Top 5 Rules for Using Twitter as a Social Media Solution in Legal Marketing

Twitter is the top social media tool according to Social Media Marketing Industry Report: How Marketers Are Using Social Media to Grow Their Businesses. Given Twitter’s top spot in the ranking and its relatively new introduction as a social marketing tool for lawyers I thought I would share my 5 Rules for Using Twitter as a Social Media Solution (“SMS”) in Legal Marketing.

Rule #1: Keep your “tweets” professional. By using Twitter you are answering the question: “What are you doing?” Using Twitter as a SMS your followers should be clients, prospects, and other lawyers. These individuals do not care where you are eating dinner or what concert you are attending. Your Facebook status is perfect for that. The best answer to the question “What are you doing?” on Twitter is a professional one that educates your followers.

Rule #2: Educate your followers with tweets. Many lawyers make the mistake of using Twitter to spam their followers with tweets that either try to sell the lawyer’s services or advertise the lawyer’s services. Use Twitter as an education-based marketing tool.

Rule #3: Use Twitter moderately. Lawyers should focus on quality—not quantity. A good rule is to tweet 3-5 times per week to keep top-of-mind with your followers.

Rule #4: Use discretion when you tweet. Twitter is public and search engines like Google can pull tweets. If you do not want the world to read it then you should not tweet it. If you do not want all of your followers to read a tweet then direct message (“DM”) the follower.

Rule #5: Re-tweet useful information to your followers but give credit to the original author.

What is your company doing to prevent the disclosure of sensitive corporate information to bloggers or by employee bloggers?

Today begins Social Media Policy Week at Martindale Connected. The major theme this week is the creation of company policy to combat the disclosure of sensitive corporate information on blogs and other forms of social media. I was asked to be a guest blogger on this and other topics and here is an excerpt from today's post:

Today’s Wall Street Journal confirms in an article what in-house counsel already knows: real-time disclosure of sensitive corporate information on blogs is a major problem for companies. Creating an effective policy for preventing such disclosure is vitally important and current policies. But policies are not enough. The implementation of technology to monitor employee email and internet use is critical to protecting your company.

According to a survey cited by the WSJ and conducted by the American Management Association and the ePolicy Institute “14% of 586 employees admitted they had sent confidential or potentially embarrassing company emails to outsiders.” In a company with thousands of employees the number disclosing sensitive corporate information to bloggers can be very significant and costly.

In addition to disclosure of sensitive corporate information, ePolicy.com reports that the following are some of the most common and costly e-risks companies face:

 Sabotage and Internal Security Breaches
 Lost Productivity
 Wasted Computer Resources
 Media Scrutiny
 Public Embarrassment

I recently represented a corporation who had a disgruntled employee blogging about a fictitious relationship with her married employer. The employee was blogging under a fictitious name. Had she not been crass enough to blog from her work computer my client may have never discovered the public embarrassment she was causing both my client’s company and my client personally.

Questions for Counsel:

If you are in-house counsel what steps has your department taken to prevent the disclosure of sensitive corporate information on blogs?

If you are outside counsel what advice are you giving your corporate clients on preventing the disclosure of sensitive corporate information?

Does your company (or corporate client) have written policies to prevent the disclosure of sensitive corporate information? If so, how do you or our client measure the effectiveness of your policy?

Does your company or client use software to monitor employee email? If so, what software does your company or client use? How is the effectiveness of this software measured?

Finally, how does your company monitor employee blogging outside the corporation, if at all, to assure the non-disclosure of sensitive information or to assure that the most common e-risks are avoided?

A company policy, by itself, is not enough to assure that employees are not disclosing sensitive corporate information to bloggers or by employee bloggers. Technology must be part of the solution. One disclosure is one too many.

Series LLC

Texas has joined 7 other states (Delaware, Nevada, Oklahoma, Iowa, Illinois, Tennessee, Utah and Wisconsin) and adopted legislation permitting the formation of series limited liability companies.

Essentially, a series LLC is a one or more subsidiary LLCs set up under one parent LLC. For example, Parent LLC has three series: A, B, and C. As long as each series “(1) has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations; or (2) has a separate business purposes or investment objective” only the liabilities of A can be enforced against the assets of A, only the liabilities of B can be enforced against the assets of B, and only the liabilities of C can be enforced against C.

The liabilities of one particular series can not be enforced against the assets of one of the other series or Parent, LLC.

One of the unanswered questions debated in the few states that allow series LLCs is whether courts will respect the inter-cell liability protection. I believe Texas courts will respect the inter-cell liability protection of a series LLC.

The most obvious benefit of a series LLC is that you only incur one filing fee for Parent, LLC regardless of the number of series Parent, LLC has. For example, the filing fee for Parent, LLC is $300.00 with the Texas Secretary of State’s office regardless of the number of series (i.e., other businesses) Parent, LLC has.

Under a 2008 Private Letter Ruling the IRS held that each series will be treated as a separate entity for tax purposes.

What's wrong with giving a law firm a trade name?

In Texas, a law firm must include the name of one or more of the firm's attorneys.

Rule 7.01(a) specifically states:

A lawyer in private practice shall not practice under a trade name, a name that is misleading as to the identity of the lawyer or lawyers practicing under such name, or a firm name containing names other than those of one or more of the lawyers in the firm, except that the names of a professional corporation, professional association, limited liability partnership, or professional limited liability company may contain "P.C.," "P.A.," "L.L.P.," "P.L.L.C.," or similar symbols indicating the nature of the organization, and if otherwise lawful a firm may use as, or continue to include in, its name the name or names of one or more deceased or retired members of the firm or of a predecessor firm in a continuing line of succession. Nothing herein shall prohibit a married woman from practicing under her maiden name.

In other states, such as Massachusetts, a law firm can be identified by a trade name. Consider, for example, Exemplar Law.

Massachusetts Rule of Disciplinary Conduct 7.5(a) specifically states:

A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1

Are you wondering which of these two states follows the Model Rules of Professional Conduct? Massachusetts does.

Rule 7.5 of the Model Rules provides:

(a) A lawyer shall not use a firm name, letterhead or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1.

So why does Texas not allow law firms to use trade names?

An interpretive comment from 2006 does not provide any useful insight:

Rule 7.01(e) prohibits a lawyer from advertising in the public media or seeking public employment by any communication under a “trade or fictitious name.” Texas Professional Ethics Opinion 529 authorizes the use of firm names such as “Jones, Smith & Doe,” “Jones, Smith & Doe, P.C.,” and “Law Offices of Jones, Smith & Doe.” Firm names such as “JonesLaw,” “Jones Law,” and “Jones Law, P.C.” are not permissible because the name claims or implies a quality of the firm beyond the fact that the firm renders legal services. Among other things, the use of the term “Law” as a noun, or as a part of a noun in a firm name constitutes –in the absence of a firm lawyer named “Law”—an impermissible trade name.

Uniform Resource Locator’s (URL’s) cannot be used as a trade name, but can be advertised as the Internet address for the lawyer or law firm as long as the requirements of the Rules are met.

Opinion 529 weakly concludes that a trade name is a "misleading communication because words in a trade name claiming or implying qualities of a firm's legal services necessarily would be incomplete and would not be subject to verification on an ongoing basis."

In my opinion, it is time to re-evaluate Texas' position on law firm trade names which was established in 1979 by Opinion 529 - especially when the Model Rules allow it.

Human channels vs. Digital channels

In his best-selling book, Developing Knowledge Based Client Relationships, Ross Dawson states that “the most valuable customer relationships must be nurtured by a mix of human and digital channels that draws on and integrates the strengths of each.”

What does the firm of the future look like? Will the traditional law firm and its costly overhead survive or is the future virtual law firms with less-costly overhead and more attention to building knowledge based client relationships?

Regardless, Mr. Dawson's point is well taken. Even attorneys offering clients virtual services must draw on the strengths of human channels and digital channels to provide the client superior customer service.

I believe that technology today blurs the line between human channels and digital channels. Take for instance Skype. Skype allows me to communicate in a virtual setting but face-to-face using VOIP with my clients. Skype is both a digital channel and a human channel.

The important point is that VOIP technology, like Skype, allows lawyers to provide superior customer service and save clients valuable time and money.

Google's "Ad Words" Under Attack - and rightfully so

Have you noticed all the lawsuits filed against Google recently alleging violations of the Lanham Act, False Designation of Origin, Dilution of Trademarks, Common Law Trademark Infringement and Deceptive Trade Practices among others?

The plaintiffs complain that Google sells the plaintiffs' trademarks as "ad words" to plaintiffs' competitors. When an individual searches Google using the trademark for which the plaintiff's company is known the right side of the Google search-result window, which says "Sponsored Links", lists the competitor's website at the top of the list thereby diverting traffic to the competitor's website and generating revenue for Google.

For example, if you owned the trademark for "Twin Deals"--and I have a client that does--and you search Google for "Twin Deals" guess what comes up under the "Sponsored Link" category? The Target website. In this example Target is not necessarily a competitor but if it was, and if Google knew it and nevertheless sold my client's proprietary mark to my client's competitor, Google ought to be held accountable.

Caperton does not establish an objective standard for judicial recusal.

Many readers have written asking my opinion of the United States Supreme Court's decision in Caperton. Unfortunately, I didn't have time immediately after the release of the decision to post my thoughts but I did immediately read the decision.

The Supreme Court is supposed to announce broad principles of law that apply to cases throughout the United States. Caperton presented a factual scenario that did not allow the Supreme Court to announce a broad principle of law. Instead, as the majority concedes, Caperton is an "extreme case" and only rarely will be applied.

It is true that extreme cases often test the bounds of established legal principles, and sometimes no administrable standard may be available to address the perceived wrong. But it is also true that extreme cases are more likely to cross constitutional limits, requiring this Court’s intervention and formulation of objective standards. This is particularly true when due process is violated.

I do not quarrel with the point that Caperton is an "extreme case." It certainly was. I also believe that the judge should have recused himself under the objective standard already in place under the ABA's rules of judicial conduct:

Almost every State—West Virginia included—has adopted the American Bar Association’s objective standard: “A judge shall avoid impropriety and the appearance of impropriety.” ABA Annotated Model Code of Judicial Conduct, Canon 2 (2004).

Notice that the majority concedes the ABA's standard is objective!

I do not, however, believe that the Supreme Court should have used the due process clause to correct this one case with a standard that purports to be objective but is anything but objective. Under the majority's logic the Supreme Court should intervene in every case to address the perceived wrong.

Justice Roberts made the point in dissent that the majority's "objective" standard is anything but objective.

Unlike the established grounds for disqualification, a “probability of bias” cannot be defined in any limited way.

Caperton opens up every case to scrutiny of judicial bias. Justice Scalia predicts, I believe accurately, how much money will be wasted on Caperton motions:

The Court’s opinion will reinforce that perception, adding to the vast arsenal of lawyerly gambits what will come to be known as the Caperton claim. The facts relevant to adjudicating it will have to be litigated—and likewise the law governing it, which will be indeterminate for years to come, if not forever. Many billable hours will be spent in poring through volumes of campaign finance reports, and many more in contesting nonrecusal decisions through every available means.

Time will tell but I believe Justices Roberts, Scalia, Thomas, and Alito are correct.

Peanut Case Shows Holes in Safety Net

Today's New York Times asks if it is time for a Department of Food.

I've got a better idea that my ultra conservative friends will not like - reform tort reform and allow more meaningful lawsuits to be brought against companies like this that knowingly place a product in the stream of commerce with salmonella - and don't stop there.

It goes back to the Ford Pinto cases...if the company believes it is a better business decision to put the product in commerce knowing it is unsafe because a ton of money can be made and the settlement of potential lawsuits is built into the margin than these business practices should be the target of lawsuits with significant penalties.

Starbucks Plays Common Joe

Will this kill the "Starbucks Effect"?

For those of you interested in marketing (at any level) you are probably familiar with the "Starbucks Effect." If not--you should be.

At its core, this "concept" takes a product or service and puts a price and value on that product or service that is a premium to other products or services in its category. It does not necessarily mean that the quality of the product or service is better (and certainly not the value).

The equivalent of this story to law firms would be if the big firms suddenly dropped their hourly rates to those of litigation or transaction boutiques (e.g., from $500+/hr. to $300/hr. for partners and $300+/hr. to $200/hr. for mid-level associates).

In my opinion this will kill the Starbucks Effect just as it would kill the "but we hired one of the largest law firms effect" that often gets pitched to shareholders of a Fortune 500 company when the big firm racks up millions of dollars defending a lawsuit and looses.

Today's Wall Street Journal has this article on Starbucks new marketing efforts.

Manor Independent School Board

I am running for Manor Independent School Board: I officially launched my campaign for Manor ISD's Board of Trustees. The election is in May of 2009. I have simultaneously filed an application for appointment to one of the two current vacancies on the Board which, if appointed, I will have to run for election to in May 2009.

Although I have not launched an official campaign website yet I have launched a political page on Facebook that I encourage you to become a supporter of (just search for "Bradley B. Clark") even if you do not live in the Manor school district.

I look forward to the opportunity to serve the District and work with the administration, faculty, staff, parents and students to continue the positive physical and academic growth the District has achieved thus far. I am also extremely excited about the recognition MISD has received recently which proves that Manor ISD is a leader in innovating a dynamic curriculum and learning environment that has and continues to serve as a model for school districts across the United States.

Straight-Ticket Voting

More people are voting and voter-turnout was at an all-time high for the 2008 Presidential election. Most would agree that higher voter turnout is a good thing and good news. Some however, would disagree with me that straight-ticket voting in Texas should be abolished as it has been in many other states.

Today's Austin American Statesman discusses a bill by Sen. Wentworth of San Antonio to try again at getting rid of the straight-ticket option in Texas.

But in the legislative session starting Jan. 13, Republican state Sen. Jeff Wentworth of San Antonio plans a second run at deleting the straight-ticket option from Texas ballots. His repeal proposal didn't advance in 2007 .

"Both political parties need to stop being quite so partisan," Wentworth said.

He said that if a voter wants to favor every Republican or Democrat running, "that's fine with me; I'm not trying to tell them how to vote. I'm just saying they ought to be more informed by seeing the name. "

Nationally, 16 states offer the straight-ticket option, which has been repealed in five states since 1994 , though voters may still favor a single party's candidates by voting one by one. ... Wentworth said his proposal "has nothing to do with trying to give an advantage to either political party. It's an effort to bring us into the mainstream of the 34 other states that don't allow it."

Although the major parties seem to like the ability to vote straight-ticket in an election year like 2004 or 2008 it hurts well qualified local candidates. But then I guess those informed voters on the local races may not vote straight-ticket regardless. We'll see how this issue shakes out but at first blush I'm with Sen. Whentworth on this issue.

Clean up the books!

Eric Dexheimer with the Austin American Statesman has a great article in today's paper regarding old and odd laws that remain "on the books" in Texas. The article can be accessed here or I have posted it below:

LEGAL ODDITIES:

Many Texas laws old, in the way

Statutes dealing with topics from telegraphs to communism hang around for decades after they're out of date, sometimes causing problems.

By Eric Dexheimer
AMERICAN-STATESMAN STAFF
Friday, December 26, 2008

In 1954, Allan Shivers, anticipating a difficult campaign for his third term as Texas governor, proposed that membership in the Communist Party be made punishable by death. More moderate lawmakers voted to make it punishable by a mere 20 years in prison instead. Such McCarthy-era restrictions have since been cleansed from state statutes.

Most of them, anyway. A citizen cannot work for the state government if his supervisor has "reasonable grounds to believe that the person is a communist," says Chapter 557 of the current Texas Government Code.

"We don't have any communists," insisted Andy Homer, director of government relations for the Texas Public Employees Association. But, he said, "I'm not sure about the Texas State Employees Union," a rival organization.

The prohibition against communists is one of hundreds of laws still on the books despite being outdated, unenforceable or — like Article 4413 of Vernon's Texas Civil Statutes — meaningless: "A person may not conduct blasting, rock quarry operations, or another activity that causes ground motion in excess of one micron in frequencies of five hertz or less as measured at an interaction region of the super collider."

That would be the superconducting supercollider, the vast atom-smashing project near Waxahachie that the federal government canceled 15 years ago.

Texas laws prohibit the sale of baby formula and contact lenses at flea markets, selling an armadillo or tripping a horse. On the other hand, since 1997 residents can legally cast a vote from space. Ten Texans have, according to NASA.

Such minor laws see irregular enforcement. The state's Business and Commerce Code requires companies advertising a going-out-of-business sale to "file an original inventory with the chief appraiser of the appraisal district in which the person's principal place of business is located." The permit costs $20.

"If we get two a year, it's a banner year for going-out-of-business-sale permits," admitted Ron Melton, director of the Travis Central Appraisal District's personal property division.

That's a better track record than offenses related to secondhand watches. The Business and Commerce Code still identifies as an outlaw anyone who sells used watches not labeled as such "in letters larger than any other letters on the invoice." Austin Curry, owner of Austin Watch and Jewelry, said the old laws are "kind of a sticky deal" — a vestige from the time when not-always welcome immigrants used their jewelry as currency. It was passed in the 1940s "out of fear," he said.

Though still valid, today it's a rule flouted thousands of times daily on Craigslist and at pawn shops across the state. "We don't enforce that," Austin Police Department spokeswoman Veneza Agui?aga said.

"I'm not familiar with that statute," Travis County Attorney David Escamilla said.

Sometimes, leaving outdated laws on the books is simply a matter of lack of momentum .

Senate Bill 387, which will be considered when the 81st Legislature convenes in mid-January, would update the Code of Criminal Procedure to include the use of "secure electronic means" to transmit an arrest warrant. Yet references to telegraphs — Article 15 outlines the duties of a telegraph officer — remain embedded in the same statute. And much of the section being considered for revision has been irrelevant since a 1967 law gave police authority to arrest someone without a warrant in hand.

Rep. Bill Callegari, R-Katy, has been trying to clean up the state's outdated laws for years, said Jeremy Mazur, his chief of staff. Last year, he managed to repeal the Texas Centennial Commission's authority to condemn land — about 70 years after the state celebrated its 100th anniversary.

"When they're still on the books, these old laws can be live wires," Mazur said.

Prosecutors say so-called boutique laws can cause serious headaches. Criminal defendants must be charged under the most specific law possible. Shannon Edmonds, governmental relations director for the Texas District and County Attorneys Association, said it's not unheard of for a prosecutor unaware of a new or little-known statute to earn a conviction using a more general law, only to have it appealed because of the incorrect charge.

Outdated laws that stubbornly remain on the books can also reveal social fissures.

Federal courts have long since deemed flag-burning and homosexual conduct to be legal. But Texas legislators have been unwilling to officially erase the laws against them for fear of alienating an ambivalent public.

The last time the lawmakers contemplated removing flag-burning, "nobody really wanted to go on record as repealing it because it's a symbolic statute important to much of the public," Williamson County District Attorney John Bradley said.

The Texas Legislative Council periodically rewrites the codes to make them more reader-friendly and streamlined. It last sand-blasted the Texas penal code in 1993. In 2000, a university law review identified Texas as having one of the clearest codes in the country.

But that was four legislative sessions ago. Since then, state lawmakers have been busy creating new offenses — despite pleas to show restraint.

The district and county attorneys association used to give legislators a pamphlet at the start of each session outlining the pitfalls of cramming the penal code with nit-picky laws. "New legislation, although well-meaning, may inject unnecessary confusion into the system," it said.

The association stopped several years ago, however, after noticing that no one was paying attention. "You get a special interest that wants its own law, so they hire lobbyists to get it done," Edmonds said.

The 2003 and 2005 legislative sessions created 70 new violations, according to the association. The more recent session created four dozen more.

Texans can now be arrested, fined or both for shining a laser pointer at an airplane (unless it's an emergency distress signal), recklessly moving feral swine or attempting to drive over a railroad crossing in a car with insufficient undercarriage clearance.

The specialized laws can be more catharsis than serious public policy enhancement.

Last session, Sen. Jeff Wentworth, R-San Antonio, heard of an incident in which a father and son were driving home from a hunting trip. The father asked his son, who had a learner's permit, to drive while he napped. A few miles from home, the boy crashed; a child in another car died.

After hearing that no laws had been broken, Wentworth pushed through Senate Bill 153, making it illegal for an adult supervising a probationary driver to fall asleep, or be intoxicated or otherwise distracted.

"I don't know of any other case like that," Wentworth said. "But clearly it's something that needed to be fixed in the law."

Is a deposition a public record?

A Houston lawyer recently posted an edited excerpt of a videotaped deposition on You Tube. The issue that came of the posting became the subject of local and national news and was the cover story in a recent edition of the Texas Lawyer.

The ultimate issue at the hearing was whether a deposition is a public record. The Court held that it was not a public record unless it is filed with the court (in the old, old days, discovery responses, including depositions, were filed with the clerk of the court). Today, discovery responses are only filed with the clerk of the court if they are attached to a pleading. The Court ordered the lawyer to remove the video excerpt from You Tube.

I have a hard time accepting the Court's ruling in this matter on the sole issue of whether a deposition is a public record. I believe that it is a public record and I believe that members of the Texas Bar treat them as such irrespective of whether they are ever filed with the court. For example, I routinely receive phone calls from lawyers in other cases asking for a copy of a deposition transcript of a person who I previously deposed. I routinely make the same request of other lawyers and we freely exchange these transcripts. Additionally, expert witness depositions are available on websites such as Westlaw and Lexis.

I think the Court's ruling had more to do with the factual circumstances surrounding the posting on You Tube which I do not get into in this post than it did with whether it is a public record.

Nevertheless, I think the bench begins to set a very dangerous precedent when, and if, they start ruling the depositions are not public records (or any discovery response for that matter) and that such responses cannot, in appropriate circumstances, be posted online on websites such as You Tube. The issue, in my mind, once it is determined that it is a public record is whether such a posting can be done during the litigation of the case and/or after the litigation of the case.

You Tube has plenty of video deposition excerpts (mostly outrageous) posted on its site and a few are from Texas. Additionally, every month in the Texas Bar Journal (a magazine that is distributed to all members of the Texas Bar Association) includes a humor column written and edited by Judge Jerry Buchmeyer that includes written excerpts from depositions.

If depositions are not public records than it follows that it would be impermissible for Judge Buchmeyer to use these excerpts as part of his blog Say What?. I don't think any member of either the Texas Bench or Bar would argue that Judge Buchmeyer's use of deposition excerpts is improper because the depositions themselves may not be public records.

There is, I will admit, an enormous difference in the way Judge Buchmeyer uses the deposition excerpts and they way the Plaintiff's lawyer in the Houston case used his deposition excerpt. Unfortunately, there is no rule regarding the proper and improper use of deposition excerpts during litigation or after. With the advancement of technology this is an issue that the Texas Supreme Court Rules Committee and the State Bar needs to address.

Update:

A few cases have found that depositions are public records.

See 1989 WL 22992 (holding that a deposition is a public record under FRE 902); see also 1992 WL 205226 and 2002 WL 31973299 (same case, two separate appeals, affirmed trial court that depositions are public records under a Tennessee statute).

Innovating the practice of law.

A colleague of mine is a solo appellate lawyer who is making a very decent living with essentially a virtual law practice. The idea of a virtual law firm has been around for a long time but I think the profession is finally starting to enter a time when not only is it technologically possible but financially practical for both the customer and the lawyer. Most courts have also made it possible for the success of virtual law firms by accepting electronic filing and providing electronic notice of filings.

Virtual law firms will benefit consumers in the long term and de-commoditize the practice of law. Historically, lawyers billed for "services rendered" at the conclusion of the matter. The customer received one invoice for an amount that the lawyer believed the value of the service provided. Today, the practice of law has been commoditized and lawyers bill for increments of time. This practice does not benefit the customer.

It is often said, the client may control the hourly rate but the lawyer controls the number of hours. It bothers me immensely that this mentality is out there among some of my colleagues. Many of the large firms require an associate to bill more than 2000 hours per year. Several studies have shown that this is virtually impossible. Based on my own experience I reach the same conclusion. I am physically in the office 10-12 hours per day and on a good day will bill between 50-75% of that time. There is a lot of lost time working on administrative matters that cannot be billed for or that do not meet the "reasonableness" standard for the fee charged. Just because it took a lawyer 4 hours to draft a one page letter does not necessarily mean that the lawyer should bill the entire 4 hours at $200 per hour (an $800 one page letter!) if doing so would not be reasonable.

A lawyer's hourly rate is a function of his or her salary, firm overhead, and equity partner profit. Even law firms that operate as an economy of scale commoditize the practice of law based on an hourly rate. When a lawyer has a virtual law practice his or her hourly rate will be substantially less then if he or she was at a firm. First, and most importantly, the virtual law firm will have substantially less overhead than that of a physical law firm. Second, the virtual law firm will have less equity partner profit as long as the virtual law firm is not composed of multiple equity partners. Finally, the virtual lawyer can offer a lower rate or, more importantly, value price his or her service based on the low costs of operating virtually.

Many traditional law firms pass through the following expenses to clients: faxing documents, receiving documents by fax, copying documents, travel, deliveries by runners, postage, long distance and other expenses. In a virtual law firm many of these expenses are unnecessary because the service is not necessary. For example, in a virtual law firm, documents are emailed rather than faxed, documents are scanned rather than copied (where necessary copies will obviously have to be made), deliveries are not necessary because of electronic communication, postage is not necessary because of electronic communication, and long distance charges are unnecessary with VOIP technology which is consistently improving.

My health insurance company has recently ceased mailing me my EOBs and instead sends me an email and link to my EOB. I can check the status of pending claims and paid claims online. In much the same way a virtual law firm can send a client an email when something has been filed on his or her behalf with a secure link to the document. Additionally, customers are already communicating with their lawyers by email as well as sharing and editing documents in .pdf format. The technology is already present for secure online document sharing and storage so that clients can upload documents for the lawyer and the lawyer can upload documents for the client.

Several websites that have explored virtual law firms have also written about the use of paralegals and others overseas who can provide services at a reduced price and at a faster turnaround. For example, if a virtual lawyer received a set of electronic documents from his or her client at the end of the business day and wanted a summary prepared of the documents the lawyer could contract with an overseas paralegal to summarize the documents for him or her at a substantially reduced cost than the American workforce. In many situations, the lawyer can assign the work to the paralegal overseas at the close of business and when the lawyer returns to work the next morning the paralegal's summary of the documents provided less than 12 hours before are summarized and sitting in the lawyer's email in-box.

I could probably write a small book about this topic. I think it is the future of the practice of law. Innovation is what separates companies that succeed from those that fail and the same will be true of law firms. Law firms appear to be the most reluctant of all professional service firm to accept technological innovation. Firms that do innovate will succeed whereas those that don't will fail.

I would like to next explore the costs of setting up and maintaining a virtual law practice. If you have a virtual law practice or otherwise have suggestions on the costs of setting up and maintaining a virtual law practice please be sure to email me your thoughts.

Competition vs. Cooperation

I posted this on Texas Business 411 today and thought it was worth posting here as well because I believe that the future success of a law firm depends on its ability to create customer (not "client") teams that develop a deep knowledge of the customer, its business model, and its market so that the team (and therefore the firm) can provide more value to the customer than can currently be done profitably on an hourly-rate billing model.

Here is the post:

I am currently reading a book I should have read years ago: The Seven Habits of Highly Effective People by Stephen R. Covey. It is on the shelf in this blog's Reading Room which you can access here. One of the stories told by Mr. Covey is about the president of a corporation who was "trying to get the fruits of cooperation from a paradigm of competition."

The goal of the company was to work together for the good of the company but in realty what was set up was a competition among the people who worked for the company. At the end of the year the person with the best numbers won a free trip to a tropical paradise. This "reward" did not foster a spirit of cooperation among the president's employees but rather a fierce competition. This created a lose-lose situation for the company and its customers.

Unfortunately, I see this in a large number of businesses that I represent as well as a large number of businesses that I patronize. Rather than sharing information and working together to increase the value proposition of the company the employees tear the fabric of the company because the paradigm is flawed. To address the problem, Mr. Covey created a paradigm that rewarded cooperation rather than competition.

Many professional service firms are starting to understand the importance of this paradigm shift as well. In order to create more value for customers professional service firms are increasing the value of the firm to their customers by creating a paradigm of cooperation by creating customer teams.

Customer teams are slowly becoming recognized by professional service firms as a way to increase the value to their customers. Accountants are doing a much better job than law firms at this but I believe the future of law firms depends on the ability to do the same. That would necessarily require a shifting from hourly-rate billing to value billing - which accountants are doing a better job than lawyers at as well. Value billing and shifting to a team approach to solving customer problems is the future of law firm success.

The fact that professional service firms can and are employing internal cooperation rather than internal competition is proof that Covey is right. If your business is still using a paradigm that awards competition and not cooperation (for example, among your sales representatives) than your company is sure to be left behind by those that are.

The central point is that by creating a paradigm of cooperation rather than competition is a win-win for both the company and it's customers.