LEAVING AMLAW – Understanding Virtual Law Firms and Why Partners Make the Move
Read Sterlington CEO and Founder Chris Harrison’s article featured in the Winter/Spring 2021 National Association of Legal Search Consultants (NALSC) newsletter, “Leaving AmLaw: Understanding Virtual Law Firms and Why Partners Make the Move.”
Almost 10 years ago, I was debating with the executive committee chairman of my AmLaw 20 firm, where I was co-head of an M&A group, about modernizing to create flexible work structures. I told him that he was “trying to run the firm from the 1960s.” Despite my directness, I’m afraid the message was not understood. So I got a toy music box shaped like an old typewriter that played the song “Yesterday,” and displayed it in my office. Still, that device could not get the message through. Don’t get me wrong, my law firm was as good as it gets in its legal practice; it was the infrastructure supporting those talented lawyers that I was talking about.
I left the firm for unrelated reasons to take a job as the Chief Investment Officer of a multibillion-dollar family office client that was making its money in technology and AI. Since then, I have focused on how best to create the future of modern legal practice, using my experience as a professor teaching negotiating M&A deals at NYU Law and legal technology at Fordham Law, and then founding a law firm focused on practicing law through a distributed and diverse team of integrated attorneys.
I see the future of law as focused on excellence through efficiency, quality, and diversity. Modern “virtual law firms” are at the forefront to achieve this by investing in firm infrastructure, utilizing technology, and supporting a flexible work environment, which lays the foundations for an enhanced lifestyle to meet the diverse needs of a modern inclusive team. Partners can take home substantially more income by leaving traditional, institutionalized law firms and joining these new types of practices.
So, who is a good candidate for a virtual law firm?
A great candidate for a virtual law firm is any partner who:
- Wants to take home a larger share of their own revenue. Virtual law firms share most top-line revenue with their partners. In many cases, a lateral partner can take home 25-75% more than at their current firm.
- Has a smaller or larger book of business than a traditional law firm desires. Virtual law firms are more flexible.
- Needs professional marketing and business development support to grow their practice. Virtual law firms invest in services to support their partners, who they view as clients, not servants.
- Is not a friend of mandatory office “face time” and who desires a flexible lifestyle.
What are the real benefits?
Economics. More revenue in the partner’s pocket.
Flexible hours and lifestyle. Any partner wishing to work less than full time or avoid traditional office hours is welcomed in a virtual law firm, while they are treated like second-class participants in a traditional law firm. That is not to say remote lawyers do not work as hard as any others. Instead, they work more efficiently and productively in a distributed work environment.
Talent retention. Flexible accommodations keep top talent from leaving the industry or their careers.
All of this leads naturally to greater well-being among partners, a better sense of community with the team, and greater diversity and inclusion.
How can recruiters identify the right candidates?
Given the enhanced economics and lifestyle, it is an option that every lateral partner should consider. Virtual law firms are more attractive than ever for lateral partner candidates.
How is a virtual law firm different from just working remotely?
Virtual law firms work together more closely than lawyers across two offices of a major law firm, surpassing the constraints of location and time zones. Once entirely untethered to a physical location, partners can move anywhere they like, for family reasons or to further enhance their economics by taking advantage of geographic arbitrage.
What do virtual law firms do for their partners?
Virtual law firms are in the business of serving their partners. Providing the best possible services to the partners is the revenue driver for the firm, not a cost center, leading virtual law firms to invest heavily in operations to attract lateral partners to the platform.
In particular, virtual law firms go out of their way to provide extensive business development support for their partners, as well as automation and information technology to make partners more productive.
Is the partnership economic model the same?
Virtual law firms have more sophisticated – and lucrative – economic structures for their partners than traditional law firms.
Most importantly, in a virtual law firm, producing partners take home a share of their own revenue, rather than being at risk for variable firm profits. In a traditional law firm, partners share profits with partners they do not know, which are reduced by overhead expenses they do not control.
In a virtual firm, there are typically two equity classes. The first class grants the producing partners a share of their own revenue. The second class manages the firm’s operations and is responsible for its overhead. It acts as the service provider to the partners.
How to work with a virtual law firm?
Virtual law firms are optimized to work with recruiters. Not only are the fees higher (because partners earn more), but they also have professional recruiting functions. Virtual law firms are focused on expansion and making it work.
At Sterlington, we actively seek team members with different backgrounds. I wanted to move away from my own early experience of a firm dominated by a group of men who were educated at the same schools and had the same hobbies. By being an advocate and encouraging a team with different experiences, I knew we would grow to be a stronger team with richer experience, ready to navigate the future and the unexpected.
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