General practice (GP) firms around Florida are rethinking how to best serve their clients’ intellectual property needs. Instead of building a small patent group of a few patent attorneys, GP firms turn to an unexpected ally: big IP boutiques. Big IP boutiques have 50-plus patent attorneys, scientific advisers and patent agents. The allegiance between GP firms and big IP boutiques yields unexpected and profitable results. Clients are thrilled because they receive top-quality patents drafted by highly specialized patent attorneys. GP firms are thrilled because they continue actively representing their clients without the profit-draining overhead and support required for a GP firm to maintain an in-firm patent group. Indeed, by joining forces with big IP boutiques, GP firms can offer their clients a world-class bench of patent expertise with far deeper resources and experience relative to a smaller patent group.
The GP Firm/Patent Group Cycle: Bolt On, Bolt Off, Bolt On …
Traditionally, once GP firms reach a certain size and visibility, inevitably they consider bolting on a small patent group. The thinking goes: “If we’re going to be a true full service firm, we need a patent group. Plus, patent groups practically print money.” So it happens that GP firms invest years of time and treasure nurturing a small patent practice group. In some cases, the small patent group never grows beyond one or two attorneys that handle the patent needs of the firm’s institutional clients. In other cases, defections of unsatisfied attorneys or clients weaken the small patent practice group. In still other cases, the small patent group succeeds, then quietly unbolts from the GP firm to open a small boutique directly servicing the firm’s clients. To complete the cycle, when it comes time for senior patent partners at the small IP boutiques to wind down, they look to sell to GP firms. Real-life examples of the GP firm/small patent group cycle come to mind without much effort.
Unfortunately, the reasons driving this cycle are not always evident in the excitement and promise of adding on a small patent group. Many times the technical limitations and costs of a small patent group outweigh the benefits. First, and most obvious, a small patent group means a small number of patent attorneys. Each patent attorney’s scientific education focuses on a specific scientific field, thereby limiting the patent group to the fields represented by its individual attorneys. For example, a GP firm that hires a patent attorney with an electrical engineering background will not be able to capably represent clients in the chemical industry. In that instance, the only practical solutions are either refer the chemical work to an outside patent attorney with a chemical background, or have the electrical engineer undertake the chemical work. Neither of these solutions is particularly profitable for a GP firm trying to maximize the work performed by its own patent attorneys while ensuring clients get top-tier results.
A second reason small patent groups do not thrive is that patent attorneys require costly, specialized resources. Small patent groups require specialized business development support, paralegals, secretarial support, docketing software, docketing personnel, IT support, increased malpractice insurance and continuing education. With only a handful of patent attorneys, GP firms find these expenses difficult to defray over a large patent client base, while still keeping rates reasonable and turning a profit. As a result, small patent groups either become cost centers or struggle to make do without necessary resources. Either way, clients pay the heavy price.
Third, there are often practical and cultural limits to growth of small patent practice groups at GP firms. With only a couple of patent attorneys, winning beauty contests for large IP litigations is nearly impossible. That, in turn, limits prospects for the most lucrative patent enforcement or defense work. In some instances, GP firms strain to convince a client that commercial litigators can handle a patent infringement action with little involvement of patent attorneys. Any resulting loss creates enormous malpractice exposure. Again, real life examples come to mind without much effort.
There is a profitable alternative to the dysfunctional GP firm/patent group cycle.
GP Firms Roundly Profit From Strong Relationships With Big IP Boutiques
Increasingly, GP firms develop long-term, client-centered relationships with big IP boutiques. Such relationships yield immediate benefits, both to clients and GP firms. First, big IP boutiques with scores of patent attorneys possess deep scientific specialization across nearly every industry imaginable. Such specialization dramatically improves patent quality, drafting efficiency and overall client experience. Second, when the big IP boutiques’ clients encounter non-IP legal needs throughout Florida, it is only natural to refer that work to their capable colleagues at GP firms they already work with. Third, in many instances, big IP boutiques work shoulder-to-shoulder with the referring GP firm. Big IP boutiques frequently serve a “special counsel” role as part of a broader litigation or transaction.
Close collaboration between a GP firm and a big IP boutique requires a tight, reliable relationship. To foster this, the big IP boutique pours itself into the relationship—with all the care afforded to actual clients. The IP boutiques: above all, provide world-class representation to the GP firm’s clients; develops strong, one-on-one relationships with attorneys at the GP firm; meticulously respects the GP firm’s boundaries with client relationships and practices; refers the GP firm work at every opportunity; educates the GP firm with IP-related CLEs; and answers day-to-day questions for the GP firm without charging. In response, GP firms rely on, trust and benefit (read: profit) from the relationship. As the relationship prospers, the client, GP firm, and IP boutique all prosper.
Given its benefits, forming alliances with big IP boutiques is a strategy that an increasing number of GP firms will employ to meet their clients’ intellectual property needs.
Alex Fernandez is a shareholder at Brinks Gilson & Lione in Tampa.