Recently, I have had many calls and emails from other lawyers asking how we set up our IT systems.  It’s true that our current hardware, software, VOIP phones and web site enable us to practice very efficiently and also remotely.

What is also true is that it was expensive and time consuming to set up.  The costs of the hardware, software, consulting fees and time spent building our IT infrastructure were significant.  The fact that I am also married to a highly technical electrical engineer whose hobby it is to keep our systems running is also something people should know.  This is not an endeavour every solo or small firm lawyer should necessarily jump in and do.

If I was just starting out, I would seriously consider using a web-based SaaS application like Clio.  Clio can be accessed from Macs, PCs and iPhones.  It provides matter management, time tracking, billing, contact and document management, task scheduling and trust accounting. Clio is priced by monthly subscription. Pricing is US$49/month for lawyers and $25/month per support staff member. This cost includes all technical support, maintenance and upgrades.

Yes, it won’t be as customizable as our system is.  That said, the set up time is minimal and the price is pretty amazing.  In contrast, costs to build our systems approach 6 figures.  Particularly in this economic environment, I think it’s worth a serious look.

When people discuss virtual law firms, they are generally referring to two distinct concepts:

1. a law firm where there is centralized branding, administration and management, but individual lawyers work from satellite offices, often from client work sites or home; or
2. a law firm that exists online through a secure portal.

Virtual Firms: Centralized Administration and Contract Lawyers

In response to the global recession and a traditional business model under attack, many innovative law firms are emerging that employ lawyers who work largely at home, thereby saving on overhead and costing clients less in legal fees.

The traditional math used by large law firms is one-third of the revenue goes to salaries, one-third goes to overhead and one-third goes to profits. High associate salaries and the cost of prestigious offices have put pressure on billing rates, which often reach as high as $800 an hour.  Clients are increasingly looking for rate and fee reductions, and many expect that mindset will continue into the economic recovery and beyond.

To reduce costs, law firms are cutting or freezing compensation, cancelling summer programs and laying off associates.  Litigation departments are outsourcing document review and production, work that was formerly assigned to junior associates.  In transactional practices, large numbers of associates have been let go as it is increasingly uneconomic to retain unproductive staff for when the economy rebounds.

In addition to the business pressures on law firm management, large numbers of lawyers are choosing to leave the traditional law firm model.  A February 2007 cover story of California Lawyer magazine entitled, “We’re Outta Here: Why Women are Leaving Big Firms”  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.”

Firms like Virtual Law Partners, Axiom Global Inc. and Keystone Law, have seized on a business opportunity.  For example, Virtual Law Partners is a virtual law firm consisting of experienced lawyers, most who have left big firms. According to its website, “We work primarily with in-house legal departments of large and mid-sized companies to provide general corporate, licensing, contract, IP protection, securities regulation, financing, real estate, employment, merger and acquisition and other legal services.”

The firm currently has over 40 lawyers, all of which are “partners” and work from home.  Some of the benefits for clients include lower billing rates and more experienced lawyers.  Client work is performed by senior lawyers and work typically assigned to junior associates is given to highly trained paralegals. The firm highlights that they don’t have an “up or out” promotional system, which enables lawyers to stay with the law firm, and their clients by extension, for a longer time.

The VLP website further notes that “our state-of-the-art technology platform allows us to operate virtually, eliminating expensive office space and minimizing personnel as well as other overhead expenses. We pass along the savings to our clients. VLP attorneys, with education and experience comparable or superior to attorneys at other top tier firms, practice law at more prudent rates. ”

Our firm Heritage Law is an example of a virtual law firm.  Heritage Law is currently five lawyers and six support staff, practices in the areas of wills and estates, family law and mediation and has offices in West Vancouver and Vancouver, BC.

Heritage Law is paperless and utilizes practice management software to centrally manage billing, time tracking, matter information, contacts, appointments, documents and document assembly.  All staff log into one remote, secure server over the Internet which is a repository for all firm data and software applications.  We have a VOIP phone system which allows eleven staff in different locations to use the same phone line and system.  We have a remote answering service which answers client calls during the business day if a staff member is out of the office and routes the message to the appropriate person to deal with.  All staff have a computer, high speed Internet, a VOIP phone and a scanner at their home offices.   The firm retains traditional offices for meeting with clients.

Other than the principal of the firm Nicole Garton-Jones, all lawyers and staff are on contract.  The lawyers earn a percentage of billed time and flat fees.  Paralegals are paid hourly by the firm and there are some administrative staff on salary. The firm is at full capacity, and the lawyers and staff determine the amount of their earnings by how much they choose to work.

In terms of 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.

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.

Virtual Firms: Practicing Law Over the Internet

The impact of the recession has not just been difficult for big law.  Many smaller firms and solos have felt enormous pressure as spending on consumer legal services has shrunk significantly.  In an effort to reduce costs, enhance flexibility and offer reduced fees, many smaller firms and solos have chosen to open web-based practices.

In this context, a virtual law office, also termed e-lawyering or online lawyering, is generally defined as a professional law practice that exists online through a secure portal and is accessible to the client and the lawyer anywhere the parties may access the internet.  These firms provide lawyers and clients with the ability to securely discuss matters online, download and upload documents for review and handle other business transactions in a secure digital environment.

Companies such as DirectLaw and VLO Tech have sprung up to enable solo practitioners and small law firms to service consumers and compete technologically with larger firms by using web-enabled software and also automated document assembly that can be bundled with legal advice. Clients are charged a fixed fee, rather than billed by the hour, and purchase legal services online using a credit card.

Heritage Law’s firm web site is www.bcheritagelaw.com.  In terms of e-lawyering, clients can currently fill out online questionnaires to open files and pay invoices online.  Heritage Law has signed an agreement with DirectLaw, a company based out of Florida, to assist with the launch of a companion firm site, www.heritagelawonline.com.

Heritage Law Online will be a branch of Heritage Law where simple estate planning legal services will be provided to clients, at least partly via the web and phone.  Pending regulatory approval from The Law Society of BC, clients will be able to potentially interact with the firm entirely online.  The fees will be relatively low and the intended client profile will be the approximately 50% of British Columbians who will die without a will.

For Heritage Law, the combination of a firm culture predicated on balance and flexibility with innovative technological solutions to facilitate it has enabled Heritage Law to access top talent and retain it.  In addition, other benefits of the technology have been our ability to efficiently handle a large volume of client files, provide excellent client service and generate a high quality work product.  Last but not least, the lawyers and staff of Heritage Law are happy to be part of the firm.

There are many interesting and innovative developments in the practice of law today, including virtual law firms.  These technologies and innovations offer benefits to law firm managers, lawyers and clients alike.  For many of us, these opportunities have enabled us to recapture the sense of excitement that made us enter the legal profession in the first place.

Why to Do It

Generally speaking, the benefits are:

• reduced file storage costs;
• the efficiency of having all firm information reside in once central digital repository.  Also, a firm is better positioned to take advantage of new technologies such as document automation if client information is already stored digitally;
• better risk management as client conflict checks are more comprehensive and automatic;
• the ability to work remotely, enhancing work life balance (which can be a human resources advantage);
• often enhanced client service through increased speed of delivery of legal services; and
• being paperless is green as thousands of documents are never printed out.

Issues to Be Aware Of

A firm has to be aware of potential issues of being paperless, including:

• the importance to regular and secure data back-up;
• security concerns; and
• potential staff resistance.

How to Do It

At the outset, a firm needs to be dedicated to the paperless goal and implement a well organized plan. It is important to get buy in from all staff, put firm policies in place and ensure adequate time and resources are allotted to planning, implementation and training.

Second, a firm must ensure its hardware is up to the demands of the increased amount of scanning, processing and storage.  Network servers need the ability to store up to 5 GB per lawyer per year. Having a reliable backup system and testing it often is critical.  A firm should consider installing scanners at every desk and have a central printer/scanner for larger scanning projects.

Third, a firm needs to put the required software in place. Adobe Acrobat is the standard for document exchange and is a good means for converting paper documents to legal files.  A document management software program needs to be selected, which serves as an electronic filing cabinet.  Finally, a firm may want to consider legal practice management software as well.  Practice management software allows a law firm to centrally organize client information digitally, including accounting, contact and case data.  Practice management programs often have document management capabilities built in, or you can link a third party document management program such as Worldox.  Two popular examples of practice management programs are Amicus Attorney and Time Matters.

Example in Practice

Heritage Law is an example of a  “paperless” law firm and utilizes practice management software to centrally manage billing, time tracking, matter information, contacts, appointments, documents and document assembly.  All staff log into one remote, secure server over the internet which is a repository for all firm data and software applications.  We have a VOIP phone system which allows ten staff in ten different locations to use the same phone line and system.  We have a remote answering service which answers client calls during the business day if a staff member is out of the office and routes the message to the appropriate person to deal with.  All staff have a computer, high speed internet, a VOIP phone and a scanner at their home offices.

With respect to software, we use PCLawPro for billing and time keeping.

We use Time Matters Enterprise for matter management and tracking contacts and appointments.  Time Matters has been customized for Heritage Law as follows.  There are tabs for matters in the categories of: Corporate, Litigation, Estate Admin, Estate Planning, Family Law, Mediation and by responsible lawyer so every open matter in the firm is categorized and viewable from one central location.  Each matter has an electronic client intake sheet so the user can see information including the date the file was opened, the responsible lawyer, the referral source, bring forward dates, relevant limitation dates, conflict check info, retainer letter info, any special billing info and a current status field where a short update is typed as the file progresses.

We use Worldox for document management.  No paper is kept except for original client documents.  Every document is saved or scanned into the system and saved according to client and matter.  Every document saved in Worldox is searchable by client, matter, description and text.

We use HotDocs 2008 Professional Edition for document assembly.  All our standard firm documents (memo, fax cover sheet, retainer letters, non-engagement letters, reporting letters and demand letters) are automated.  We are currently working on a project to automate our estate planning practice (wills, powers of attorney and representation agreements).  Document automation, in addition to the other programs, enables staff to generate client documents in an efficient and high quality manner.

PCLaw, Time Matters, Worldox and HotDocs are all linked together to work as a cohesive whole.

Each member of the firm shares a Microsoft Windows desktop running on a shared server in the Heritage Law IT infrastructure, and every desktop offers all of the core productivity applications previously described. Because all of the desktops reside on the same server, rather than on individually configured and field deployed desktop PCs, all that is required for a staff member to access and begin work for Heritage each day is a Windows PC and an internet connection. The Windows PC does not have to have any special applications installed on it, and might be a home PC, a borrowed PC, a laptop on the road or any other PC to which the staff member has access throughout their work day.

Each staff member has a Polycom SoundPoint IP 560 desk phone with HD Voice technology. Each phone has an ordinary 3 digit extension registered through Iristel, a Canadian internet telephony service provider. The power of the phone system is derived from the fact that the phones can be connected to any ordinary internet connection in any of the staff member’s home offices, and yet all remain reachable through simple 3 digit extensions. Calls to other phones in North America are toll free, and calls within the firm have HD voice quality. There is an automated attendant to greet callers and provides a directory for them to reach the appropriate staff member’s extension.

As the staff all wish to have flexible schedules, we employ a call answering service based in Abbotsford, BC called Re: Messaging Solutions Inc.  If a staff member does not pick up a client call directed to their local on our phone system, the call is then automatically forwarded to the answering service.  The answering service can then call the staff member directly on their cell phone, email the message to them or forward the message to another staff member, depending on the circumstances.  This allows us to be able to maintain a high level of client service while staff are out of the office during regular business hours.

Clients can fill out questionnaire forms online which are emailed to the firm prior to a file being opened.  The goal in the future is to populate this information into an answer file in our document automation program for enhanced efficiency.

Heritage Law is currently working on www.heritagelawonline.com, where clients will be able to potentially interact with the firm entirely online.

More than 20 years have passed since graduating from my paralegal program in Ontario.   After deciding to relocate to British Columbia four years later, I found myself starting at the ground up, feeling disillusioned that none of the lawyers I had interviewed with seemed to grasp what I had to offer.  But I was young, optimistic and glad to be working.   It has been a long haul finding an environment in which I am given the trust and latitude to do what I do best.   Yet I continue to be surprised that so many lawyers fail to recognize the benefits that can be gained by effectively leveraging the skills of talented paralegals and other legal support professionals.    Considering our current economic climate and cost-sensitive consumers, delegating effectively is key to achieving a competitive advantage.

In contrast to other provinces, Ontario, for example, certain tasks and functions that sensibly should be delegated to paralegals are currently prohibited in British Columbia.    This issue has been explored by the British Columbia Law Society’s Paralegal Task Force.  In 2003, the Benchers asked the Task Force to consider whether the Professional Conduct Handbook should be revised to permit an expanded role for non-lawyer employees and to frame the appropriate qualifications of those employees.   An interim report was made in 2005.  The final report to the Benchers of April 2006 (which can found on Law Society website) formulated a definition of a paralegal as “a non-lawyer employee who is competent to carry out legal work that, in the paralegal’s absence, would need to be done by the lawyer.   A lawyer must be satisfied that the paralegal is competent by determining that one or more of the paralegal’s training, work experience, and education is sufficient for the paralegal to carry out the work delegated.”   While Chapter 12 of the existing Professional Conduct Handbook does include certain principles of delegation to legal assistants (i.e., paralegals), the Task Force concludes that additional functions can properly be delegated to paralegals in the interests of the profession and the public.   If the recommendations of the Paralegal Task Force were implemented (which would require revision of the Professional Conduct Handbook), a paralegal could perform advocacy work on a client’s behalf, for example, or appear in the Small Claims Division.

Yet lawyers need not wait to get more out the human resources available to them now.    Clients will benefit from receiving cost-effective, high quality legal services.   Employees will benefit from the expectation and challenge of greater responsibility.    The ‘how’ can be gleaned from a number of publications that offer guidance, including Arthur Greene’s  Leveraging with Legal Assistants: How to Maximize Team Performance, Improve Quality, and Boost Your Bottom Line, one of several excellent ABA resources on this topic.