If you are like me and enjoy the economics of law practice as much as the practice itself, then you’re probably familiar with Bruce MacEwen’s blog, Adam Smith, Esq., where “law firm management comes under the microscope.” (and what can I say about a guy who can work in the word “Jesuitical” in a blog article?*)

In a recent post (Deal Market is Back! But Hey, What About the Rest of Us?), MacEwen mentions an article by Aric Press describing that changes are afoot in the profession and that things are essentially unchanged, and that “both sentiments are exactly correct.” This is because clients are dividing their legal work into two distinct categories:

Column A: These are the deals, cases, and issues where price is no object;

Column B: Everything else.

That is, companies hire firms at a money is no object level for their (perceived) mission critical work and then trying to get the rest of the work done at cut rates. I agree with the assertion that unless you have a tony NY address, you’re not going to get the bulk of your revenue from Column A so that leaves a lot in Column B. What I have trouble with is how things get prioritized in column A versus B. My experience is that many clients (not ours, of course) are often penny-wise, pound-foolish. That is, they ask that you “commoditize” work that cannot be easily reduced to a commodity, e.g., patent work. They put Column A patents into Column B.

Clients will say they want an alternate billing arrangement (read: capped price) for patent applications when they really just want to lower the cost; not increase the value derived. Patent applications are as diverse as the inventors themselves. Almost without fail, the invention is presented as (quote) Just a simple invention (unquote) but then the inventor changes the invention in mid-stream or decides that he really has several related inventions. Recently, I had a single invention balloon into over a dozen applications – each one more complicated than the first – as we delved into the gritty details of just what it was the inventors had discovered.

Too often, patentees look to get a patent as cheaply as possible only to turn around and spend like there’s no tomorrow in defending it. Often a lawsuit that could have been avoided had the patent been better crafted in the first place. Personally, I would not want my patent attorney to be incentivized to stop carefully crafting an application because too much time is being spent. Not if this patent covers my company’s core technology. What, indeed, is to be done?

I don’t mean that I’m against alternative arrangements. They can often make sense – just not always. Earlier, MacEwen put together the “Adam Smith, Esq.” official “Savvy Blawgers Panel,” a brain trust of outstanding members of the legal blogosphere and asked about the future of the billable hour (Savvy Blawgers Query #2: The Future of the Billable Hour). The answers often derided the billable hour as bad for the client, good only for the lawyers. But is this really so? No one pretends that the billable hours is perfect or all-wise but, as it has been said about democracy – it’s the worst form of Government except all those other forms that have been tried from time to time.

I agree with Dennis Kennedy’s take on the billable hour, that it is, by its definition, not the best way to make money for lawyers. There is only so much you can charge per hour. There are only so many hours in the day. Unfortunately, when clients ask for a patent application to be an alternative billing arrangement, they are asking that it be shifted from Column A to Column B. That is, they are treating it as a simple routine matter — just file form 123PDQ and you’re done. But patent drafting is not that way. It is an art, a craft, a give-and-take between the patentee and patent office.

This is not to say all patents must be in Column A. Certainly, sophisticated clients can and do decide that they do not intend to procure the best patent claim scope but merely some claim scope, knowing that they will never enforce the claims. Many companies just want patent numbers. For some, this is a way of keeping score. For others, it’s a way to provide tender to barter with if a competitor ever comes knocking at their door.

There’s certainly nothing wrong with trying to get a low cost patent – as long as careful thought goes into the decision. If one decides that a piece of intellectual property is important to the company’s mission and business plan, then it should be treated like column A. If it is nothing more than a commodity-like procurement, then it could be a Column B item. Just be sure you can tell the difference. Like the saying goes, you can have cheap or good … just not both.

Here’s to savvy blawgers … and clients and their attorneys.

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*Jes’u·it’i·cal (adj). One given to subtle casuistry — the determination of right and wrong in questions of conduct or conscience by analyzing cases that illustrate general ethical rules.

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3 Comments

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