April 01, 2015

Five Steps to a More Efficient, Profitable Boutique IP Practice

Varun Shah

Intellectual property (IP) is one of today’s most competitive law practice areas, and the patent filing process is under particularly intense time and cost pressure. Solos and small firms focusing specifically on patent prosecution must overcome many hurdles to file and protect patents successfully while remaining profitable. With corporate clients squeezing outside counsel to reduce fees, firms need to accelerate processes while ensuring patent quality.

For many boutique IP law firms, these circumstances require a dramatic shift in the way the firm operates, including a fresh approach to client service. First, boutiques should look at leveraging technology and third-party support services to increase quality, efficiency, and profitability. Second, they need to set themselves apart from the competition by offering superior service to their clients and by providing fast, high-quality work at competitive rates. All of these factors will help firms to attract and retain clients more successfully.

I recently left my role as Global Head of IP Development at Aruba Networks to start my own boutique firm, Precision IP, based in Silicon Valley. Coming from an in-house counsel position at a growing technology company to start up a small law firm, I understand the patent process from both outside and inside counsel perspectives. This has given me dual insight when devising the firm’s approach to patent prosecution and more effective IP management.

Solo attorneys and small IP law firms must be flexible and adjust to changing times. Because many of us are business owners as well as attorneys, we have the distinct advantage of agility. We can adopt new policies and bring in outside expertise whenever our business requires them. Our lean management can mean less red tape and faster decision-making so we can reinvent ourselves often.

What follows are five steps for increasing efficiency, building client satisfaction, and ensuring cost-effectiveness and profitability at small IP law firms.

1. Reduction/Elimination of Overhead Through Outsourcing

Precision IP outsources all docketing, paralegal, and administrative work to CPA Global, a specialist IP software and services provider. As a result, we don’t have any paralegals or clerical staff working on-site. CPA Global maintains its own paralegal teams, which are already trained on FoundationIP, their IP management software we use, as well as USPTO procedures and forms. I don’t have to hire, teach, or manage paralegals, and, because I don’t have paralegals or administrative people working on-site, my firm saves big money on office space.

2. Stop Billing Clients for Paralegal and Administrative Tasks

While in-house at Aruba Networks, I often received lots of small bills from external law firms, and it drained my time to verify their validity. At Precision IP, to demonstrate our greater consideration for the client, I decided to absorb the entire cost of paralegal and administrative tasks. Although we don’t bring in exactly the same dollar yield as if we were billing clients for paralegal time, the firm still maintains strong profitability. Also, clients are grateful for the realized time and cost savings this policy provides, which leads to greater customer satisfaction and loyalty that benefits our firm overall.

I believe this policy gives me a competitive edge over other IP firms that do charge for paralegal and administrative services. My clients know they will not be bothered with small bills that will make them feel “nickel and dimed.”

3. Using Outside Vendors to Ensure Quality

External vendors for docketing and paralegal services are specialists in what they do because they are performing the tasks day in and day out. Also, it’s in the vendors’ best interest to ensure they are providing quality work so they can keep the business relationship going. By using external vendors like CPA Global, I can achieve quality results in a fraction of the time of having internal employees do this work.

Although there is still a requirement for some supervision of vendors’ activities, I have built relationships with vendors that I trust. They can do their tasks with relative independence so I can focus on completing more high-level, substantive legal work for clients.

4. Automation of Payment Services Including Patent Renewals

Well-designed software can track cases and alert lawyers to deadlines and due dates. Renewal payments can be completely automated. By turning over these routine administrative tasks to automated systems, we have greatly reduced the risk of human error so we don’t miss deadlines and patents are renewed on time.

5. Make Bold Innovations

The IP world revolves around creativity and invention. Therefore, as IP firms serving this industry, we need to experiment and innovate to produce better results. For example, our firm has developed a two-lawyer or “two-chair” approach to the disclosure meeting so the full claim set can be constructed and reviewed at the meeting in real-time.

At our disclosure meetings, a junior attorney leads the discussion with the client, while a senior attorney simultaneously drafts the patent claims. At the end of the meeting, the senior attorney presents a working version of the claims to elicit feedback from the client before the meeting breaks. This way, both our lawyers and the client walk away with a full claim set that has been thoroughly discussed and honed.

IP law firms face many challenges in today’s patent environment. To meet these challenges, we need to reexamine and update the way we practice IP law. Outsourcing, billing, and automation may not be the most glamorous topics, but they have real teeth when it comes to ensuring quality, reducing costs, and effectively serving clients. We need to innovate, to find new ways to be successful, to ask clients what they want from us and then respond accordingly. The ideas in this article have worked for us in ensuring profitability and efficiency. My hope is that you will find your own ways to unlock the greatest potential for your IP practice.

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Varun Shah

Varun Shah recently founded Precision IP (www.precisionip.com), a boutique Silicon Valley law firm specializing in intellectual property law. Shah has served clients ranging from start-ups to Fortune 100 tech companies including Apple, Dolby, Oracle, Cisco, Netflix, TiVo, Fanvana, Yahoo!, Intuit, Condusiv Technologies, Improvised Electronics, Schlumberger, and Sun Microsystems (prior to Oracle acquisition). Formerly, Shah served in-house as the Global Head of Intellectual Property Development at Aruba Networks (NASDAQ: ARUN).