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Intellectual Property Work Shifting to Largest Law Firms

Large law firms—comprised of more than 750 lawyers—are reaping the benefits of an intellectual property (IP) sector that is surging in this changing world of ultra-fast technologies and social media. Smaller law firms are losing out on lucrative legal work surrounding patents, trademarks, licensing and copyrights as a result.

A market analysis, “Enterprise Legal Management Trends,” conducted by Raleigh, N.C.-based Lexis/Nexis CounselLink evaluated four million law firm invoices it processed since 2009, and found that some lucrative IP work was shifting from smaller firms to the largest firms. The company releases its market findings twice per year.

A recent article in the New York Times titled Big Law Firms Winning More of Intellectual Property Work summarized results from this latest analysis:

1. The country’s largest law firms have taken IP work away from smaller firms.

  • The 50 largest law firms held 61 percent of specialized IP litigation work in 2014, a jump from 36 percent in 2011.
  • For law firms with 201-500 lawyers, IP legal work fell to 13 percent in 2014 from 35 percent in 2011.

2. An abundance of patent challenges and defenses has especially benefited large law firms because of their access to additional resources.

3. The large law firms rivaled their smaller counterparts with flexible billing arrangements using contract lawyers and designating more work to junior partners resulting in more competitive fees.

  • At the largest law firms, partner time spent on patents and other IP legal work was billed at less than 1 percent, according to their submitted invoices.
  • A much larger portion of partner time, 20 percent to 60 percent, was spent on IP litigation at firms with 201-500 lawyers.
  • Median partner rates at the large firms continued to decline from $656 an hour in 2011 to $622 an hour in 2014.

4. Hourly compensation, however, was on the rise for partners at smaller firms—from $560 in 2011 to $651 in 2014. Lawyers at smaller firms did not or could not hand down the work to their subordinates, billing at partner-level rates.

5. For legal IP work, specific industries appear to prefer using alternative payment provisions such as set fees instead of traditional hourly billing.

  • Pharmaceutical, scientific and technical communities especially negotiate billing terms.
  • Almost 19.5 percent of pharmaceutical companies negotiated legal billing arrangements last year compared to 3.3 percent of the companies in 2011.

About the Author: Law Firm Marketing Consultant Margaret Grisdela

Margaret Grisdela is president of Legal Expert Connections, Inc., a national legal marketing agency, and author of the book Courting Your Clients. She specializes in insurance defense marketing, employment law marketing, and serving as an outsourced legal marketing director. Connect via LinkedIn or at 1-866-417-7025.

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