How Does Virtual Practice Differ?
A virtual practice is virtually paperless—documents are stored and retrieved virtually—and most work can be conducted via cellphone or laptop. Local print shops can be used to process, sign, and seal drawings. Expenses are directly billed to projects, reimbursable, and profitable with markups. But many of these practices are already common in a variety of architectural firms today. So what are other notable differences in virtual practices from what has been the norm in traditional practices?
Winters considers the most significant difference between a traditional firm and his virtual practice to be the work flexibility it affords him—and not having to commute. He finds that it profoundly impacts his own family life since he can be at home with his son and participate actively in his daily life and school.
The virtual architectural practice model may be ideal for millennials who prefer flexible work arrangements. Parents can raise children and work from home, while others can choose recreational activities in the middle of the day. Macrae, who was 58 when he started his virtual practice, began living his retirement travel dreams while working easily and profitably from anywhere in the world. He highlights a recent “sea-change of less paranoia” about stealing others’ work and clients as an important factor in collaborating with his consultants. In utilizing only consultants or contractors, the elimination of human resources responsibilities and their associated costs is identified as another valuable characteristic of the virtual practice.
Employees and Contractors
Just like traditional firms, virtual firms need project managers, interior designers, draftspersons, engineers, 3-D modelers, and other collaborators and team members are assembled when needed for a project. In Peter Macrae’s firm, he now has six teams that work on various project types around the world, completing 150 US projects in 2016—in addition to collaboration on projects in Australia, New Zealand, Canada, and Mexico. With every project, he analyzes the requirements then assembles the necessary resources and talent from across the country.
Macrae notes that it’s important to empower one’s workers—which are now, in his case, all contractors to his firm—to identify future projects and then develop them together, sharing both the risks and the rewards. It is noted that from a legal standpoint, it is best that contractors have multiple clients and incorporate or form an LLC to ensure compliance with labor laws and to demonstrate that they are not simply employees who are being treated as contractors. Typically, the individual with the project connection takes the lead on the project. He notes that one’s income is consistent if one works efficiently and effectively; all are paid when the client pays. Importantly, each person performs the tasks for which one is best suited.
For a geographically diverse virtual practice, becoming registered in multiple states is required by law. Macrae is registered in 36 states—a feat accomplished through the National Council of Architecture Registration Boards (NCARB) and its certificate process. Winters holds eight registrations on the East coast where his firm currently does business. Your own state business license may be the only license required as long as the architect is not signing and sealing documents in other states, but state laws will vary. Generally, the architect's license will be on the line for unlawful practice and there could also be implications for the firm as an entity depending on the nature of the activity. Each state defines what it considers to be “doing business” in that state. If you are doing business in a state, you generally must register as a “foreign” entity so you can be added to the tax rolls and pay income tax and an annual license renewal fee, in addition to the architectural license. Checking with state requirements and acting accordingly is necessary to ensure the firm is not later obligated to pay back fees, taxes and penalties which in many states could be crushing.
For the Kezlo Group, the freedom to structure one’s day and balance personal and family needs, avoiding trade-offs that pit work and life requirements against each other, make the biggest difference. However, maintaining a healthy firm culture when employees are not in the same physical space has provided challenges for his firm, requiring much more consistent communication than originally anticipated. Employee motivation is critical, and employees must be self-starters, motivated without needing much direction or feedback. Therefore, personality fit is crucial for success and must be ascertained before hiring to ensure the employee is able to work independently in a virtual office environment.
Overall, Winters doesn’t find that the services his firm offers are any different than they would be in a traditional practice, and they handle their contractual relationships and service providers the same way as before in a traditional small firm environment, employing most of the design team as consultants for a project including MEP engineering, structural engineering, interior design, etc. As for marketing, the firm encourages everyone in it to market and work on business development; currently, most of their work is with repeat clients or referrals.
Luis finds that in a virtual practice, one is more “fully aware and in the moment of (where) you are actually located” and that it “evens out the playing field” to seek opportunities to work with people located elsewhere. She identifies the significant difference between virtual and traditional practice to be the diversity of stakeholders found in virtual practice. She finds the opportunity to work with diverse voices meaningful and important when trying to solve some of the most pressing challenges affecting the built environment. In addition, virtual practice offers flexibility not found in traditional practice, including not binding one to an 8 am to 5 pm schedule nor to a geographical location. One downside she noted is a lack of in-person meetings with colleagues.
While there are many benefits of a virtual practice, as with most any enterprise, there are also risks. This overview will touch on many but not all of them—and hiring the right professionals, such as an attorney, a business consultant, and a financial advisor, is the best approach to help you lay the groundwork you’ll need for future success. As the legal principle goes, ignorance of the law is no excuse, so it’s vitally important that every practitioner understand what is required so they don’t discover too late what can go wrong.
For example, employment may be handled differently in a virtual practice, but it still must conform to the law. You’ll need to pay close attention to the factors that determine whether a worker is properly classified as an employee or as an independent contractor—or you could face huge fines. Since a virtual practice depends almost exclusively on technology for communications, you’ll need to establish and communicate clear and consistent policies and procedures for how employees and contractors use technology.
When “onboarding” a new employee, one’s role and responsibilities must be communicated and understood by the employee and everyone with a vested interest. If travel is required, those requirements must be clearly understood and agreed to before employment begins. They’ll need to be able and willing to travel to meet clients and prospective clients. Virtual practitioners and their workers must be self-starters, comfortably and productively working independently to be successful. A consistent and regular communications plan for all your workers, whether employees or contractors, is always necessary to avoid misunderstandings or worse—especially when you won’t be seeing them across the water cooler. As for any type of firm, it’s also important to establish employee exit policies and procedures for the firm. Employment related disputes and claims can arise in any work setting. When engaging employees or contractors, it is important to keep abreast of labor laws, and stay educated on workplace harassment and other common claims.
A good understanding of contract law and intellectual property rights as they apply to architectural practice is advisable, and relying on an attorney as well as one’s liability carrier for interpretation and advice as needed, or when a potential claim may arise is also necessary. A virtual practice also means it’s important for you to have a thorough understanding of the business practices and culture wherever your projects and your workers reside.
A virtual practice must be ready to invest in appropriate technology and software upgrades for the security and efficiency that you’ll need to avoid future problems with both, which may likely arise. Project extranets can be utilized to establish relationships, streamline communications, increase accountability, and create a permanent record of project information which could be critical in the event of a future claim.
Importantly, you must be registered in every state where you perform architectural services and obtain state business licenses wherever you may be doing business. You need to maintain adequate insurance for you, your firm, and your employees—and even if you’re a solopreneur contractor. It’s important to make any necessary changes to your policies to address your current practice and ensure it’s adequately covered.
Establishing a financial discipline that includes strategies appropriate for the firm’s size and structure is also an important consideration. You need to define appropriate profit margins, time allocations, and staffing models to address your work.
You’ll need to think through and plan how you will find work and grow the business from the standpoint of marketing, sales, and business development—whether that’s you, your workers, or outsourcing the responsibility. There will be “hidden costs” of starting and running a new business so it’s important to organize an appropriate backup plan or stream of alternate income while getting the firm off the ground for the first year.
This overview will highlight the many benefits and risks of a virtual practice, with a checklist at the end to help summarize what you’ll need to address. Starting out with a team of professionals with whom you can consult and set plans, will help to ensure your virtual practice is virtually flawless.