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Tight Budgets Put Squeeze on IP Firms

By William Vogeler, Esq. on July 11, 2017 | Last updated on March 21, 2019

When a sandstorm is coming, it's good to be a camel.

In the story, the camel inched its way into an Arab's tent for protection. First its nose, then the front feet, and finally its whole body pushed the Arab out.

Likewise, as intellectual property budgets have shrunk, companies have moved more legal work in-house and outsourced other jobs to legal service providers. In the mix, IP law firms have found themselves even more on the outside looking in.

Budget Cuts

According to the "2017 Global Patent & IP Trends Indicator," applicants reported filing 16 percent more patents last year. At the same time, more than one-third of the respondents reported budget cuts.

The companies and universities were able to file more patents with less money largely by bringing patent work in-house or outsourcing to a non-law firm provider. They also filed seven percent more patent applications overseas than the previous year.

"Our report shows that regions once considered to be emerging by the global patent community have matured into central patent hubs," Justin Simpson said in releasing the report. "At the same time, we are seeing new international markets develop as patent filing centers because of shifts in manufacturing centers, research and development and filing costs."

The United States still ranks as the most popular jurisdiction for patent filings, but first-time filing jurisdictions included Mexico, South Africa, Australia, Turkey, Brazil and India.

Alternatives

The change in the legal landscape is no surprise to company attorneys, who have been finding ways to reduce costs and remain productive for years. Technology, legal operations, and outsourcing have provided some answers.

As a result, spending on outside law firms has been declining. Above the Law, reviewing the trend last year, said it "should be a source of concern for BigLaw (and boutiques that play on the same field."

"This trend has law firms running scared," David Lat wrote.

Thomson Reuters, in its last report on Legal Department In-Sourcing and Efficiency Report, showed how in house leaders are implement changes, using legal department operators and analyzing alternatives with outside counsel.

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