Avoiding the Unauthorized Practice of Law in Other Jurisdictions When Practicing Law Online

Practicing law from a web-based virtual law office brings the risk of unwittingly establishing an attorney/client relationship regarding a legal matter that the virtual attorney is not licensed to handle. The unauthorized practice of law in other jurisdictions can be avoided by following some simple practice methods.

First, the virtual law practitioner has the responsibility to provide clear notice throughout the VLO website that he or she is only licensed to practice law in the states in which the attorney holds an active bar license. This information should show up at every turn - from the terms and conditions for the website to the registration and clickwrap agreement allowing access to the online client's homepage.

Second, the virtual law office website should contain contact information and the name of the attorney running the VLO. For some state bar associations, such as North Carolina, the requirement extends to providing a physical mailing address for the prospective client. This information should be located in a section that is easily found by the online client, such as an "About Us" section or at the start of the website's disclaimer. By providing adequate notice throughout the VLO, the attorney should not be found to be soliciting clients from a state where he or she is not able to practice law.

In addition, a well-designed VLO should contain a jurisdiction check for the benefit of the client and the attorney. This safe-guard was built into the VLOTech software for this purpose.



When the client registers on the attorney's VLO website, a simple check for the zip code notifies the attorney that the client is a resident outside his or her jurisdiction. A note would appear to the client which states that the attorney may only be retained to answer legal questions and handle legal work related to the laws of the state for which the attorney has an active law license. The jurisdiction check should not prevent the client from continuing with the registration process, but serves the purpose of providing more than adequate notice of the attorney’s jurisdiction. Through this process, the attorney is provided with a red flag on the backend of the law office to let him or her know that the client resides in a different state and may not have a legal matter that the attorney is permitted to handle.

With the combination of adequate contact information and notice to any prospective clients regarding jurisdictional limitations, the virtual practitioner should be able to safely avoid crossing the line into unauthorized practice of law.

Screenshots of VLOTech Client Side

I posted the manual for the client side of the VLOTech software on the VLOTech blog here. I am excited to share the new format with my own online clients. The software has everything that I have been using to practice law online for the past couple years at my own virtual law practice, but it also has some additional features that I think will make my virtual practice run smoother for me and my clients.

One of the great things about the software-as-a-service model is that the software doesn't require installs for every different version or patch. VLOTech can get input from the attorneys using the product to decide what aspects of the technology to develop next. Updates to the software are then just added to the existing clients' systems. It's development guided by the users which just makes good sense.

We have a test site up and running for our first group of innovative attorneys to try out before they go live with their virtual law practices. The goal is to get an online demo on the VLOTech blog so that it's available for everyone. For now, the focus is on supporting our first e-laywering pioneers. We now have attorneys from 21 different states who have expressed an interest in opening a web-based virtual law practice with VLOTech. There's clearly something going on here.

Accepting Online Payments in a Virtual Law Office

Accepting credit card payments from clients has come up several times recently on the ABA's Solosez listserv. Some list members were questioning whether it was ethical to accept client funds online if the funds were meant to be held as a retainer. By most state bar regulations, a retainer should be held only in the attorney's trust account.

How should an attorney operating a completely virtual law office handle accepting online payments from clients?

To start, if a virtual law practice accepts credit card payments from clients, then the attorney must make sure that the practice is Payment Card Industry Data Security (PCI DSS) compliant. PCI compliance must occur whenever any business stores, transfers or collects credit card information from clients. Failure to comply with these rules, set by the credit card industry, may result in a business no longer being allowed to take credit card purchases, in addition to multiple fines and penalties.

It is unlikely that a virtual law practice would handle the number of transactions that require an audit by the PCI DSS Qualified Security Assessors. However, the standards in this area are constantly being changed. The responsibility falls to the VLO attorney to keep any online purchases of legal services by credit card compliant with the most current rules and regulations.

It should go without saying that a VLO must also be set up to comply with rules set forth in that attorney's state bar trust account guidelines or other bar association regulations. Because many attorneys operating a VLO will choose to use the fixed fee method of billing in which the client is provided and agrees to pay a fixed fee before the completed services are delivered in full, the VLO attorney may not require a separate retainer. If a retainer is required as part of the initial price quote and must be completed before the VLO attorney proceeds, then those funds should most likely be placed in the VLO’s trust account and kept separate from the VLO operating account per the rules of most state bar associations.

As I mentioned above, one gray area is the use of Paypal or other credit card processing service to hold retainer fees. The issue is whether the retainer may be run through the credit card processing company even if that company routes the funds to the attorney’s trust account rather than operating account. Because the funds would first be transmitted to the attorney’s online account at the credit card processing company and then routed to the trust account, this may be in violation of the online attorney's state bar trust account rules because for a short period of time the funds are held by the credit card processing company.

There are a variety of ways that the online attorney might choose to set up the payment function of the VLO and his or her compliance with trust account rules would depend on that particular setup. With the use of the VLO billing features and invoicing process, it may be not be desirable for the attorney to request a traditional retainer fee from the online client or if necessary, the VLO attorney could request to receive the retainer through snail mail for direct deposit into the attorney’s trust account. In which case, the question of the trust account being attached to the credit card processing company would not exist.

While all of this may sound hyper-technical because the funds would end up in the attorney’s trust account as required, if PayPal or the credit card processing company in question was not one of the financial institutions approved by the attorney's state bar for the purpose of maintaining trust accounts, then the transaction might be in violation of their bar’s trust accounting rules. This is a question that the individual state bars may have to address as more attorneys provide legal services through virtual law practices.

Setting Up a Virtual Law Practice

I asked my readers in a recent post to let me know what their top questions were regarding virtual law practice.

One reader writes:

"Is there a software solution that can be installed out of the box that would work well for a virtual practice, or does someone have to find someone with programming expertise to set up the website? What software do you use for your virtual practice?"

Since I don't know of any "out of the box" products that can create a completely virtual law office, I thought I would explain exactly what a virtual law office is and how it operates with the VLOTech, Web 2.0 application which is what I use to operate Kimbro Legal Services.

The definition of virtual practice has evolved with the technology we have available to us and will continue to do so. VLOTech clients either have a law office website in place or VLOTech refers them to Grant Griffiths at G2WebMedia.com whose services may set up a virtual law office website with blog functionality. The VLOTech application is then integrated into the attorney's vlo website. Unlike packaged software that you have to install on your PC, VLOTech is a hosted system. Read up on Web 2.0 apps or SaaS for more details. The VLOTech website also has more information about the product and faqs.

By the basic definition, a completely virtual law office (VLO) is a professional law practice that exists online through a secure portal and is accessible to the client and the attorney anywhere the parties may access the Internet. A VLO provides attorneys and clients with the ability to securely discuss matters online, download and upload documents for review and handle other business transactions in a secure digital environment. With a VLO, an attorney’s clients benefit from the convenience and accessibility and the attorney benefits from the flexibility of a virtual law practice, an online client and revenue generating software, and lower overhead associated with setup and maintenance of a nontraditional law office.

It is important to distinguish a professional VLO from the many online websites selling legal documents and from rented “virtual,” physical offices. A VLO provides direct and personal communication between an attorney and a client rather than “form generated,” unbundled legal documents for sale and purchase by the public. Communication by email does not constitute a virtual law practice even if sent through a law firm’s website. Email is limited as a method of transacting business and is typically unencrypted, and therefore, not a secure method of handling sensitive attorney/client data.

Physical office space rented out to an attorney to meeting with clients when scheduled for a monthly fee is also often referred to as a “virtual” law office. While this arrangement allows the attorney to work from a home office and meet with clients in a shared office space, the program does not use technology to operate the functions of a law office or provide an online interface to obtain and work with clients.

Previous hesitation by legal professionals regarding “elawyering” or the practice of law online centered around technology that was limited in both protecting the security of sensitive attorney/client data and in allowing for adequate communication between the attorney and his or her client. As Web 2.0 and web-based applications continue to evolve, the definition of a virtual law practice will need to adapt at the same pace. While the software applications & technology used to create a VLO may update continuously, the public demand for online access to legal services will sustain the VLO method of practicing law. However, it will remain the responsibility of the individual virtual law practitioner to stay current with the security concerns related to the technology used for the VLO and to maintain strong ethics and professional conduct when practicing law online.

Can't We All Just Get Along?

While I don't like general characterizations of anyone, this post by Jordan Furlog over at Law21 had me smiling as he writes tips for how Gen-Y lawyers can adjust to working with Boomers and Gen-Xers. I found it insightful on most accounts, especially regarding multitasking with different technologies.

Furlong writes, "Boomers don’t understand multitasking. Well, they do, but in the sense of “I’m carrying 75 files at one time,” rather than “I’m drafting a top-notch memo while IM’ing a friend and listening to a podcast.” Boomers live in a linear and sequential world, while you [Gen-Y] were thinking outside the box before it became a cliché."

Oddly enough, when it comes to introducing a virtual practice to other attorneys, I've had both Boomer and Gen-Xers who see the benefits of going online. In fact, I have a couple attorneys who are looking to "retire" into running their vlos in the next few years. At the same time, I know several Gen-Xers who have mastered email and that's as far as it goes.

My point is that it does take an entrepreneurial spirit and certain tech savvy to start up a virtual law practice - regardless of your generation label. I wonder if virtual attorneys of all generations wouldn't have more in common with each other than their traditional law office counterparts?