Virtual Office vs. Office Rental: Know the Pros & Cons for Your Law Practice
If you are debating using a virtual office or office rental for your small firm or solo law practice, this information will help you make the best decision for your firm. Having the right type of work space for your practice is vital for the development and growth of your firm. Virtual offices and office rentals are two of the most popular work space solutions for small firm attorneys. Each has pros and cons depending on your situation and practice area.
What is a virtual office?
A virtual office is an unbundled office rental arrangement where you can get the business presence of a traditional law office without having to pay for expensive office space.
A virtual office gives you access to the resources of a traditional office, such as an address to receive mail, a physical location to meet clients, conference rooms, receptionist and admin services, and temporary office space.
The difference is you only pay for services when you need them. Virtual offices are often sold in “packages” starting at about $100 per month, with higher priced packages including more services at a discounted rate.
Attorneys using a legal virtual office work primarily from another location, which can be the attorney’s home office or a law office in a different city.
An office rental is slightly different.
Small firm lawyers and solos – especially in high-rent cities like New York, Miami or Los Angeles — typically rent an extra office from another law firm, or get office space from a shared office space provider.
Most “shared office” situations have similar amenities, such as access to conference rooms, printing, filing, a receptionist to greet your clients and call answering services.
The key difference between an office rental and a virtual office is cost. With the former, you are paying a higher rate for the unlimited use of the office space, whereas a virtual office, you pay for office services as you need them but at a higher per-transaction cost.
But with an office rental, a security deposit will be required, and chances are you will have to make a longer term commitment to get a favorable rate. Depending on the space you choose, you may need to purchase furnishings or equipment. It can get expensive pretty fast.
The big negative of a virtual office: lawyers earn 30% less
A big pro of a virtual office is the freedom to work from wherever and whenever you want without feeling guilty about paying rent for an office rental that you may not use every day.
Plus it’s cheap to get started. Most times no security deposit is required, and the contracts are month-to-month. For $100 a month, you can use an office address in a premium location that you may not be able to afford if you had to rent an office space.
But a major con with a virtual office is that lawyers miss out on easy opportunities to collaborate and share referrals with other attorneys that a lawyer with an office rental in a shared legal suite would get regularly.
Statistics show that this can have a major negative impact on revenues. Several studies have found that lawyers who use a virtual office earn at least 30% less than their peers in shared law office space.
But if a virtual office is appealing to you, there are ways you can mitigate this problem. The key is finding a virtual office provider that emphasizes community and networking, and then making the most out of those opportunities.
Virtual office may not be the best fit for new solos
While the low cost of a virtual office may be tempting, lawyers starting a new solo practice may put themselves on a faster path to success by spending a little extra on an office rental in a shared law suite.
New York matrimonial lawyer Joleena Louis has a unique perspective on this subject. Louis started her solo law practice in an office rental. But when her personal financial situation changed suddenly, she moved her practice to a virtual office.
“A huge beneﬁt of an office rental is the ability to meet other people, says Louis. “The act of going to an ofﬁce everyday forced me to get dressed up and be sociable.”
Early in her solo practice, Louis got several client referrals from the other attorneys in her shared law office space. “Those are clients I would not have gotten without being in that office,” says Louis. “Plus, it’s great to have other attorneys around to ask questions, collaborate on cases or just talk shop.”
According to Louis, “ I don’t think my practice would have been as successful had I not started with an office rental. I miss having my office and the people who worked around me, but right now, the flexibility a virtual office affords fits better with my current lifestyle.”
But you can still make a virtual office work
Solo attorney and JDBlogger author/podcaster John Skiba started a law firm…twice. The first time only 18 months out of law school, and the second time a few years after merging his practice into another practice and realizing firm life wasn’t for him.
The second time Skiba started a firm, he started in a virtual office and transitioned into an law office rental once his practice could support it. “I operated out of a home office with three ‘virtual’ offices where I could meet clients,” says Skiba. “This reduced my monthly overhead tremendously.”
Lower expenses freed up cash for other things that grew Skiba’s practice faster, like marketing and a hiring a paralegal. Skiba was able to moved into an office rental within two years of starting his firm.
The right type of office space is different for each lawyer, but knowing the differences between the two options, as well as the pros and cons, you will be better prepared to make the right decision for your practice.
About Stephen Furnari
Stephen Furnari is a self-employed corporate attorney and the founder of Law Firm Suites, a coworking space for law firms based in New York City. Through Law Firm Suites, Furnari has helped dozens of attorneys launch and grow successful law practices. He is the author of several eBooks, including “7 Deadly Mistakes that Prevent Law Practice Success” and “An Insider’s Guide to Renting the Perfect Law Office”. Stephen has been featured in the ABA Journal,Entrepreneur, New York Daily News and Crain’s New York. Connect with Stephen on Twitter (@stephenfurnari) or Google+.