Reputation, expertise and costs are the top three considerations for in-house counsel hiring outside IP advisers, according to a research report by IP STARS. The report also reveals their attitude towards different service and billing models, likelihood of external adviser review in the next 12 months, and the most important markets in which their companies intend to increase IP activities in the next decade. 

The overwhelming majority (90%) of respondents to this year’s IP STARS survey of in-house IP practitioners said sector or technology knowledge and expertise in the IP area concerned are the top two criteria that are very important when selecting outside counsel. This was the standout finding in this year’s survey of 1,200 in-house practitioners worldwide, which formed part of our annual IP STARS research. The survey data was collected between November 2016 and March 2017. 

Technical knowledge is most relevant in patent work than in soft IP. This is followed by commercial awareness (at 65%). In-house counsel spoken to for the IP STARS research often say they want IP specialists who also understand the commercial realities in their industry and the client’s business goals.

All of the criteria (see bar chart) together can make up a firm’s reputation in the market: 58% of respondents say the reputation of the candidate is very important to them (in last year’s survey, this number was 46%), with 38% rating it as moderately important and only 4% saying it is unimportant.Reputation could range from being known to be active and largely successful in contentious proceedings before the IP office or courts (53% said track record is very important) to the nature of a firm’s business model.

Personal contact or recommendation also has a role to play: 58% of respondents say it is very important. As some comments show, recommendation from a peer may well be decisive. In-house counsel’s previous connections or contacts during their private practice career can also be important. This suggests external advisers must concentrate on demonstrating exceptional client care and delivering results in order to be held in high regard by their clients, but should not lose sight of how their competitors perceive them. Competitors may one day implicitly or explicitly recommend you.

Does size of firm matter?

Only 16% of respondents say the size of a firm’s IP team is a very important consideration. And, of all the criteria, size of IP team also had the highest number of respondents who said it was unimportant (19%). The other low scores (under 50% average) for "very important" were for "range of services offered" (34%), "firm’s presence in key markets" (35%) and "firm’s corporate values" (46%). They also had higher scores for "not important" answers; for example 14% of respondents said a firm’s presence in key markets is not important.

Conflict of interest wasn’t presented as a criterion but several respondents commented that this as an important consideration for them. No doubt this is applicable to all respondents as part of their due diligence process.

One-stop shop more popular

Over half of the respondents in 2016 were either happy to deal with separate IP service providers (49%) or expressed no preference (23%). But this year’s figures are strikingly different: 51% preferred separate providers, 41% favoured one-stop shop and just 8% had no preference.

When it comes to fees and billing, 63% said this is very important while 37% of respondents see it as moderately important, which somewhat corresponds with the views they expressed on billing preference (see box). Although 62% of in-house counsel say they prefer a fixed-fee arrangement, they understand that this depends on the type of work, and there will be matters where a hybrid model or a completely different arrangement (for example, contingency fee for litigation) may well be the most suitable.

Billing – selected comments

  • "Fixed monthly fee for standard work is great" (General counsel in an entertainment company in Australia)
  • "I do like fixed rates for pre-litigation tasks such as cease and desist letters" (Attorney in a food industry company based in the US)
  • "Fixed fee for routine work and hourly fee for tricky issues including complex applications and prosecution" (Head of IP in an automotive industry company based in France)
  • "Hourly billing is more clear to see the time spent on each topic" (CEO of a technology company based in Sweden)
  • "Hourly billing subject to prior estimates and regular updates" (General counsel in a financial service industry company based in the US)
  • "Where fixed fee is not available, we prefer cost transparency by quote and cost reporting" (Senior legal counsel in a technology company based in Australia)
  • "Will love to work with a firm who are flexible on capped fee arrangement or other models like contingency fee" (Vice president of IP in a pharmaceutical company based in India)
  • "With respect to filing applications and dealing with intermediate work during examination, a fixed-fee system is desirable. With respect to lawsuits and proposal for countermeasures against illegal copies, a fixed-fee system is also desirable, but hourly billing is acceptable depending on circumstances" (IP manager in an engineering company based in Japan)

Hiring criteria – selected comments

  • "Firms' ability to accommodate and consistently follow through with our requests" (Director of brand protection in a sports fashion company in the US)
  • "Accessibility and rapport with the legal team" (IP department manager in a beverage industry company in Thailand)
  • "The lead lawyer is often as important as the firm" (Senior IP counsel in a financial services company in Singapore)
  • "Knowing everything of today, but seeing the future" (Director in a pharmaceutical company in Australia)
  • "How well we think they can work with us" (Senior counsel in a healthcare industry company in the US)
  • "Personal experience with the firm" (Director of legal services in a manufacturing company based in Canada)
  • "Personally recommended by someone I trust who has used them" (Senior business executive in a technology company based in the US)
  • "Personal relationships and past experience" (Managing counsel in a services industry company based in Australia)
  • "Flexibility in meeting urgent demand" (A senior business executive in a technology company based in Sweden)

Other findings

The second part of this report looks at what causes firm-client relationship breakdown.

This article was originally published in Managing Intellectual Property.