Virtual Law Firm

Virtual Law Partners

by Susan Davis

Craig Johnson’s death in October 2009 sent shock waves through the California legal community. Not only did his sudden and untimely passing end a brilliant legal career, but it also raised a telling question: Can a “virtual” law firm survive the loss of a key partner?.

The 62-year-old attorney, entrepreneur, and business leader was best known for having left a top slot at Wilson Sonsini Goodrich & Rosati in 1993 to start Venture Law Group, an innovative Silicon Valley firm that shot to success by helping fledgling companies become dot-com giants (think Yahoo). But in his last incarnation, the Northern California lawyer co-founded Virtual Law Partners (VLP) in 2008, along with RoseAnn Rotandaro, whom he later married, and Andrea Chavez.

VLP quickly became the best known of the dozen or so midsize virtual firms that have cropped up in recent yearsRiding Virtual Bumpssuch as Axiom, Phillips & Reiter, FSB FisherBroyle, and Rimon Law Group. In all of these firms attorneys typically work remotely, which cuts real estate overhead – and therefore clients’ bills. Many, including VLP, hire only mid-career lawyers. And some let attorneys set their own hours and rates, as well as keep a higher proportion of what they bill than they could in a traditional firm.

By the time Johnson died in 2009, his virtual firm had grown to 41 lawyers – and he had been Rotandaro’s husband for six weeks. Rotandaro took bereavement leave, and by the end of the year Chavez had left to set up her own office – a nonvirtual firm in San Francisco called Zenobia Law.

VLP has remained about the same size, but the sudden loss of two of its founding members raised concerns about both the immediate and long-term survival of the firm – and, by extension, virtual firms in general.

To be sure, there are drawbacks to the virtual environment. Cases that require “a significant scale of people or massive document handling are hard for virtual law firms,” says Joe Altonji, a Chicago?based member of Hildebrandt’s Law Firm Strategy and Structure Practice Group. And since a number of the virtual law firms were launched in tough economic times, it’s possible they could lose their luster as the recession recedes. Also, if a lot more firms were to suddenly stop hiring associates, the industry would need a new way to train novice attorneys.

Still, the case for going virtual can be persuasive. “The recession has only accelerated trends that were already happening in the marketplace – including market segmentation,” says Peter Zeughauser of Zeughauser Group, a legal consultancy in Newport Beach. “Clients are becoming more sophisticated about what they’re willing to pay for which kinds of services. That’s not going to go away.”

Indeed, virtual firms may be uniquely resilient. Part of what is helping VLP weather this storm, says VLP lawyer David Goldenberg, is that “each attorney has his or her own client base. The primary attorney on any one case was never Craig Johnson. That meant we were able to nimbly manage a major crisis and not only survive, but thrive.” Since Johnson’s death only one major client has left.

“The real question is, What’s the role of virtual law firms?” says Altonji. “Over the next ten years, we’ll see a role for a wide variety of different business models in the legal field.”

As Goldenberg puts it, “We’ve never positioned ourselves as being the answer for all law firms. But we’re one answer.”