The Malaysian Bar Council has finally put a lid on the use of virtual office by lawyers. In their letter dated 21 August 2015 to a group of lawyers (“Group”) (which I am a part of), it stated:
Having considered the reasons and proposals put forth by the group of lawyers during its meetings with the Legal Profession Committee, as well as the Memorandum prepared by one of your members, the Bar Council is of the view that crucial issues such as the cardinal principle of solicitor-client privilege, keeping and storing of physical documents, accessibility and traceability of lawyers are being compromised through the practise of such mode of offices.
In light of the above decision, you are required to take immediate and necessary steps to ensure compliance with the relevant Rules and Rulings of the Bar Council, the Legal Profession (Practice & Etiquette) Rules 1978 and the Legal Profession (Publicity) Rules 2001 and cease to operate through virtual office with immediate effect.
History of the Ban
On 7 March 2015, the Bar Council issued Circular No. 49/2014 entitled “Law Firms Operating Through Virtual Offices” (Circular 49) with the following statement:
The concept of a virtual office essentially means there is no physical presence of a law office. The office is “virtual” as it is merely a front, consisting of generic office facilities operated by another company offering the services of a receptionist and/or interchangeable meetings rooms, used by various parties (whether lawyers or not) paying for such services. Any telephone calls made to a lawyer utilising this arrangement are received by the receptionist, on the lawyer’s behalf, who would then convey the communication to the lawyer concerned, for example in a text message through a short message service (“SMS”). Documents are also received, on behalf of the lawyer, by the receptionist. The services of the receptionist and/or use of meeting rooms at a virtual office are shared by other lawyers and/or companies and/or businesses.
The Bar Council is of the view that lawyers practising through virtual offices are in breach of Ruling 7.03 of the Rules and Rulings of the Bar Council Malaysia, which provides as follows: Where an Advocate and Solicitor shares an office or premises with another person (whether an Advocate and Solicitor or not), the office or premises must be partitioned off with separate and distinct entrances, with no connecting door between the two offices or premises. This Ruling shall not apply to Advocates and Solicitors who are partners of the same law firm.
Where a law firm operates through a virtual office, a further cause for concern arises in respect of confidentiality and the safekeeping of information, including files and documents, which appear to be lax in such virtual offices.
Members are therefore advised to cease such operations with immediate effect, as the Bar Council may take disciplinary action against lawyers who are reported to be operating through virtual offices.
The Group subsequently got in touch with the Bar Council and meetings were held with the members of the Legal Practice Committee (LPC) to clarify and discuss on the ban. A moratorium was granted pending the discussion between the Group and the LPC. This moratorium was subsequently lifted with the letter of 21 August 2015.
Notwithstanding the said ban, it is unclear what type of virtual office is banned by the Bar Council. There are many service providers in Malaysia who term their service as a virtual office service but they differ from each other.
Wikipedia defines “virtual office” as ”a virtual office provides communication and address services without providing dedicated office space”. The California State Bar Standing Committee on Professional Responsibility and Conduct has a different view on virtual office. In a matter concerning “virtual law office practice” (VLO), it described the VLO with the following features:
“In her VLO, Attorney intends to communicate with her clients through a secure internet portal created on her website, and to both store, and access, all information regarding client matters through that portal. The information on the secure internet portal will be password protected and encrypted. Attorney intends to assign a separate password to each client after that client has registered and signed Attorney’s standard engagement letter so that a particular client can access information relating to his or her matter only. Attorney plans not to communicate with her clients by phone, e-mail or in person, but to limit communications solely to the internet portal through a function that allows attorney and client to send communications directly to each other within the internet portal.”
In an article entitled “PRACTICING LAW WITHOUT AN OFFICE ADDRESS: HOW THE BONA FIDE OFFICE REQUIREMENT AFFECTS VIRTUAL LAW PRACTICE” by Stephanie L. Kimbro, M.A., J.D. the learned author described VLO with the following features:
The features of a virtual law office and methods of communicating and delivering the legal services online differ depending on the features available in the technology chosen to set up the virtual law office. These features will continue to evolve with the technology, but the key feature that will remain the same is the client portal, which requires a unique username and password. Once inside the secure virtual law office, the client may then have access to his or her case file, documents, invoices, text communication with the attorney, interactive calendar, and forms. In addition, the client may also have the ability to pay invoices online, sign online engagement letters, or hold video conferences or real time chat.
In the article entitled “The Rise of the Legal Virtual Office” by Stephen Furnari, the learned author stated that “virtual” law practice comes in various forms and this include, virtual law firm (a law practice that does not utilize a central office to house attorneys or permanent staff), virtual law office (an unbundled office rental arrangement where firms get the business presence of a traditional office and have access to its resources, such as an address to receive mail, a physical location to meet clients, conference rooms, receptionist and admin services, and temporary office space), and virtual legal services (actual legal services that are provided and delivered exclusively online using SaaS applications)
Whether the Bar Council’s definition would fall within the scope of a VLO defined above is unclear. Nevertheless, Circular 49 stated that “the concept of a virtual office essentially means there is no physical presence of a law office” and the lawyer is sharing office with third parties.
But it is clear that those who have their law office at home with certain administrative functions outsourced would not be caught by the ban.
With the advent of broadband, cloud services and other new technological features, a traditional law practice has changed. Working files are no longer kept in our paper files but stored in our PC or even in the cloud. Lawyers do not need a physical file to work but with only a device which may or may not belong to him since one can access them using cloud services. Technology has evolved so much and so quick that a laptop can even now become a tablet and vice versa (e.g. Windows Surface 3). In two years, a smart phone can become your only computer (according to an article by Wired). Traditional physical offices may one day be redundant to some lawyers and could even be reduced to an electronic device.
The Bar Council will certainly need to address and be open to these technological advancements. Malaysian lawyers should be encouraged to move ahead with times and adopt new technological advancements to be competitive and on par with any international lawyers.
First published on LoyarBurok on 2 November 2015.
[Postscript 5 March 2022: In light of the negative repercussions caused by the Covid-19 pandemic, the Bar Council has approved the use of virtual offices by law firms. The provision regarding the use of virtual offices are now under, among others, Ruling 7A of the Rules and Rulings of the Bar Council. For more information, please refer to Circular No 324/2021 | Virtual Offices and the Applicable Rulings of the Bar Council]