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After years of belt-tightening, corporate legal departments are beginning to show signs of expansion, at least in the technology sector. Much of the new hiring involves licensing attorneys who handle the intellectual property transactions that are a mainstay of Silicon Valley’s technology companies. The trend underscores the extent to which businesses are dedicating their in-house legal resources to revenue-generating activities. The demand for licensing attorneys also reflects an improving economic climate. Deals that call for licensing know-how are becoming more common. Licensing attorneys are so closely entwined with deal flow that many companies keep their attorney staffing figures close to the vest for fear of telegraphing their strategy and sales forecasts to business competitors. According to legal recruiters who work with in-house legal departments, though, demand for licensing attorneys is definitely on the rise. Julie Brush, co-founder of Solutus Legal Search, says she was recently conducting up to eight searches for in-house licensing attorneys. That compares to only two such searches that she was involved with a year or so ago. And those, she says, were “soft” searches, meaning that the companies proceeded very slowly. “There was no pressing need to get somebody on board,” says Brush. Now it appears the need is there. For example, Applied Biosystems Group, headquartered in Foster City, California, hired an attorney to fill a newly created technology transactions position last year. Instead of relying on its in-house patent attorneys to pitch in on licensing matters the way the company had traditionally done, Paul Grossman, the company’s vice president of intellectual property, decided that the work required a specialist. For technology companies, the licensing of intellectual property is bread-and-butter legal work. Most prefer to handle the work in-house because of the repetitive nature of the transactions and the intimate knowledge of the business that’s required. “Licensing is clearly better done inside,” says Marcia Sterling, general counsel of Autodesk Inc., a software company in San Rafael, California. “It’s very hard to get an outsider close enough to a particular business unit to really understand.” Sterling recently hired a part-time attorney whose duties will include licensing, among other things. “We were just a little light. We’ve got a lot going on right now,” says Sterling. “And folks were working too hard.” Software vendors in particular rely on licensing attorneys since every sale is essentially an outbound licensing deal that requires lawyer involvement. As a result, licensing attorneys play an indispensable role in the company’s core business. “When revenues and sales pick up, the first thing that a company wants is a licensing lawyer because they need to service those revenue deals,” says Heather Meeker, a partner at Greenberg Traurig’s office in East Palo Alto. Unlike general corporate work, says Meeker, “the amount of [licensing] capacity that a company needs is directly related to the amount of sales they’re doing.” Licensing attorneys also play a big role in strategic deals, entering into joint ventures with other businesses and incorporating technology from other companies into their own products. Thus far, the industry’s hiring of licensing attorneys appears to be more of a gradual buildup than an arms race. Corporate legal departments tend to hire attorneys one-by-one rather than bringing on groups of people as law firms often do. And budgets for in-house legal departments are typically set at the beginning of a company’s fiscal year, allowing for less flexibility when it comes to hiring staff in response to sudden changes in deal flow. For many companies, a wait-and-see approach is the safest route. Until a business determines that an increase in licensing work is a normal business condition rather than a one-time surge, it’s easier and less risky to offload surplus licensing work to outside counsel. Still, the outlook within many corporate legal departments is upbeat. Says Sterling, “I would say that it’s predictable that as the economy picks up, you’ll see corporate legal departments expand.” Alexei Oreskovic is a reporter at The Recorder who writes about corporate law departments and other matters.

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