Budgetary constraints and pressure to meet corporate targets are compelling patent departments to more diligently evaluate their external partners and to ensure that they are getting value for money from their legal services.
In-house counsel from patent-focused businesses tell Patent Strategy that they are achieving this aim by implementing assessment timeframes and putting together the right criteria for measuring private practice lawyers.
They add that the legal services landscape is becoming increasingly competitive and that it is important for businesses to leverage that change for the business’s benefit – by not continuing to use a law firm simply because they always have.
“It is vital for us to understand whether we are working with a private practice firm because we have always worked with them or because they are good at what they do or perhaps even better than anyone else,” says Rimma Pugatsch Shendelzon, IP manager at Israel-based Landa Digital Printing. “There are so many service providers out there, and we should have the right tools and processes in place to compare them and make sure they’re providing a quality and cost-efficient service.”
When to assess
The first step to effectively evaluating counsel, according to sources, is working out how often they should be assessed. The head of IP at the IP arm of a UK university says that there are two timeframe strands to his organisation’s external evaluation strategy.
“One strand is a constant process to see if we are getting bang for our buck by whether we are sticking to budget or not,” he says.
He adds that he receives an up-to-date statement of the organisation’s spend from the accounts department every month, and he assigns each invoice to the appropriate person to find out if the business has gone over or under budget.
If matters have gone over budget, the business will try to work out whether that has happened because a case became more complicated than was expected or whether external counsel need to be reined in, he adds.
The other strand to this strategy is having the organisation sit down every two to three years and conduct a more thorough review of private practice performance. This informs which law firms the business decides to employ.
Other in-house sources point out that both approaches are important as part of a comprehensive review strategy. Pugatsch Shendelzon says that it is important to have an ongoing evaluation process so that the business can react quickly to changes in the quality or cost of a service.
“If we see that there is something that has to be changed, we can change it. If we are not satisfied with a service provider, we try to find an alternative,” she says. She notes that the business will consider mitigating factors such as how long the law firm has worked with it and whether there is a good reason for the drop in service quality before it takes any action. A more comprehensive analysis of counsel performance every year to two years also enables businesses to better pick legal partners as part of their long-term strategy. Alan Tibbatts, IP and licensing manager at University of Birmingham Enterprise, another university IP arm, notes that his organisation is required to evaluate external counsel performance every four years. The university can appoint a law firm for two years and extend that appointment for an additional two years.
What to assess
Finding the right criteria for measuring private practice counsel is a little trickier. In-house sources point out that there is no one-size-fits-all set of standards and that different businesses will need to measure law firm performance in different ways depending on their needs.
Tibbatts says that there are obvious and uncomplicated standards for each business to consider. For his organisation, it is important to look at the size of the firm and the scope of the tech they cover. “We obviously want to go to companies that can respond to any technology that we have at the university, which is pretty broad,” he says.
Cost and quality are also obvious factors to consider – but the trick is assessing whether the business is paying the right amount for the kind of service it needs. Pugatsch Shendelzon at Landa Digital Printing says that some of the firms she uses are more expensive than many of their competitors’, but the business is willing to pay that expense because it needs a higher level of service for certain tasks.
Tibbatts says that his organisation seeks to drive down costs where it can, but that its business model ultimately relies on patents getting granted and it cannot afford to pay less if the business ends up filing ideas that will not be granted.
The university has sought to get the right balance on quality and cost from its partners by challenging them to give typical prices for different filing scenarios, including a typical engineering and medical-type filing.
“The funny thing we found when we looked at attorney firms offering a fixed price for initial work compared to those offering an hourly rate was that once you had gone through the entire filing process, they were nearly all the same price.” Many companies, he adds, offer low-cost initial flat fees at the start of the service but pull back their costs, and firms that charge a straight rate from the start often charge lower additional costs.
A perhaps even harder standard to measure law firms by is the relationship they have or will build with the business, and whether they will go the extra mile as part of their client service. The university head of IP says that the external lawyers he uses participate in college conferences and even offer internships or work experience to students and graduates. He adds that these lawyers also take the time to socialise with the business and talk about matters of concern in a more informal setting.
The legal services landscape is getting more competitive and businesses are making sure they get more bang for their buck out of external partners. Assessing counsel properly is a matter of working out when and by what standards to measure them – and while timeframes are perhaps a no brainer, businesses need to spend time working out what they really want to get from outside counsel.
