WHAT ARE THE DIFFERENCES BETWEEN A LARGER PATENT PROSECUTION FIRM AND A SMALL FIRM?

There are many differences between working at a larger patent prosecution firm (50+ lawyers, biglaw) and a small patent prosecution firm (1-3 lawyers, small law). Medium sized patent prosecution firms (10-30 patent lawyers) have many of the same issues as larger patent prosecution firms, just with clients with fewer demands for patents. Therefore, this blog post will manly discuss the differences between client’s expectations for hiring a larger patent law firm and a smaller patent law firm, as well as attorney’s/partner’s expectations at larger patent law firms versus smaller patent law firms.

Clients ranging from start-ups to large major corporations need patents in every industry ranging from mobile technology to furniture. When clients are determining how to select a patent attorney to begin relations with they may do a simple Google search of “Patents attorneys, Austin, Texas” or whatever local they are in. They will be presented with a list of patent law office’s ranging from small to large law offices, with some law offices that only do patent prosecution work and other offices that have patent law groups (a subset of their attorneys that do patent law work).

CLIENT SIDE:

Workflow

When clients initially meet with the partners at larger firms, they are likely not meeting with the patent attorney who will be drafting their patent application. The partner they initially meet with is likely a technology group head that manages their technology group. This partner will then go over the patent process with the inventor, costs associated with the patent, and set up a time to later discuss the inventor’s invention. For many larger clients (fortune 500 clients), the client will have an in-house IP attorney that will discuss all client matters with the technology group head at the patent office. This process streamlines communications between the two entities. At the later time, the inventor will meet with a patent attorney, either over the phone or at their office, who will be drafting their patent application. There will be an inventor interview going over the inventor’s invention; this process typically takes an hour. The patent attorney at the larger law firm will 1) draft the patent application, 2) depending on the patent attorney’s seniority at the firm, the technology group head partner may review the patent application, 3) the patent application will be submitted to the inventor for the inventors approval, 4) the patent attorney will revise the application based on the inventors comments, 5) the patent application will be submitted to the in-house IP attorney, 6) the patent application will be submitted to the USPTO. This is the typical workflow between larger companies and larger patent law firms. When clients or start-ups meet with the partners at the smaller patent law firms, they are likely meeting with the attorney who will be drafting their application, and their direct point of contact at the law firm. Typically, or initially, the inventors at start-ups will also be managing the start-ups IP portfolio, so there the direct connection with the heads of both the start-ups and patent attorneys.

There are benefits to having the same attorney drafting all of your companies patents vs. having different attorneys draft the patents. First, having a single attorney draft each of your company’s patents means that attorney will be able to fully understand your desires and business as your company expands. Second, the single attorney can draft responses to office actions associated while understanding your company’s intellectual property needs. Third, it limits the amount of interactions necessary between an inventor and multiple patent attorneys at the same firm. Fourth, the patents will be drafted with much greater consistency than if a plurality of attorneys drafted the applications, which could be a benefit if the patents are litigated. However, there are some detriments to having a smaller firm draft your company’s patents. First, if you are a larger company you may have to many patents for a single attorney to draft, so you may require a larger firm where multiple attorneys can handle your workflow. Second, having a partner at a larger firm review an attorney or multiple attorneys’ work product will give a second set of knowledgeable eyes reviewing your company’s patent application. Third, having multiple patent attorneys’ draft your company’s patents mean that there will be multiple different perspectives on your company’s intellectual property, which could be a good thing. In my opinion, the main detriment to having a larger firm draft your company’s patents is that it is likely that the patent attorney who drafted your patent application will be gone to from the firm in 2-3 years when discussions with the patent office are required.

Fee Structure:

Why are patents written by larger companies much more expensive than patents written by smaller firms? There are two main reasons, the first being overhead, the second being partner review for consistency. A patent attorney at a larger law firm (the one drafting your patent application) typically collects one third of his billing rate. One third of the attorney’s billing goes to the cost of the attorney, mainly 1) office space, 2) secretary’, staff, and docketing salaries, 3) printer/paper costs, 4) continuing legal education costs, 5) technology, such as docketing and 5) bar expenses. The last third of the attorney’s billing goes towards the partner. Therefore, by hiring a large law firm you are essentially paying an extra third, the partners cut of the attorney’s billing. This isn’t to say the partner hasn’t put in his work to receive the clients, but it an additional cost. Therefore, if you are paying an attorney $300 an hour for 30 hours to draft your application, your patent application will cost 9,000 to be drafted, while the patent attorney collects $3000. In smaller firms, where there is 1) no partner’s cut of a salary, 2) part time staff, and 3) co shared office space, the patent attorney’s hourly rate can be much lower, while providing the same work product. For example, if a patent attorney’s average billing rate is $200, the same 30 hour patent will cost the client only $6000 to draft, while the patent attorney collects the full $6000 (minus the office expenses). Therefore, for the same work product a client could reduce their costs by hiring a smaller firm.

The second major cost associated with patents at larger firms is the partners review time. Partners will typically charge $450-500 an hour for reviewing a patent application. Even if the partner only spends 1-2 hours reviewing a patent drafted by a senior associate, this will add an extra $1000 to the client’s. Alternatively, if the client is working on a fixed fee structure, this means the patent attorney drafting the application will have 5-10 hours less to draft the patent application due to the partners review time.

ATTORNEY SIDE:

At larger patent firms attorneys are essentially given the following career arc:

JUNIOR ASSOCIATES (1-2 years)

Different firms work differently, but patent attorneys who are junior associated (1-2 years) have to learn the ropes of the patent process quickly. When patent attorneys join patent law firms, they typically know very little about the patent world, and have to be coached quickly. When starting at a patent firm, the typical process for patent attorneys is to draft responses to office actions, so the patent attorneys can 1) review how patents at the firm are drafted, 2) learn about 35 USC 102, 103 rejections, and just get a feel of the MPEP in general, 3) learn different types of arguments, 4) learn from the responses with the USPTO to determine how patents should be drafted, and 5) most importantly how to draft claims and amend claims.

After 1-2 years of drafting responses to office actions, patent attorneys can expect to draft their first applications. The first two years at a patent law firm are very crucial for patent attorneys, and also the most difficult. Their work will be micro-managed by the partners, which is expected because the partners don’t have trust in the attorney’s work until the attorney has earned that trust. At the end of this initial period, the patent attorney should be able to start signing off their own responses to the USPTO with minimal edits from their partner.

MID LEVEL ASSOCIATES (3-5 years)

It is at this point where the patent attorneys begin to draft their own applications and have decent autonomy when drafting responses to the USPTO. Similarly to when the patent attorney joined the firm, the partner will micro-manage the attorney’s patent applications and give them helpful hints of how and why applications should be drafted in a certain way. I remember when I started to draft patent applications I would give traits to certain elements of a computer network that element did not contain. For example, I remember stating in a patent application that a “database would determine x,y,z,” the partner at the firm helpfully told/reminded me that “databases” themselves actually do nothing. The databases only hold information in a manner which can be accesses by other elements. Therefore, that portion of the patent application should be drafted in a manner such as “a processor may be configured to receive a globally unique identifier associated with an entry of a database, determine relevant information associated with the entry of the database, and determine x,y,z based on the relevant information.” It is minor things like this that make a huge difference in a patent application, and are necessary skills that a patent attorney must learn/pay attention to while drafting patent applications.

SENIOR ASSOCIATES (6-9 years)

During the point in an attorney’s job life they are given relative autonomy over their work and there is minimal review from their partner. The senior associates help teach the junior associates the ropes of the patent game (so the partners are not bothered). Senior associates are supposed to in their extra time because of the lack of review with their partners learn new patent laws and bring in new clients.

At smaller patent firms attorneys are essentially expected to be at the senior associate level, and be able to manage a full docket with no review. It is for this reason that smaller patent firms hardly ever hire junior associates with no prior patent experience. It is also paramount for attorneys at smaller law firms to be fully trained before opening up their own patent shop because it is unlikely that their work is going to be reviewed and/or there may not be anyone to review the patent attorney’s work as a solo practitioner.

As an attorney at a larger firm the main benefits are 1) you get experience and 2) you get paid a salary/benefits on a set schedule. However, this comes at a price of not being able to control your own workflow and schedule for vacations, and being micro-managed can be annoying at times (although it is a necessary evil when learning how to draft patent applications. The other main downside of working at a larger patent law firm, is you don’t know if you are going to make partner, where you are at the top of the pyramid. Patent law is a relatively young field, with partners who are in their early 50’s. These partners will not retire in the next 20 years, which limits the amount of new partners. One of the main reasons why I left my old firm, was because out of the 50 attorneys at my office, only 1 had made partner in the last 10 years. That is just a very low new partner rate, and was unacceptable by my standards. There is nothing wrong with making around 200g a year working 2200 hours a year, but that is not the long term life I wanted, and I believed I could make something similar being on my own.

As an attorney at a smaller firm the main benefits are 1) your income will be higher if you have constant workflow and 2) you can set your own schedule. However, these come at a price. I have had slow months where I was typically drafting 1 patent application a week (thus making less weekly than I was at a larger firm), and I have had times where I had been swamped drafting 3-4 applications a week (making much more weekly than at my larger firm. Therefore, I never quite know what my monthly income is going to be. Second, I have to pay for 1) my own CLE, 2) insurance, 3) office space, 4) technology, and 5) staff fees. These are necessary costs, but costs you don’t have to pay if you are at a larger firm. If I was older and had a family and a higher health insurance premium, the benefits of having a great health insurance package and a known monthly income could be important.

By | 2013-08-05T08:52:18+00:00 August 5th, 2013|Blog|Comments Off on WHAT ARE THE DIFFERENCES BETWEEN A LARGER PATENT PROSECUTION FIRM AND A SMALL FIRM?