The future for small practitioners

This morning I held a breakfast meeting for small firms of solicitors to discuss the future under the Legal Services Act 2007, when the rules allowing Alternative Business Structures come into effect in 2011. We had an interesting discussion, and I may post another blog about some of what we discussed, but here I just want to mention the business model of running as a consultant rather than a law firm. This is what is happening in society generally, and is something too few solicitors consider when embarking on life outside large law firms.

It seems to be a clever way of operating as a solo nowadays to set up as a consultant rather than as a sole practice. There is a glut of lawyers, and the danger in setting up a solo practice is that you may find yourself trapped in a situation where you can't close down the firm (unless you're willing to pay 6 times your annual Professional Indemnity insurance by way of run off cover), and yet have to continue unless someone either buys the practice from you, or is willing to take over your liabilities.

Many solo firms lack the business and marketing skills required to create a truly successful business that someone will buy off them. The problem is that they set up their firms for the wrong reasons - redundancy, or for lifestyle reasons, and then find it doesn't provide the income they had hoped for.

If you don't set up your own law firm but instead offer your services on a case by case basis to other law firms (usually the larger ones) at far lower hourly rates than you would need to charge if you had your own law firm, you can still work from home, and get to use your expertise, but you stand to make a lot more money. You make more than you were making as a salaried employee, and much more than many solos make who set up their own firms.

You probably need to 'attach yourself' nominally to one of your client firms, who will put you down on their practising certificate renewal application form, but otherwise you are free to work for a number of different firms, and each assignment you undertake will be covered under the insurance of the client firm.

If you find a prospective client who wants your skills, but perfers to have you contract through a big brand law firm then you can refer the work to one of your bigger law firm clients, (collect a referral fee for this) and do the work at your normal rate. Similarly, if the client wants to pay lower fees you can refer the matter to a smaller client firm, again collect a referral fee, and do the work charging your normal rate. The client gets the same expert either way but gets to choose whether to use a large branded law firm or a smaller, cheaper one. You have none of the headaches about professional indemnity insurance. Your hourly rate is low enough to be affordable by either large law firms or smaller ones.

The wrong choice of business model underlies many of the problems solos face. Increasingly as it becomes more and more expensive to operate as a solicitor because of the regulatory overheads being piled up on law firms, why would anyone starting out want to burden themselves with a law firm? If you are a patent attorney, then it's easy enough for you to continue to practice. But for solicitors who don't want to or have nothing to offer if they drop their solicitor title, the solution is to set up as a consultant.

The time for running a lifeystyle law practice is coming to an end. Unless you've got a unique business proposition to offer clients don't set up your own law firm. The promise of lower fees and a more personal service, which you may or may not be able to deliver on, is increasingly not enough of a differentiating factor to win business for a solo practice.

WIPO Arbitration Training by Mark Anderson

Last week I attended a WIPO two-day course, in Geneva, on the arbitration of intellectual property disputes. It was one of the best legal courses (12.5 hours CPD) I have attended.

Thanks to Tom Giovanetti of IPI PolicyBytes for this image of the WIPO sign circa 2005

Although the course did consider the arbitration of “pure” IP disputes (eg infringement of IP), most of the case examples that we discussed were concerned with disputes arising under IP agreements, including licences and R&D collaboration agreements.

The course took us methodically through the different stages and processes of arbitration under WIPO rules, looking in some detail at the various rules, treaties and guidance documents. This would have been very valuable in itself. For me, what made the course exceptionally good was hearing the practical insights of experienced WIPO arbitrators (including our own Trevor Cook) in relation to each stage and process. These insights were further enriched by the inclusion of half a dozen panellists from different jurisdictions, who were able to discuss both common law and civil law approaches to dispute resolution, and how these approaches compared with the WIPO arbitration process. Although the panellists mostly agreed on their approach to the various issues discussed, their occasional disagreements (eg as to the best way of handling difficult situations in an arbitration) were extremely valuable in teaching us about subjects where there is no single, “correct” answer.

Several sessions consisted of “case scenarios” where small groups discussed practical problems. It was well thought-out to keep the membership of the groups constant but to rotate the panellists between the groups for each session. This meant that group members were able to develop a rapport and to have an easy discussion, whilst the insights of a different panellist at each session gave us some further light and shade on how best to tackle the practical issues that arise in arbitrations.

The course was very well-organised, and this gives confidence that a WIPO arbitration might be similarly well-organised by the WIPO secretariat.

It was fascinating to encounter that rare human sub-species, the IP diplomat. After an introductory talk by Francis Gurry, Director-General of WIPO, we were introduced to Erik Wilbers, Director of the WIPO Arbitration and Mediation Centre, and Ignacio de Castro, the Deputy Director. To be a successful IP diplomat, it seems to be necessary to be a talented IP lawyer (often with experience in a major law firm such as Freshfields), and to have the qualities of “ease and tact” that are necessary for international diplomacy. If you are interested, they currently have several vacancies for IP lawyers.

Understanding Copyright in Patent Prosecution

One of the biggest problems the governments of the world have in designing copyright laws is making their scope well understood to those who are subject to them. This means keeping it simple. Members of the public need to know when they can copy and when they can not.

You would expect specialist IP practitioners, such as patent agents, to understand how copyright impacts their everyday work.

Sadly the Berne Convention does not prescribe every potential limitation on the scope of copyright, although it does sanction certain free uses that countries may cover in their national legislation. In English law, Copyright is not infringed by anything done for the purposes of judicial proceedings (s45(1) CDPA 1988). So what are judicial proceedings? They are a minor definition in s178 and include proceedings before any court, tribunal or person having authority to decide any matter affecting a person’s legal rights or liabilities. Since the Patent Office or Intellectual Property Office (IPO) affects a person's legal rights when it grants or refuses a patent application, it can copy and communicate copyright material to the public with impunity. However it is arguable whether this exception covers what goes on in the Attorney's office. The practice of the IPO and EPO of offering, for a fee, to provide extra copies of citations suggests that they think we do not enjoy this exemption. It may even be why the IPO oddly posts two copies of their search and exam reports.

During the Gowers review in March 2008, the TMPDF suggested that the IPO was not entitled to publish patent files online, as the EPO and USPTO do, because the copyright exemption under s47 for publication does not extend to the making available right (s 20 as amended).

Neither the Crown, the IPO nor any patent applicant has, to my knowledge, ever objected to the making available (in due time) of their files by asserting copyright. If this ever happened the defendant would claim an implied licence to copy. However, once we rely on an unwritten implied licence, how can we expect a teenage downloader to comprehend the law.

The problem lies in the broad coverage of copyright. It seems that everything has copyright. Perhaps it is time to raise the bar and eliminate copyright from the fields where it does not belong and give it back to artists and authors who need it to live off. Lawyers and businessmen can monetise their work in more direct ways.

If you wondered why I used the image above to illustrate this article, hover you mouse over it. Maybe The Museum of Modern Art or the artist himself might appreciate that copyright law was not so complicated.

Take the Train to Westlaw Training this November

Free training on the Westlaw IP platform for SOLO practitioners will take place at the Thomson Reuters Towers at 100 Avenue Road Swiss Cottage.

More information to follow but places will be limited so expressions of interest please.

Professor Susskind acknowledges SOLO contribution

It well worth listening to the College of Law podcast in which Professor Susskind and Mike Semple Piggot engage in conversation about the future of the legal profession.
You will be well aware of Professor Susskind's evangelistic advocacy of all things IT and commoditised that he believes will replace large swathes of lawyers' work in the future. He has seen this future for many years but maybe we are really getting closer now. One of the examples he discusses is a sole practitioner, so it is encouraging to believe we may be part of the future.
Certainly the IT tools I use in my practice for case management, accounting and communication are essential and I could not practice unsupported without them. Indeed they free me to add that strategic advice and wisdom that only an individual brain can add.
I am however less enthused about the idea that we and our clients should outsource entirely. Rio Tinto has taken their patent work offshore. Professor Susskind sees this as extending the team, which is fair enough. I suspect they might have done better to re-examine a strategy that demands they factory file patent applications in the first place.
Another area that concerns me about factory drafted legal agreements is that they tend to be verbose and beyond the comprehension of many clients. So, sadly, do many law firm drafted products. Having learned to draft contracts after I learned to draft patent specifications, I tend to make less use of precedents. My short documents can cause consternation and frequently are substituted by the other side's prolixity. However I keep coming up against problem situations created by misunderstood or missing legal documents:

• a negotiation between two small firms held up because one wants a 9 page confidentiality agreement
• investment delayed because the proposed investors don't want to spend the entire investment on drafting the shareholder agreement
• disputes unsettled as the drafting of the settlement agreement takes forever and the parties forget where they are going
• re branding prevented because there is no licence to use the new logo

The less0n must be that we do need to keep some sensible legal advice available at a reasonable price. If the price of the real advice can be reduced by IT and commoditisation then I am a supporter but don't take the lawyer out of the equation.

Guest Post from Mark Anderson: Sole or SOLO

My good friend Susan Singleton is a sole practitioner specialising in IP/IT/competition law and a regular correspondent on the letters page of the Law Society Gazette. Her letter in this week’s Gazette comments on the joys of being a sole practitioner. One of the necessary qualities for sole practitioners that she identifies is being “emotionally robust”, which certainly applies to her.

Other qualities that I would identify are:

1. When you start in (sole) practice, it helps to have a steady client base that will stay with you when you go it alone.
2. You need to develop a “gene pool” of contacts who will recommend you or feed work to you to replace the clients who inevitably move on, retire, have no further need of your services, or find someone else whose services they prefer.
3. Linked to the previous point, you need to develop and maintain a reputation as someone who is good at what they do, and a credible alternative to using a larger firm. How you do this depends on your skill-set and temperament.
4. You definitely need to be someone who does not need the social interaction of a large office and can concentrate on work without external pressure.

There are different models of sole practice. Susan has chosen the extreme route of having no support, other than occasionally asking me to baby-sit her clients whilst she is on her holiday island off Panama. My route, as someone who worked at the same firm (Bristows) as Susan for 5 years, and set up my firm about 6 months after she set up hers, has been slightly different. Although still a sole practitioner, I employ six people.

What do readers think are the key qualities for successful sole practice?

Advising SMEs with enforcement issues: can you help?

The appeal posted here earlier today on the IPKat weblog for volunteers to share their experience with SABIP's researchers regarding IP enforcement by SMEs has already attracted some responses from the 'small litigant' sector. Assistance has also been offered by Own-it, which provides pro bono sessions for micro-businesses with enforcement / infringement issues.

If your practice involves advising SMEs, particularly in circumstances in which cost is a major factor, and you'd like to make yourself available for survey or interview purposes, please email Jeremy Phillips or Robert Pitkethly with the email subject line 'SMEs SABIP', no later than 25 September 2009.