Legal Spend Trend: Big Law Winning More IP Litigation Work

by | May 19, 2015

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A new edition of the CounselLink Enterprise Legal Management Trends Report finds the largest of law firms – those with 750 or more attorneys – are winning market share in highly competitive IP litigation work.  An announcement published online notes:

The largest firms are winning a growing share of market in IP litigation – from 36% in 2011 to 61% by year ending 2014. The Largest 50 firms are winning this business against the next two categories of law firms based on size by attorney headcount – the “Second Largest” and the “Large Enough” – those firms with 501-750 attorneys and 201-500 attorneys respectively.

The data – some $18 billion in legal invoices – suggests the largest law firms have modified staffing models and reassigned IP litigation work to more junior partners in an effort at cost control.  The data found flat (individual) or declining (median) bill rates among partners and notes that partners are generally billing fewer hours on this category of work.

Bloomberg Big Law Business reported a countertrend vis-à-vis previous studies of a similar nature — Large Firms Use Junior Lawyers to Gain Share of IP Litigation, Report Says:

The findings run counter to those of previous reports, which found that some ‘high-dollar’ work in areas like litigation and mergers and acquisitions was shifting away from the largest firms, said Kris Satkunas, director of strategic consulting at CounselLink and principal author of the report.

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Growing IP Litigation Practices?

The New York Times Dealbook column — Big Law Firms Winning More of Intellectual Property Work – suggests “the proliferation of patent challenges — and defenses — has been a boon to law firms,” which have grown IP litigation practices:

Last year, for example, Morgan, Lewis & Bockius, which represents technology giants like Oracle and Facebook, made the list. The firm, which is based in Philadelphia and has 2,000 lawyers globally, has expanded its practice “significantly in the last five to 10 years, and even in the last 12 months,” said Eric Kraeutler, who heads the firm’s 200-lawyer intellectual property practice.

The group, the firm’s fourth-largest practice group, represents large clients like the University of Pennsylvania, which was involved in a complex legal tangle over a new therapy to battle cancer, a case that was recently settled. If the firm reaches a forecast of $2 billion in overall revenue this year, it will be among the country’s five top-grossing firms.

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AFAs Adoption Grow Subtly

Another legal spending trend the study found was increasing adaptation of alternative fee arrangements, or AFAs. Law360 reported that more GCs are experimenting with AFAs:

The overall percentage of work being done under nonhourly fee deals remained steady last year at 9 percent, but an analysis of firm invoices found 76 percent of in-house departments engaging in some form of AFA with their outside counsel in 2014, according to the Enterprise Legal Management Trends Report. That’s up from 67 percent in 2013 and 64 percent in 2012.

“Corporate legal continues to mature and these departments are finding more sophisticated means to implement alternative fees by breaking large matters into phases and pricing those phases accordingly,” said Satkunas. “Those law firms willing to engage AFAs and find a profitable model that also delivers value are more likely to find a receptive audience among GCs.”

Forthcoming Webinar on this Trends Report

The full report is freely available for download with registration and the team will host a webinar to break down the numbers and explain the trends:

What: ELM Trends Webinar
When: Wednesday, May 27, 2015 at 1:00 p.m. EDT
Where:  Online
Cost:  Complimentary
Registration:  Register online: http://bit.ly/ELM-Trends-Webinar

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