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  • Writer's pictureFrederick L Shelton

Virtual Law Firms Part 2: How COVID Proved NewLaw Was Right

Reprinted from the “Shelton Shares” Column in Attorney at Law Magazine

Prior to COVID, the practice of high-end business law was evolving. After over a century of operating on an archaic and inefficient business model, AmLaws discovered their clients were beginning to leave them. Clients ranging from startups to the top of the Fortune 500 started actively seeking out more value-centric providers and other ways to reduce exorbitant legal costs.

In addition to alternative fee arrangements and outside counsel positions, automated doc review, verdict research software and other tech and A.I. began commoditizing low-level business law. Just as importantly, it brought about the advent of something heretofore unheard of — The Virtual Law Firm.

I first wrote about these firms in the March 2019 article. Back then, AmLaw attorneys scoffed at their virtual competitors, whom they viewed as a passing novelty. The idea that such firms could compete for work involving the size, scope and complexity of an AmLaw, seemed ludicrous. This was supported by the fact that some of the better known virtual firms were simply a group of solos who happened to be on the same website. To this day, there are large virtual firms that offer no real support when it comes to marketing, collaboration and back office functions. But there are also innovators who offer real support in all of those areas and are coming after AmLaw clients.

AmLaws assumed they could continue selling brand instead of value ad infinitum. The reason for their hubris was simple — in-house counsel hired AmLaws so that if anything went wrong, they had the excuse that they’d hired the most expensive attorneys possible. However, businesspeople know price doesn’t always equate to quality or value. Executives and in-house counsel had finally realized this applied to lawyers.

For example, a Fortune 500 company recently held a three-day webinar on how to reduce the legal work that goes to AmLaws by using tech, A.I., mid-sized firms, boutiques and … virtual law firms. Their general counsel couldn’t disclose the company name but offered this insight:

“Corporate Counsel used to hire AmLaw’s for everything as a means of CYOA to protect their jobs. That’s not good enough anymore. Nowadays, The Boardroom wants a more proactive approach to reducing legal expenses. You gain more political clout by informing The Board that you have reduced legal costs by over thirty percent in perpetuity – and with the same quality of representation (most virtual firm attorneys come from AmLaw’s). That’s why we’ve started using smaller firms and virtual firms for everything except ‘bet the company’ litigation. Even that could change in the future.”

Mary Lou Ivey agrees. She works at Harris, Hardy & Johnstone, an accounting firm and has used a virtual law firm for years.

“In my ‘after school job,’ I am the current chair of the Board of Independent Trustees, of which there are three, for World Funds Trust – WFT. WFT currently has 10 funds all over the country — one of which is located in La Pas, Bolivia. I use (virtual law firm) Practus Law, who acts as general counsel for the trust and has since inception in 2010.

“Additionally, a new trust has been organized and in the process of being launched – ETF Opportunities Fund. Practus has been integrally involved in getting the fund ‘launched’ and filing the various forms required throughout the process. John Lively, and Practus as a whole, has never provided anything less than exemplary service to the Trust regardless of not being considered a ‘traditional’ law firm.”

It’s not just clients who see virtual law as the future. Premium talent sees the same in their collective crystal ball. BigLaw is enjoying the tail end of its dominance in the legal market, as lawyers who see the flaws in their business model are moving to NewLaw.

These market disruptors offer partners control over their rates and lifestyle, as well as complete transparency. Additionally, while the very top of the AmLaw food chain seems to be defending themselves from race and gender discrimination on a regular basis, virtual firms are a true meritocracy. No matter what an attorney’s demographic, they get paid exactly the same as their partners, i.e., a formula based compensation structure that pays 70% or even 80% on their book of business.

Marlene Laro is the COO of Potomac Law. Her virtual law firm has seen a definite increase in interest from AmLaw partners since 2020.

“We’ve been growing steadily since we were founded – over 110 lawyers in nine years – and COVID launched a new wave of interest from BigLaw partners. Now that everyone has been forced to work remotely, many have concluded that they (AmLaw partners) are not interested in returning to the traditional law firm model. All the reasons to consider NewLaw that existed pre-COVID, including greater autonomy, less bureaucracy, and transparent compensation, are especially compelling now.

The economic impact of the global pandemic has refocused clients’ attention on cost-effective and high value legal services. With its billing rate flexibility and low overhead, NewLaw is well positioned for growth on the client development side during the COVID era.”

The benefits of working at a virtual law firm are especially appealing to those who seek indisputable equality, regardless of race or gender. Knicole Emanuel is a former AmLaw healthcare attorney who joined the virtual law firm that Ms. Ivey referenced, Practus Law.

“Prior to joining Practus Law, I worked at an AmLaw for nearly two decades. While I tried to stay focused on providing the greatest value to my clients, it was no secret that many partners at AmLaw firms were more focused on how to extract that maximum number of billable hours, rather than address matters with efficiency and value in mind. This is unavoidable when you have Park Avenue real estate, armies of over-priced associates and the overhead that comes with firms that exceed 500 attorneys.

“Additionally, everything was about politics and the ‘Good Ol’ Boys’ club. I brought in three times as much business annually, as the male partner in the office next to me but guess who was paid more? The day I tendered my notice, three other, female partners with large books of business resigned from the very same firm!

“At Practus, I can talk to a client for an hour and if I decide not to charge them, no one will say a word. Realization Rates and hours billed, are deprioritized in favor of value and creating a better client experience. Everything is transparent and I am paid more than double the income I made at the AmLaw. I have more control over my practice, my lifestyle, and time with my family. I’ve never been happier in my career!”

While all of this may sound like the panacea to all legal woes, it’s not for everybody. Additionally, being virtual in and of itself, does not make a firm innovative or even fiscally sound. Dozens of such firms have been started and failed within the first year or two.

Additionally, there are the intangibles. Paul Beattie of Gravis Law graduated from a top five law school, worked at an AmLaw for years and then went to a virtual firm, which he eventually left.

“After spending half my career in Big Law, I have worked at virtual or semi-virtual firms for almost a decade. The basic concept is good: firms can provide good legal work and client service without investing as much on expensive offices and related costs. Experienced lawyers have the freedom to work from home and save the time and expense of the daily commute. If a lawyer has a solid book of business, he or she can often pocket a greater share of the profits than in traditional firms.

“But virtual firms are not for everyone. If you don’t have clients who will port with you, these firms are probably not going to work for you. Additionally, although some have annual retreats and virtual get-togethers, the daily experience does not include talks around the ‘water-cooler’ or in person brain storming sessions. For lawyers with little established business or very social personalities, virtual law may not be the right fit.

“Finally, not all virtual firms are the same. Some are more of a hybrid – offering some aspects of brick-and-mortar law. Some also operate as mere loose associations of lawyers, skimming percentages while contributing very little out of their own pockets to their lawyers’ practices. As always, it is important to find the right fit for you.”

BigLaw is going through a form of Corporate Darwinism. It is not the firms whose only claim to fame is being virtual, that will become the new, dominant species. It is the nimble market adaptors that offer a remote platform, and yet truly support their partners, who will continue to grow and capture market share.

Traditional brick-and-mortar firms have already started offering remote platforms to their attorneys but most still keep over 60% or more for overhead. So while they tout themselves as being innovative, it won’t be long before partners operating under these models, will realize they can double their income by moving to the firms with the NewLaw model.

Whether the pandemic continues for another month or more than a year, one thing is certain: virtual law firms and remote lawyering are here to stay. COVID has accelerated the evolution that was already occurring, and the near future will determine the survival of the fittest, legal models.

Frederick Shelton is the CEO of Shelton & Steele and provides Rainmaking & Legal-Specific AI Consulting to lawyers and law firms. He can be reached at


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