A comprehensive survey of almost 400 IP professionals across IP law firms and corporate IP departments has revealed the pressures IP law firms are under. They need to grow profitably and at the same time, are subject to client requests to reduce costs and increase strategic advice.
The survey revealed a significant gap between law firms' perceptions of what corporates are looking for and what corporates believe they really need from external counsel. To generate profitable growth, law firms need to understand clients' requirements more comprehensively, as well as organise their firms in order to deliver efficient services within clients' budget constraints. Despite cost pressures, the survey identified that corporate IP departments are willing to invest in strategic counsel that will help to cultivate a more relevant and efficient IP portfolio.
The survey was conducted for CPA Global by independent research company B2B International, in association with ManagingIP Magazine.
|About the survey|
The survey was designed to deliver a clear insight into the dynamics of the IP law firm market today, as well as providing law firms with insights that would assist in creating stronger client relationships and profitable growth for the future. The survey explored the pressures faced by today's law firms, the activities they are prioritising and their perceptions about innovation and efficiency.
To achieve this, CPA Global sought the views of law firm practitioners – from managing partners, COOs and partners, to patent and trade mark attorneys and paralegals, across 232 law firms, ranging from sole practitioners to international giants.
Critically, the survey also sought the views of IP professionals in corporate roles. In total, almost 150 companies provided input – from those with less than 50 employees to some of the largest corporations in the world. Responses were received from around the globe. While most of the participants were based in the Americas, Europe and Middle East, a significant proportion were based in Asia where dynamic change in law firms and IP management is taking place.
Commenting on the survey, Jayne Durden, VP Solutions Marketing & Strategy at CPA Global, said: "CPA Global was founded by IP law firms, for IP law firms almost 50 years ago. Our business relies on understanding the complex needs and requirements of a diverse range of global clients. To properly serve the legal IP market, it is essential we understand the industry and can support it effectively as it changes."
She added: "The survey provided robust confirmation of many insights we hear anecdotally from our clients. However, it also provides new insight into the growth challenges that IP law firms face in a fast-evolving market. The input from corporates provides a valuable extra dimension, highlighting key differences in perceptions between what law firms believe corporates want, and the view that corporates hold on the added value they desire from external legal resource."
Growth, profitability and pricing pressure: the law firm perspective
The IP law firms that participated in the survey are clearly feeling under pressure due to the need to adapt to clients' financial constraints and generate profit. When asked what they perceived to be the most significant challenges they would face in the next three years, the top three items identified were all related to cost and profitability.
The primary challenge concerned pressure to reduce prices, with 59% of respondents ranking this issue among their top three considerations. This was closely related to the second, most significant challenge: maintaining or improving practice profitability (identified by 44% of respondents). The same proportion of respondents identified increased competition among law firms as a significant issue.
The research also explored how law firms are addressing these challenges. Firms are working hard to try and meet client requirements, aiming to improve the accuracy of price estimates, looking to embrace new and more sophisticated fee models and, in some cases, considering discounts and fixed fee arrangements for clients.
Business growth was a firm focus for the firms surveyed. However, when asked about the most effective ways to grow business, most felt retaining clients and positioning the firm as a strategic partner were more important than seeking new client relationships.
As a result, it is perhaps unsurprising that only around half of law firms had dedicated business development or marketing resources. Those that did felt these were not always fully utilised or that they had the team but not the tools to market the firm effectively. The 50% of law firms that did not have dedicated business development resources relied on fee earners – from partners to practising lawyers – to take on this role.
Technology, particularly software, was considered a tool that can help improve practice efficiency and profitability, with 31% of respondents seeing technology that transforms and automates workplaces as a key opportunity in the next three years. Respondents were looking for more user-friendly, efficient and integrated software packages, across client relationship management, IP workflow and docketing. Cloud computing was identified as a significant opportunity.
The survey clearly demonstrates that law firms are feeling pressure to reduce costs, while at the same time wanting to grow revenues and profitability. Many firms were struggling with how to address these challenges. Law firms were keen to optimise their offerings in the market and create efficiency through technology. The critical question was what strategy would achieve this?
The corporate view on IP law firms
The survey clearly demonstrated that corporate clients' predominant desire is for law firms to better meet their needs and requirements. Law firms that understand why work is sent to them are far more likely to become strategic partners with clients.
On average, the corporates that responded to the survey outsourced around 50% of their legal work to law firms. This was driven by two factors: firstly, the need for specific IP expertise and secondly, to address shortfalls in in-house resource.
The three most referenced challenges for corporate IP departments were: pressure to reduce costs (51%); aligning IP with business strategy (40%); selecting the right IP to protect and maintain (37%).
The survey revealed a significant gap between law firms’ perceptions of what corporates are looking for and what corporates believe they really need from external counsel
When asked what corporate IP departments expect from a great law firm, expertise and experience came at the top of the list, with participants commenting on the need for realistic advice, commercial understanding and strategic thinking. Second on the list, came responsiveness, particularly through fast and accurate communication. Pricing was the third consideration, cited by 24% of respondents.
IP departments were asked what would differentiate a law firm's offering. The responses ranked quality of service (70%), specialisation (59%) and deep sector and business understanding (50%) as more important criteria than cost (26%).
The message is clear: law firms that wish to receive business from corporate IP departments need to demonstrate significant relevant IP experience to clients. They need to help corporates understand more clearly where IP is driving business value and they need to provide strategic advice that can actively help in cost control.
One area where there was a disconnect between the views of law firms and corporates was around innovation and transformation. Participants were asked about these terms in the context of their respective relationships. In response, law firms focussed on the tools that would drive innovation, such as technology, digitisation and automation when responding. IP departments focussed more on the outcomes of innovation and transformation as they saw them. These included higher quality, added value, expertise and flexibility. For corporates, the tools that drive excellence are less important than the outcomes. Law firms that want to grow need to identify the means to deliver a higher quality, more effective and flexible service and implement this quickly.
|How CPA Global helps law firms create successful strategies for growth and development|
Founded in 1969 by and for IP law firms, CPA Global is the world's leading IP management and technology company. The company has 23 offices across four continents, serving more than 10,000 customers and connecting millions of global IP users every day.
CPA Global recognises the challenges faced by law firms and is committed to helping law firms drive the efficiencies they need to achieve via technology and services.
CPA Global helps law firms in the following ways:
- IP diagnostic service. This delivers expert analysis of a law firm's current IP operation, focusing on best practice use of people, processes and technology to mitigate risk, increase efficiency and profitability and recommending strategies to transform your firm.
- IP support services. Teams of specialised IP professionals can be integrated into your firm's processes to help reduce costs and increase capability and capacity to support your firm and your clients.
- Professional services. CPA Global employs around 2,000 expert IP professionals globally. The company's expert professional services team provides implementation, upgrades and maintenance of IP software and services.
- The IP Platform. Cloud-based technology solutions for critical aspects of IP management, from docketing and filing to renewals. By centralising all services in one platform, CPA Global ensures that data entered in one app will be reflected across the entire platform. CPA Global delivers a single sign on environment for all apps and software, reducing the need for law firms to integrate technology within an existing environment. This saves both time and cost of deployment.
- Accurate data. The IP Platform offers seamless access to verified data through IP One Data – CPA Global's patent database and matching engine, covering more than 100 million patent records. IP One Data offers a consolidated view of IP data, augmented by external IP data sources. The verification process ensures information is cleansed, using best in class big data technology and proprietary algorithms.
- The IP Platform serves as a means of bringing the industry together, further connecting global IP networks. Law firms can identify partners in new territories via the platform as well as using it to showcase expertise and experience to CPA Global's customer base of corporations.
Winning strategies for law firms
Law firms that are looking to grow successful IP departments need to balance the following objectives: improving or maintaining practice profitability; driving business growth; improving client service by demonstrating relevant expertise and experience, and strategically applying this to a client's business objectives.
The survey reveals law firms believe that a lack of time and resources is a significant challenge to creating improved practice efficiency with 70% of respondents citing this as an issue. The next most significant barrier was a fear of disrupting day-to-day operations and services (54%). Other barriers to change were people-related: 45% felt law firm staff were not flexible enough, with 40% citing partners as resistant to change.
Technology, particularly software, was considered a tool that can help improve practice efficiency and profitability, with 31% of respondents seeing technology that transforms and automates workplaces as a key opportunity in the next three years
Law firms need to cast aside these concerns, particularly around a lack of time or resources. Specialist third parties such as practice management specialists or IP efficiency experts can help firms identify opportunities for automation and improved efficiency. Partners and IP practitioners are far better deployed demonstrating expertise and differentiation from other firms to existing and prospective clients than acting as change enablers internally. It makes sense for law firms to conduct a thorough audit of their own IP processes and practices, identifying where technology can play a role within the firm, before committing to specific resources. This is a further area where third party expertise can be utilised.
Law firms that take a more strategic approach, as demanded by corporates, should be able to identify ways in which corporations can save money. Firms that can clearly demonstrate the value of specific IP filings to corporations can help them unlock cost savings. By highlighting IP that delivers significant return on investment, law firms can help corporates make more strategic choices over filings and renewals and maintain the most effective IP portfolio.
Technology services can help law firms drive efficiencies, supporting the staff that are central to delivering client satisfaction, as well as protecting practice profitability. Additionally, technology and automation can reduce the amount of time that fee earning resource is spending on administration, freeing them up to refocus on the strategic counsel that corporates value so highly.
Law firms that can use technology that creates fast, responsive and relevant support services at the heart of their day-to-day operations will find themselves in a position to satisfy clients' baseline requirements for high-quality service and value for money. Platforms that capture and manage data and provide an analytics engine for reporting enable law firms to help corporates better analyse their IP portfolio and generate the business insight from data that can align IP strategy more closely with business strategy.
The use of technology to enable higher level staff to focus on how and where to show strategic skills
Corporations are demanding that law firms move up the value chain – reducing the cost of day-to-day or functional activities and focussing senior personnel on strategic counsel that drives improved business growth.
Technology solutions can help law firms drive efficiencies and reduce the cost of day-to-day activities by automating time intensive data-driven tasks.
Beyond efficiencies there is a further benefit to deploying technology within an IP law firm – insight from IP data. The most effective IP technology solutions will enable law firms to quickly understand more about their clients' IP portfolios – where they are strong and weak, which territories are delivering most return on IP investment, and even where strategic partnerships, mergers or acquisitions could prove valuable to corporates.
The use of technology frees up the time of fee earners to support corporate IP professionals, armed with insight that can help drive better return on investment from IP assets. Technology enables law firms to cement their position with clients, add strategic value and help corporates identify where they can be more efficient and effective.
The research provides insight into the challenges faced by law firms in the 21st Century. Corporate clients are demanding more value from IP and looking for ways that law firms can help them achieve this – be it from reduced cost, more strategic counsel, or both.
Successful law firms of the future will need to be more aligned to the challenges facing corporates, understanding them more effectively, and delivering the services that help them succeed.
In the future, successful law firms will need to be less focussed on individual patent and trade mark filings and renewals, and more focussed on the strategic value of an IP portfolio to a corporate client. By delivering more efficient day-to-day processes, law firms can ensure they are closely aligned to the needs and demands of the corporate IP department, yet still have the time and resources to ensure their own growth and profitability.