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Ugo ColellaEvaluating Virtual, Pay-To-Play Law Firms that Market Working From Home

April 27, 2020

Because layoff and compensation cuts have just begun in Big Law, law firms that identify themselves as “non-brick-and-mortar” or “virtual” and tout working from home smell blood in the water. On an almost daily basis, these firms are bombarding the online world with big recruiting pushes in an attempt to take advantage of the new disruption in the legal market caused by COVID-19.

Indeed, LinkedIn, social media outlets, and recruiting platforms have been saturated with posts and advertising from these law firms (and their incentivized recruiters) that offer Big Law partners incentives to jump ship to make more money. They stress the benefits of not having a “brick-and-mortar” presence, working from home, keeping a healthy portion of your collections, and having more of a work-life balance. And, curiously, some of these firms are going even further to try to distinguish themselves from Big Law, claiming that they are not laying off lawyers or others in light of COVID-19.

Now, a partner with a healthy book of business may find such a platform attractive. After all, no Big Law partner keeps a big chunk of her/his collections.

Many of these “virtual” firms, however, are law firms in name only. In reality, they operate as pay-to-play platforms that require a lawyer to give up a low percentage of her/his collections in exchange for back-office support and malpractice insurance. At the same time, they require the lawyer to carry all the risk associated with essentially being a solo practitioner without the benefit of having a voice in management-type decisions.

Leaving Big Law for a virtual, pay-to-play platform is perhaps one of the biggest steps a lawyer will take in her/his career because the financial and reputational consequences can be far-reaching and long lasting. Thus, partners looking for an alternative to Big Law should ask these pay-to-play law firms and their money-seeking recruiters some very hard questions.

In order of priority, these are the five most important questions you should ask any firm or its recruiter that offers a pay-to-play alternative to Big Law.

1.  How many lawyers have left the firm in the past 24 months and why? What are their names?

Virtual, pay-to-play law firms go to great lengths to publicize that a Big Law partner joined their ranks. So, one of the first and most important questions to ask is whether any lawyers have left the firm in the past 24 months. If the answer is yes, ask for the names of the lawyers and the reasons they left the firm. If those names are not provided, that should be a huge red flag.

An alternative way to determine who has left the firm is to perform an online search for press releases or other announcements made by the firm when new lawyers join. Once you have identified the lawyers that have departed the firm, contact those lawyers and thoroughly de-brief them. Is the lawyer bound by a post-departure confidentiality or non-disparagement agreement? That, too, would be a red flag. The bottom line is that you are likely to obtain information about the reality of the firm rather than the rosy picture that your recruiter and/or the firm are trying to paint for you.

2.  How many hours do the lawyers, on average, bill a year?

The impression that these virtual, pay-to-play law firms market to unsuspecting lawyers is that their firms are just like Big Law but without all of the bad parts (e.g., discretionary compensation, committees, fixed hourly rates, etc.). But many of these firms consist of semi-retired or unproductive partners who either could not survive Big Law or were otherwise forced to leave. That is why you need to know whether you are surrounded by partners that have robust practices or partners who have little to no work or very few clients. Do the partners at these firms remain successful and productive? Or are their careers basically over? That is a crucial question that needs to be answered.

Another rich source of information is the social media pages of the law firm and their partners. Many post photos of parties, social events, and other non-work activities. When are these pictures taken? During the work week? During the work day? As litigators, we often find the most useful (and damning) information on social media.

3.  How many hours do firm leaders bill a year?

Just as important to knowing the average billable hours of partners, you should know the average billable hours of the firm leaders. It could be that many of these alternative firms are run by lawyers who don’t practice at all or whose practices are minimal. It’s best to know at the outset whether lawyers in the firm’s administration are full-time lawyers making money on their own efforts. If they are not, it could be that such attorneys are using the small percentage of your collections for “marketing” trips (we all know what that means) and earning a living based on what portion of the firm’s cut goes to management and how that cut gets divided.

Many of these lawyers may try to justify their low productivity by suggesting that they spend most of the time ‘managing’ the law firm. If that’s the case, then demand proof because those types of excuses are inconsistent with the main pitch that these firms make—they are low overhead, nimble, and with no management interference in partners’ practices. Again, examine social media to see what the law firm administrators/managers are actually doing with the partners’ money.

4.  Are there unwritten policies or other restrictions that govern the practice of law at the firm?

Pay-to-play, virtual firms market themselves as staying out of the business of their partners and letting those partners run their practice free of interference. But lawyers need to understand fully (1) the unwritten policies of these law firms that can have a serious effect on their practice, and (2) the generally-worded policies that, at first blush, do not seem controversial but later could be applied by firm leadership in a way that could put you and your practice at a substantial disadvantage or in serious conflict with the leadership.

Because you will have absolutely no input into the wisdom of a past or future policy, ask the hard questions up front so that you can assess the risk that a few (unaccountable) firm leaders may pose to your practice. What types of matters am I allowed to bring in? What are my options in the event of a fee dispute with a client? What recourse do I have if another partner drops the ball or stops work on a client/matter I brought to the firm? In Big Law, the answers to these questions are pretty much clear, or easily ascertainable. Virtual, pay-to-play law firms are pure eat-what-you-kill platforms so you need to know all of the potential obstacles to your practice before making a move to one of these firms.

5.  No layoffs? Why does that even matter?

Many pay-to-play law firms are trying to capitalize on the news that Big Law is cutting compensation and laying off legal professionals by going out of their way to say that they are not laying anyone off or that no professional in the law firm is losing her/his job. Of course, that is a good thing and comes with positive publicity. But lawyers should have the following obvious question answered by such a firm making these claims: If the law firm is pure eat-what-you-kill and there are no productivity expectations, then there’s no one to lay off, right? It’s not that the claim itself by these firms is offensive. What’s offensive is a law firm suggesting that it is a good corporate citizen in this challenging time when, in fact, the no-layoff advertising doesn’t really amount to much to that firm or its lawyers.

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