Consultancy - an Option in Adversity

Those of us with accounting years that end in March will be counting the cost of the recession and the inevitable decline in demand and increase in bad debts. A sole solicitors practice does have significant overheads even if you have no staff and no office. The idea of working as a consultant for an established regulated practice has attractions and has been discussed on this blog before.
If you want to close your practice you still have run-off insurance to buy and its going to be expensive to re-start so you need to be sure this is the right course if you are going to move in as a consultant. Often a consultant is just a grand name for an employee and this may well be a good option. There are very few IP vacancies advertised at the moment. However a consultancy is a way of sharing the risk and allowing you to preserve some independence.

• Will it be exclusive? You can make the system work for two perhaps as many as three firms.
• Is there a guaranteed retainer?
• Does the firm have a work stream for your speciality or are you expected to bring in or generate the work?
• What percentage of the billings you generate will you receive?
• What percentage of the billings for clients you introduce will you be entitled to. 
• Does the firm you will be consulting for have a strong and established brand.

There are some law firms such as Keystone that work only with consultants. Perhaps some of their two dozen IP consultants would like to comment on  how this works for them.

Handling Difficult Clients

This little tale comes from our colleague Aaradhana Sadasivam (an IP lawyer from distant parts), who says "I do not have difficult clients, but only difficult moments with my clients". She writes:

"As a child, I remember reading a story about a cloth weaver-cum-merchant and his potential buyer.

It so happened that a poor cloth weaver-cum-merchant put in a tremendous amount of effort, skill, and time, in weaving a fine piece of cloth. In the evening he took the cloth to a nearby market hoping to sell it in exchange for a good amount of money. In time the cloth weaver-cum-merchant was approached by a potential buyer, who after giving a very through and detailed examination to the cloth, enquired on the cost of the entire yarn. The cloth weaver promptly advised on the cost of the yarn to the potential buyer. The client thought for a moment and decided to buy but only half of the yarn and before the seller could say or do anything, he tore away the yarn into two pieces and enquired on the cost of the half piece of the yarn in his hands. The weaver, once again, advised the cost of the half piece of the yarn. The prospective buyer, while still holding on to the torn half piece of yarn, and feeling the smooth texture of the cloth, appeared to went back in his thoughts and the very next moment divided the half yarn into further two pieces and enquired on the cost of the now quarter piece of the yarn. The weaver, yet again, calmly and patiently advised the cost of the quarter yarn. A spell of thoughts, followed by the noise of tearing off of the remaining cloth, and the torn yarn was divided yet again, and again, and each time the cloth was torn the cost of the torn cloth was enquired, and each time the client demanded to know the cost of the torn piece of the yarn and, yet in turn, he received a calm and patient response to his enquiries from the weaver-cum-merchant. This went on for some time. The prospective buyer went on to piece the yarn into small, and smaller, pieces and every time he pieced the yarn, he asked the cost of the torn piece, and each time received a patient and calm answer.

In the end, and after piecing the entire yarn into the tiniest bit that he could, the buyer finally changed his mind once gain, and decided to call off the prospective purchases reasoning that the now torn pieces of the yarn had no use for him. The poor weaver-cum-merchant gathered up all the bits and pieces of his yarn that he had so lovingly woven and expected to earn his livelihood. D despite a bleak outlook of his own life’s affairs, all the while during dealing with his prospective but a rather ruthless client, he managed to maintain a calm, peaceful environment, remained hopeful of selling off his wares, continued to answer with a high level of patience, dignity, decency, and managed the situation without displaying even a single speck of anger in his voice! No, not even once throughout the entire negotiation.

What a great display of a manner of dealing with a difficult client without going insane with anger and, yet maintaining a total control of the situation and self-dignity.

While maintaining the cloth merchant’s level of patience could be a great Herculean task for most of us, but we can certainly learn a lesson on two on dealing with difficult clients".

I suspect that, among both contributors and readers, we have experienced situations in which keeping our cool and retaining at least some human dignity has been the best outcome we can have hoped for. If you have any Herculean tales which are also IP-related, please do share them with us!

Reading, ‘riting, ‘rithmatic. But what about communication skills?

Solo practitioner Aaron Wood (Wood) has been prompting me to mention the attractiveness of Toastmasters International to fellow “Solos”. He tells me:

"One of the ways in which a “solo” is able to leapfrog a larger organisation is in focusing on development to a stage that they are far more knowledgeable and able than their counterparts in private practice. Of course, this is undermined by poor communication skills – it is easy for an audience to mistake poor structure or delivery for lack of knowledge of the subject matter.

Toastmasters International has been helping individuals for more than 80 years to improve their ability to address audiences, big and small. It provides the opportunity to speak on a regular basis and practise and refine ones skills. It also provides networking opportunities for those that are so minded, and leadership opportunities for those that care to gain skills in mentoring, leading and financial management. For those based in the UK, local clubs can be found here. Those based in London are able to benefit from the London Speaker website, which has regular updates as to what is happening in London.

I know that another Solo is flirting with attending Toastmasters meetings – it would be good to see a few more friendly faces in Toastmasters. In some ways it is a bit like perfume to body odour – only your closest friend would tell you need it, but you probably know long before that that your presentations stink!"

Flexible fees: what's in it for small practices?

Writing last month for Insight, the online magazine of the UK's Intellectual Property Office, Campbell Forsyth (Forsyth Simpson) took a look into an increasingly-discussed scenario for the funding of IP litigation in his article "Flexible Fees". He writes:

"... Conditional fees

Up till 2001, you were barred from any arrangement other than paying your legal fees as you went. To improve access to justice after the removal of legal aid for civil cases, conditional fees were introduced.

For smaller types of claim, such as Personal Injury, the impact of "no win, no fee" was immediate. In more complex IP cases, it is taking longer to change the traditional basis on which disputes are conducted.

How it works

Once you find an IP litigator who is prepared to work on this basis, they will assess your chances of winning. On a patent dispute, it could mean them taking on one to two years’ of work before a conclusion to your case, so they will certainly want to see your odds as better than even.

In the strongest cases, they might agree to "eat what they kill". If you win, they will recover all their costs from the other side. If you lose, you have nothing to pay.

On claims that are closer to call, your lawyer might ask you to pay a proportion of their fees as the case develops and take a risk themselves on recovering the rest. The incentive for the law firm is that an uplift is applied to any order on costs. On borderline cases, they might get 100 per cent extra. When the prospects of winning are more certain, the uplift might be as low as ten per cent.

The other side will have to pay these extra costs, so you have to tell them in advance. It can work to your advantage if you would like to reach an out-of-court settlement. First, your opponent realises that your lawyer thinks you have a strong enough case to justify taking a risk on going to court. Second, they have to face the prospect of paying double any of the legal costs you incur.

Other risks

Broadly speaking, the costs of your own solicitor will amount to about 40 per cent of your total liability. If you take them out of the equation, it may well be the difference between defending or asserting your rights, or staying on the sidelines.

Other cost risks arise if you go to court. You might still have to pay the other side’s fees, as well as any damages. However, legal products have emerged to cover this exposure too.

Premiums on after-the-event (ATE) insurance are high, at between 30 and 50 per cent of your total liability. But in the latest policies, you do not have to pay anything upfront. If you win, the premium is paid by the other side. If you lose, your costs are met. Either way, you are covered.

Unlike legal practice in the US, your lawyer cannot tie their fees to any damages, although this is a developing area and may change over the next few years. But even now, other people can. In some IP cases, third-party investors are starting to see the business sense in covering legal costs in return for a proportion of damages that are awarded.

The development of these alternative techniques may be affected by the Government’s forthcoming review of judicial costs. The recently published Jackson Review of civil litigation costs has put much of the "no win, no fee" and ATE system under review, but is introducing further alternatives for funding cases. One planned reform to improve access to justice for smaller IP cases in future is the £50,000 cap on costs that can be reclaimed in the junior IP court, the Patents County Court in London.

For now, the combination of conditional fees, after-the-event insurance and third-party funding offers a genuine, if complicated, route to significantly lowering the costs of litigation for enterprises. For those who have a strong IP claim or defence to a claim, it is possible to come close to eliminating two main sources of risk: the legal fees, both yours and the other side’s.

You no longer have to worry as much about betting the business on proving your IP. Instead, you can focus on what really matters: making sure that you are free to operate in your market".

I was sure that this topic was going to attract some comment on this blog but, since it hasn't, I thought I'd invite some comment myself. Is this a golden opportunity for those running sole and small practices, or is it nothing but a poisoned chalice?

Don't be made a Fool of by the European Patent Office Rule Revisions

1st April is the day that the EPO introduces its rule changes to "raise the bar". The EPO website highlights the changes here. Loads of publicity has been given to the changes to Rule 36, which prevents you filing voluntary divisionals more than 2 years after the first communication on examination.

My guess is that Patent Agents will be filling the EPO coffers with fees for Further Processing because of the new Rule 70(a) and Rule 161. These require a response to the search opinion. Its not too bad if you are processing a normal European patent application filed directly with the EPO. You must respond to the  search report when requesting examination. If you do not then you can expect a communication that the application is deemed withdrawn and further processing fees will apply as well as the filing of the response.

Life is a bit more complicated when it is a PCT-EP application. If you are going to get a supplementary search then you are OK to wait the usual long period where nothing is required of the applicant however meritless the apllication. However if the EPO did the search, then your Rule 161(1) notice stops being a letter you can ignore, but one that needs a response within a short period. Entering the national phase of a PCT application is already wildly expensive and a heavy financial risk to solo attorneys. Now it means a big risk on your own time working on the response as well. My low esimate proved too much for a lay client the other day and it transpires he is doing the work unaided.

A little client management is now going to be needed to explain this early obligation. The EPO hope that agents will be helping them reduce the backlog of doomed applications before they arrive. Its not going to be that easy especially if it raises the number of unrepresented applicants. I advised a different corporate client last week that it was not worth entering the national phase as they could not tell me why they thought the search opinion had missed the point of the invention. All that happens is that another attorney will do it and I earned no fees for my sound advice. Being solo I have no-one to whom to justify that loss of business but in larger firms such good advice may be less welcome.

If you are in Glasgow you can attend the CIPA Seminar on 16 April to make sure you are up to speed with all of the new rules.