With corporate legal budgets being cut more than 10% in 2009 it might seem like challenging times to manage a corporate IP department. To add to the difficulties, such reductions are occurring even while many corporations are increasing the focus placed on creation of value using strategic IP management. Corporate IP managers must therefore obtain more valuable IP with smaller budgets. Fortunately for corporate IP managers, the current economic climate has forced many prestigious law firms to, perhaps for the first time, develop innovative billing and practice models. This has not only resulted in the effective billable rates of these law firms effectively dropping more than 10%, but many law firms have or are developing more efficient ways to deliver legal services to their clients. Smart law firms will pass these cost savings on to their clients to
Corporate legal managers and the business teams they support complain seemingly constantly about outside counsel expense, and intellectual property ("IP") is no exception. And, why wouldn't they complain when every dollar spent on legal representation is money that is effectively removed from the company's P&L statement? This sets up an ongoing tension between corporations and law firms to reduce legal costs even while lawyers' incomes have sky-rocketed in recent years. For most corporate buyers of legal services, however, the ability to obtain substantive cost reduction has been somewhat limited due to the lack of transparent information available about legal fees. It may be even more difficult for corporate legal services buyers to gain meaningful reductions in IP costs because of the highly specialized nature of this area of law practice which, arguably, makes IP more of a "Black Box" than most areas. Moreover, regardless
Dennis Crouch of The PatentlyO blog recently posted an intriguing tidbit about about well-known IP attorneys Carl Moore (Of counsel at Marshall Gerstein); Timothy Vezeau (patent attorney at Katten Muchin); and Nate Scarpelli (who used to and still appears to be associated with Marshall Gerstein). These prominent members of the Chicago IP community appear to be "moon-lighting" from their respective law practices to act as managing partners at a patent holding company called "Virtual Photo Store LLC" ("VPS"). As reported in PatentlyO, VPS is currently involved as defendant in a Declaratory Judgment action. Here is a copy of the DJ Complaint, also posted at PatentlyO. (Interestingly, the Complaint lists VPS' address as that of the Marshall, Gerstein law firm.)The Complaint alleges that VPS is a non-practicing entity
As someone who assists corporations and entrepreneurs in monetizing their patents, I am continuously on the lookout for potential technology buyers. To this end, I subscribe to a number of services that provide "wish-lists" of technology that others are seeking to acquire. The most notable of these are Innocentive.com and Yet2.com. Recently, I have seen a number of technologies on each of these websites that are possibly relevant to patents that I have obtained for clients over the last several years. While this could be a coincidence, I also think it could be a signal that more companies are dipping their toes into the Open Innovation space, as opposed to relying solely on internally developed products or technologies. Patent attorneys seeking to improve the value they provide to clients would be well-served regularly reviewing the listings on these databases and spreading the word to their firm
NOTE TO READERS: Since I am on vacation this week (well, sort of), I have asked my friend Scott Garrison to pen a piece about IP Strategy for me. He has been so gracious to do so, and the post follows. At bit about Scott: Scott Garrison is Chief IP Counsel and Assistant General Counsel for Scientific Games which, among other things, makes scratch off lottery tickets. Prior to joining SciGames, Scott was a senior IP attorney at Kimberly Clark and, prior to that, was a law firm patent attorney. Scott Garrison is a true IP Strategist and I am pleased to present him a forum to express his views on this blog. Scott's blog post: A short while ago I had an interesting conversation with an out of town acquaintance named "Mike" who works at a large international B2B ("business to business") corporation. I was interested to find out that his
For many years, vendors of office automation systems expended considerable effort trying to convince corporate and law firm patent attorneys to adopt paperless file management systems by touting the time and money savings associated with electronic files over the traditional patent file system. However, relatively few patent attorneys have done so, instead, remaining loyal to the traditional three-sided manila patent file folder. Until recently I was one of those patent attorneys. Now that I have discovered the vast efficiencies and improvements possible with these electronic systems, the question is why I remained true to this clearly outdated system of maintaining client patent prosecution records. Given the remarkable efficiency and knowledge management improvements possible with electronic patent file management systems, there can be no viable excuse for either corporate or law firm patent attorneys not to adopt such systems.In retrospect, I think I found that the heft and history represented by the
As legal service fees continue to rise five percent or more year after year, corporate IP managers, such as Chief IP Counsel and the like, continually face pressures from their management teams to reduce outside counsel legal expenses. The current economic downturn has also resulted in corporate legal budgets being slashed, thus increasing the pressure on corporate IP managers to reduce outside counsel costs, even while IP asset value is becoming more important to C-level management. As a result, the need for corporate IP managers to achieve outside counsel fee relief while at the same time maintaining IP legal service quality is more acute than ever today. Today, there are a number of commonly accepted methods to achieve outside IP counsel fee relief including fixed (or "capped") fee arrangements and a percentage reduction per total hours billed, as well as electronic billing systems set up to automatically audit law firm bills.
A possible upside to the recent economic downturn is that many previously accepted business models are being revealed as in need of substantial reinvention or even total elimination. The billable hour/leverage law firm model for legal services is one of these increasingly maligned business models, and is now appearing to be in danger of ending up in the dustbin of history. Specifically, even those who benefit handsomely from the billable hour, such as the Cravath firm's many $ 800 per hour lawyers, now realize the fundamental irrationality of charging a client for time spent instead of value provided. This alone should signal that change is in the air. Notwithstanding the growing conversation about the need for alternative legal service billing methods, I fear that the majority of IP law firms will either try to ignore the desire for change or will respond by offering
As a self-described "Recovering Patent Lawyer," I am now effectively an outside observer of the way the patent business is conducted in the law firm practice environment, and how corporate and other clients purchase patent legal services. In this last year in which I have re-invented myself as an IP Strategist, I have come to firmly believe that the basic patent law firm business model contains a fundamental flaw: outside patent counsel can make money only when they actually do work for their corporate clients. As such, there is no value when a patent attorney (or her law firm partners) tells a client that he should not pay you for the attorney's expertise. This necessarily sets up a tension between what the best interests of the law firm attorney and those of the corporate client.
Analysts say that the current economic downturn will likely last at least until early 2010. While this no doubt seems like almost an eternity for the average consumer, for business strategic planning purposes, this date is just around the corner. Indeed, business managers at many companies are likely conducting “short term” strategic planning efforts targeted for introduction in mid-2010. This might account for the recent uptick in job postings for experienced corporate intellectual property attorneys. I see this increase in job opportunities as signifying that smart corporate leaders are realizing that sustainable business success requires companies to not only introduce innovative products and technology offerings, but also that they strategically protect such innovations. As a result, I believe that more companies will seek to hire strategic in-house IP counsel, which is good news for us IP types. Of course, the traditional model of hiring an in-house IP counsel results in