the brightest legal minds wherever they happen to live. Due to our unparalleled compensation model, we are able to recruit partners with signiﬁcant books of business who often earn much more at our ﬁrm. In addition to rainmakers, we are especially attractive for working parents, lawyers of diverse backgrounds, and anyone interested in working at a true meritocratic organisation.

ALB: Looking ahead to the future, how do you see the legal industry evolving, and what role will virtual firms play in that?

WALSH: In the U.S. we’re experiencing “The Great Resignation” as the tumult of the pandemic and other world events have changed how people feel about work. For attorneys, the pandemic has shown that they can practice sophisticated law without spending 70 hours a week at the ofﬁce. I don’t think that attorneys are willing to go back to what life was like pre-pandemic, and this is born out, especially in how the younger generations are approaching their legal careers. We’re seeing many ﬁrms offer more ﬂexibility or a hybrid model of work to keep and attract attorneys. Of course, Culhane Meadows has offered that kind of ﬂexibility ever since we began operations almost a decade ago. Hopefully, these changes in how they work will inspire change in the culture of the legal workplace, too. Research shows that a healthier, more diverse workplace leads to better outcomes for clients, attorneys and the ﬁrm. Yet too few traditional ﬁrms have been willing to make the systemic changes needed—like offering permanent remote work options—to create real change. It can be done, and cloud-based ﬁrms like Culhane Meadows will continue to show the way.

PIERSON: I believe the term “virtual” will no longer be necessary (indeed, we refer to our ﬁrm as a distributed law ﬁrm). Lawyers should be free to serve clients from anywhere, utilise technology to interact with their colleagues and clients, and choose in-person meetings when they deem it essential. This is the beginning of a golden era for law ﬁrms able to effectively manage a distributed workforce using technology, and I believe our ﬁrm is leading the way.

REIDY: We believe there will be an entire sector of distributed firms that offer better economics and ﬂexibility for attorneys, and a better value proposition for clients. Big ﬁrms are not going away, but there are thousands of lawyers - and countless clients - excited to see the legal profession ﬁnally accept modernisation. We are proud to be at the forefront of that change. There’s no question in my mind that Scale will be a power-house ﬁrm.

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