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Business of Law:

Virtual law firm grows exponentially

Law firms looking to change their business model might take a look at VLP Law Group LLP, a virtual firm that marks its five-year anniversary this month after growing exponentially during the recession.

Gross revenue last year was $11.8 million, up from $1.5 million in 2008, the firm’s first year, founding member David Goldenberg said in an interview.

“The recession forced many companies to consider ways to save costs in every part of their budget,” Goldenberg said. “Because our model reduces inefficiencies for the types of services we offer, VLP provided a way for companies to reduce their legal spending without sacrificing quality.”

The firm got its start with the help of Silicon Valley lawyer Craig Johnson. A top Wilson Sonsini Goodrich & Rosati LLP partner, Johnson left to start the Venture Law Group in 1993. It later merged with Heller Ehrman LLP.

“He came out of retirement to help found the firm, and advised us to use tech to decouple our practice from the office,” Goldenberg said.

VLP, which has grown to 34 lawyers from 24, including three counsel, recruits lawyers who attended name-brand law schools and usually have spent some time at big firms. The firm covers most transactional practice areas, though it doesn’t handle litigation. By cutting out the overhead and the percentage that would go to a senior lawyer or name partner, the firm is able to offer clients a discounted rate.

VLP lawyers bill around $350 or $400 an hour, most of which goes to the attorney. The firm takes a 15 percent cut off the top for fees and operates through several committees, including executive, hiring, marketing, new business and risk management committees.

Goldenberg, who spent seven years at Morrison & Foerster LLP, said he handles much of the same kind of work he would at a big firm. Venture capital deals for example, he said, are staffed with one or two lawyers even at big firms. VLP attorneys sometimes work together on behalf of clients, and several, including Goldenberg, have hired counsel to help with their practice.

Goldenberg’s representative work has included advising Dijit Media on its recent acquisition of GoMiso Inc. Other clients have included Fundwell, which he represented in a joint venture with a university to create a study of lending needs and credit-score issues, and MobileIron Inc., a mobile IT managing company, in a distribution agreement.

VLP attorney Dan Burke, another founding member,recently represented mobile recommendations app Livestar in its sale to Pinterest Inc. The firm’s commercial-lending group handles about 300 new originations, modifications, restructurings and intercreditor negotiations a year, Goldenberg said.

While the firm’s gross revenue put it well below the ranks of the country’s biggest firms, Goldenberg said the firm hopes to double in size in the next five years. With more people, the base level of fixed costs will stay the same, but profit will continue to rise, he said.

An added bonus of the model is that lawyers at the firm are able to maintain a balanced work and home life. “I see my kids for breakfast and dinner,” he said.

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