Smart Growth Strategies For Firm's IP Practice

Tuesday, May 22, 2012 - 10:57

In the legal industry, a number of interesting trends are converging, indicating that the time might be right again for practice expansion. That expansion has to reflect a given firm’s reality. Any law firm considering expanding a practice, whether through lateral hiring, merger or addition of services, should consider a number of factors, such as market position, economic landscape, industry trends, geographic scope, fiscal feasibility and firm culture, among several others, including the most important: client needs.

One of the areas that Gibbons P.C. has primed for targeted growth over the past two years has been its Intellectual Property Department.

Following is a discussion with the department’s chair, David E. De Lorenzi, as to why the firm chose to expand and diversify in this area, as well as the different growth strategies Gibbons has deployed.

Why is the Intellectual Property practice poised for growth?

Broadly, the economic recovery is the key. Although progress has been slow, businesses are again investing in research and development, inventing new products and filing for more patents. They are also licensing their products, and along with the requisite increased monitoring of licensed technologies comes increased intellectual property litigation. In addition, competition from new overseas markets is definitely impacting our clients. In a recent survey of in-house IP professionals, two-thirds of respondents cited this competition as significant, with enforcement of IP rights a key priority, given the worldwide rise of infringement activity.[1] More than half of the law firm respondents to a similar survey indicated an increase in intellectual property work.[2] Overall, intellectual property is now critical to most companies’ business strategies.

All of this means a corresponding increase in IP disputes. For example, the technology and engineering industries expect a rise in such litigation, and a large number of survey respondents suggest that IP and patent are among the most common types of litigation pending against their companies.[3]

How does your firm’s current focus on growth reflect big-picture legal industry trends?

Our focus is not simply on growth but on smart growth, targeting the talent that best applies to our client base – whether by recruiting attorneys to the firm or by developing the practices of attorneys already on staff. We are growing, actually, to increase efficiency, maximize the value of our client service and offer clients the most diverse, wide-ranging skill sets to address their various needs.

And clients are definitely demanding that kind of value, with services extending beyond legal services. Outside counsel now play a more strategic role in their clients’ overall operations; many corporate clients who want a greater return on their investment in legal services seek their attorneys’ advice on various business strategies.[4] A thorough understanding of clients’ businesses is essential.

At Gibbons, for example, we have broadened our traditional IP practice to help clients, on an alternative fee basis, identify their most valuable intellectual property assets and then develop and implement plans to monetize them. As a greater number of companies realize the value of their intellectual property, they now want to determine how to turn their intellectual property into revenue streams; rather than simply protecting their patent portfolios, they are seeking to expand and to monetize them.[5] Many, though, are unsure about how to handle the large portfolios they built up before the recession. In addition, small companies might lack the resources and expertise to monetize their patents.

You mentioned alternative fee arrangements. Clearly, much of the value clients seek is in terms of cost. How do you address cost concerns?

Costs are of great concern to in-house counsel, who generally predict litigation will either rise or remain the same in the next year, with costs increasing.[6] In one recent poll of corporate counsel, 62 percent of respondents reported using alternative fee arrangements.[7] At our firm, in many cases, we customize fee arrangements – including volume discounts, fixed and flat fees and blended rates – based on the matter at hand, the team working on the matter, and the client relationship.

But I believe we’ve come up with a more unique, and potentially more effective, cost-containment measure at Gibbons. Many clients have come to bristle at the “pay to train” model, paying new associates hourly rates essentially for their on-the-job education. Fifty-four percent of law firms have clients who will not pay for the work of first- and second-year associates.[8] Gibbons does not hire associates straight out of law school, but we do hire apprentices, “paying to train” select new attorneys ourselves. The firm’s Apprenticeship Program, launched in 2010, has been key to the development of our Intellectual Property Department. The program was designed to help maximize the value of our legal and client services while also providing a solid training ground for new attorneys. Clients are generally not billed for any apprentice training time, and the program eliminates the need for new attorneys to learn and develop professionally on client time.

The firm’s first two apprentices were placed in the Intellectual Property Department, given their extensive backgrounds in science and engineering. Jillian A. Centanni, the current apprentice, earned a BSE in chemical engineering. She had previously been a process engineering intern at an engineering firm and a senior valuation analyst for a boutique IP valuation firm. John J. Cahill, the prior apprentice, was promoted in fall 2011 to associate. Prior to his legal career, he served for more than eight years as director of new product development and as design engineer/scientist for several employers.

Have you brought on other attorneys to expand your practice?

We are definitely benefiting from the current trend in lateral moves.[9] This is a highly effective way for firms not only to service clients but also to leverage talent with minimal investment for professional development and training, because that investment has already been made.[10]

Hiring attorneys from the most renowned intellectual property boutiques, large-firm practices and corporate legal departments is part of our wide-ranging approach to growing our IP presence. Within the legal marketplace, intellectual property attorneys now recognize Gibbons as a unique alternative. The Gibbons Intellectual Property Department has landed some extremely impressive laterals just this year. Estelle J. Tsevdos, most recently a Life Sciences Patent partner at Ballard Spahr, recently joined as a director (partner). Ms. Tsevdos has a Ph.D. in Pharmacology, with post-doctorate study in biomedical sciences and anesthesiology. As an attorney, she has extensive experience with intellectual property and patent litigation, preparation and prosecution, and she provides licensing and transactional counsel. She has founded or led intellectual property departments, both at several law firms and as in-house counsel at such companies as American Cyanamid and Procter & Gamble.

The addition of Ms. Tsevdos reinforces our emphasis on life sciences backgrounds and industry experience, as well as on large-firm credibility in our intellectual property hires. One-third of the intellectual property attorneys who practice throughout the firm’s Newark, New York and Philadelphia offices are former chief patent counsel and executives for intellectual property departments in major international companies, including Hoffmann-La Roche Inc., IDT Corporation, International Paper Company, Araya Inc. and The BOC Group. Numerous department attorneys have advanced degrees in life sciences and technology and have worked in various research and development, engineering and other scientific capacities prior to their legal careers.

In addition, Charles H. Chevalier has joined Gibbons from the intellectual property boutique Fitzpatrick, Cella, Harper & Scinto. Mr. Chevalier undertook graduate-level study in molecular biology and biochemistry, as well as computer science. He previously worked in laboratory technician and biochemist positions at Merck & Co. As an attorney, he handles complex patent litigations. At Gibbons, Mr. Chevalier joins other recent hires from IP boutiques, including Ralph A. Dengler and Todd M. Nosher, who were both formerly with Fitzpatrick Cella, Harper & Scinto; William A. Hector, from Pearl Cohen Zedek Latzer; Andrew P. MacArthur, from Ostrow Kaufman; and Christopher H. Strate, formerly of St. Onge Steward Johnston & Reens.

Why are these attorneys leaving prestigious IP boutiques, corporations and national and international law firms to practice at Gibbons?

We have a high-quality, comprehensive practice within a midsize, full-service regional firm, serving household-name clients and startups alike, and our attorneys have tremendous opportunities for professional enrichment and challenging, interesting work. There are many advantages to this type of practice. We maintain rate structures below those of our peer firms and maximize internal billing efficiencies, all of which translate into significant savings to clients. Our size also allows us to be nimble and entrepreneurial in billing practices. We offer responsiveness; direct accountability at every level, from senior partner to junior staff member; staffing and matter management efficiencies; and additional economies, for example, in terms of overhead.

Midsize regional firms do not necessarily have to be limited in geographic scope, either. Network participation and official affiliations greatly facilitate international practice for midsize firms.[11] My firm is part of Geneva Group International, a private association of select law firms worldwide with whom the firm regularly works on international matters in all practice areas. Through that affiliation and our network of foreign agents, Gibbons is able to design clients’ foreign patent portfolios to assure proper protection in the appropriate countries; coordinate the domestic and foreign prosecution effort to maximize coverage and minimize conflicts and costs; handle appeals and interferences, as well as oppositions in foreign countries; and generally coordinate these diverse proceedings for the maximum benefit of our clients worldwide.

Ultimately, though, we don’t try to be something we’re not. Our business model is focused on offering high-quality, cost-effective middle-market legal services to Fortune 500 clients and middle-market businesses; that is, we handle major matters for mid-market companies (with annual revenues of $100 million to $2.5 billion) and mid-market matters for major companies, notably in the Mid-Atlantic region.

This vision keeps our growth truly strategic and targeted.

[1] Phelps, David “Lateral hires keep law firms on edge: With flat demand for legal services, lawyers increasingly find more opportunity outside their firms,” Star Tribune, February 20, 2012.

[2] Phelps, Ibid.

[3] Fulbright & Jaworski, “A Little Less Litigation; More Regulation,” 2011 Litigation Trends Survey, October 18, 2011.

[4] Robert Half Legal, “Law Offices Changing Business Models to Increase Revenue,” FindLaw, October 3, 2011.

[5] Griffith, Cary, “Intellectual Property: A Hot Market?” Law Crossing.

[6] Fulbright & Jaworski, Ibid.

[7] Fulbright & Jaworski, Ibid.

[8] Brill, David, “Joint Custody; Companies and law firms have long quibbled over who foots the bill for first-year associates. Here’s how to fix the pay conundrum.” New Jersey Law Journal, December 19, 2011.

[9] Poll, Ed, “Achieve Lateral Partner Integration; Plan to avoid the pitfalls.” New York Law Journal, February 6, 2012.

[10] Robert Half Legal, Ibid.

[11] Robert Denney Associates, Inc., “What’s Hot and What’s Not in the Legal Profession,” Legal Communique…, December 2011.

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