I am not a big fan of modern IP practice. The tremendous value that an IP practitioner can bring to a company, plus the fact that so few attorneys are qualified to sit for the Patent Bar exam, makes a patent attorney a very valuable commodity. From a patent attorney’s perspective, this means that a higher hourly billing rate is appropriate.
I have found that clients seem to fall into three categories. The sophisticated client understands IP and knows exactly what services they want. Typically, this client has in-house counsel that handles patents and other related IP matters. The in-house counsel is the voice of IP reason within the company, educating the inventors and being a constant resource for management decisions.
On the other end of the spectrum are clients such as first time independent inventors who have not been down the road before. These clients need effective education and counseling to help craft a business plan that can make good use of their IP assets.
In the middle are strong companies who have some IP assets (protected or not) but do not have in-house counsel. These companies may have tremendous IP assets that could be developed into revenue generating licensing deals, used as effective weapons against competitors, or as assets to attract current or future investors.
These companies in the middle are some of the most active producers of IP, but the old bill-by-the-(very expensive)-hour IP attorneys don’t address as well as they could. As business managers and inventors learn about IP protection and become proficient in making good strategic and tactical decisions, they need to ask questions. Sometimes these questions take two minutes and get the manager on the right track, other times it is apparent that the overall company may need training in some aspects of IP. In the bill-by-the-hour scheme, the two minute phone call gets billed to the client as a minimum charge of .2 hours and a tailored education program becomes so ridiculously expensive for the two or three people in the company who need it.
I think that the bill-by-the-hour IP attorneys do themselves and their clients a disservice by billing a high rate for every service they provide. When a small, growing company who is watching their bottom line gets a bill for $75 just for a short, two minute phone call, they are less likely to call with the next question. The result is that the communication between the attorney and client is tempered or severely curtailed.
I have witnessed this behavior from a number of viewpoints. As a client of a law firm, I received bills for $50 because my case was ‘reviewed for docketing,’ even though I never received a letter, phone call, or other correspondence. As an inventor at a medium sized company, we were forbidden from calling the patent attorney without specific prior authorization because of the horrendous bills we had received, this is despite the fact that we had ongoing projects with the attorney. As an employee at a law firm, several clients had expressed dissatisfaction with the constant bills for which they perceived little value. As a sole practitioner, many clients have expressed their displeasure with other firms for these practices.
From the practitioner’s standpoint, the first hour of consultation with a client is often the single most valuable hour the client may ever get from the attorney. As the client lays out their issues, all of the attorney’s hard fought experiences are brought to bear to suggest a course of action. After that, preparing and prosecuting a patent is comparatively bland. The individual phone calls or short consultations at irregular intervals may require answers steeped in the practitioner’s vast experience.
I see the client relationship from a long term perspective. Looking at it long term, if I answer a phone call, spend an afternoon educating and strategizing with the client, I may lose out on a couple billable hours, but I am much more likely to identify new areas to patent, suggest new strategies for licensing, and develop a better rapport. When my clients are happy, they recommend me to other potential clients, which starts those relationships off on a good foot. In the end, by foregoing a few hours of billing at the front end, I get much more work from that client relationship.
The other aspect is pricing the various services. For example, a training session for engineers or business managers should be a reasonable fee, not necessarily at the full billing rate. Quarterly or annual reviews may be at a prearranged nominal price or even free. When the client invests in prosecuting a patent, I like to use fixed fees that encourage communication and innovation with the client. I reserve the right to change the fee structure if the client becomes unduly burdensome, but I have never had to do so.
Remember the old adage, “You can shear a sheep over and over, but you can only skin him once.”