Save Costs, Not Quality

These  are  difficult  times  for  IP  owners.  The   economic   pressure   they feel daily is inevitably passed on to the patent law firms that manage their intellectual property. Faced with the need to accommodate their clients’ demand for re- duced costs, many patent law firms around the  world  have  resorted  to  cost-cutting schemes  that  adversely  affect  the  quality of  the  work  they  can  provide,  on  the  assumption  (which,  sadly,  is  often  justified) that it will take a long time – typically years, if ever – before the client realizes that the quality  of  the  work  has  deteriorated,  but on the other hand he will see the cost savings immediately.

One of the most dangerous schemes is  that  of  “cooperative  work”.  Firms that operate in that way employ professionals  on  a “pay  per  charge” basis… at first sight the above may seem a clever scheme, implementing it may lead to disastrous results. One  of  the  most  dangerous  schemes  is that of “cooperative work”. Firms that operate in that way employ professionals on a “pay per charge”basis, according to which the professional is paid a share of the revenues that the firm receives from the client for which he has done the work. In many cases the professional is paid a low, and even only a nominal salary, which the firm recoups from the billing that he generates.

The  advantages  for  the  firm  are  enormous and evident: it in practice acts as an intermediary between the professional and the client, receiving a good cut of his billing, while  relying  on  its  existing  infrastructure and  without  having  to  pay him  a  real  salary. In some cases, beside the administrative support,  all  the  firm  has  to  worry  about  is giving the professional a laptop or a PC, and allowing him the use of the office facilities, such as meeting rooms. This scheme lets the firm grow to a large size without investing the  sums  of  money  that  a  conventionally- run patent law firm needs to spend. As long as there is enough work to be distributed between the various professionals the scheme works, and if the volume of work diminishes it’s no skin off the firm’s nose: the professionals will make do with less or will look for work elsewhere.

While at first sight the above may seem a clever scheme, implementing it may lead to disastrous results. Some of the immediate consequences of the setup described above will be briefly described below:

Courting   dishonesty.   The   cooperative scheme proverbially places an obstacle in the blind man’s path, inasmuch as it directly links the salary of the professional to the hours he bills on behalf of the firm. While we would like to think that everybody is honest, it would be naïve to assume that heavy overbilling does not ensue. This means, for example, that if ten hours are needed to perform a specific task with good quality and giving it the required attention, a professional may be tempted to bill those ten hours, but to spend only six or seven of them actually on the job, using the remaining time to do work for a different client.

One of the advantages of a firm that employs a number of professionals… is  that  whenever  a  difficult  question arises,  or  doubts  bother  one  of  the professionals,   he   can   consult   with his colleagues and benefit from their knowledge and experience.

The  end  of  intra-office  consultations. One of the advantages of a firm that employs a number of professionals in the same field and in closely-related ones, is that whenever a  difficult  question  arises,  or  doubts  bother one of the professionals, he can consult with his colleagues and benefit from their knowledge  and  experience.  In  the  environment described  above  this  is  no  longer  possible because  consultations  within  the  firm  are not for free. Absurd as it may sound, professionals working in the same firm will bill one another at the end of the month for the time spent in helping their colleagues. Therefore, any attempt to do a better job for the client results  in  an  out-of-pocket  expense  for  the professional. This effectively kills the practice of intra-office consultation.

The end of quality control. Some firms may turn a blind eye to the practice of over- billing, perhaps quieting their conscience by saying  to  themselves  that  they  are  saving costs to the client because their reduced operational costs allow them to charge less, and that  the  client  should  take  the  rough  with the  smooth.  However,  they  confront  a  bigger problem: the control that the firm retains over the quality of the work done by its professionals is limited at best. The temptation to grow more and make a good profit with little overhead, also inevitably leads to a situation in which quality control is not practically possible, because the billing professionals greatly outnumber  those  who  can  exercise  proper technical control over them.

In the personal opinion of this author (which, no doubt, may and will be challenged and criticized) the only way in which high quality professional work can be delivered to a client in the IP field is by severing the direct linkage between the professional work and the wages. In other words, there should be no pecuniary considerations involved in the professional work done by an employee for a client, and every professional should know that he will not suffer financially for spending the amount of time needed to do a proper job.That does not mean that the efficiency of the professional is not at scrutiny, or that he is allowed to spend an unreasonable amount of time doing a job – all that belongs to the quality control process which must be in place and which is a basic requirement. How- ever, the professional must know that he has nothing to gain by overbilling and that, quite to the contrary, performing his job inefficiently will not reflect well on him.

Cost  savings  indeed  can  and  should be   achieved   by   streamlining   the firm’s  work,  but  also  and  principally through a thorough understanding of the needs of the client.

So  how  can  you  know  if  you’re  walking into a patent law firm that is free from the issues described above? The first question you should ask them is on what basis does the professional assigned to your work get paid. If he receives a monthly salary that is independent  of  the  work  he  does  for  you,  then  you may assume that the problem does not exist. However, beware of situations in which the firm gives him “bonuses” of any kind that are directly linked to the work he does for you; regardless of how nicely it may be dressed, any such remuneration scheme is not in your best interest as a client.

But then, you will ask, how do I save on costs? The truth is that there is no universal scheme for saving costs and at the same time maintaining quality. Cost savings are achieved through accurate planning that must be tailored specifically to your needs. Many patent law firms in recent years have struggled with the problem and have come up with ingenious  ways  to  help  their  clients  save  costs, without negatively reflecting on the quality of  their  work.  Cost  savings  indeed  can  and should be achieved by streamlining the firm’s work, but also and principally through a thorough understanding of the needs of the client. It should be a major item on the agenda not only at your first meeting with the firm you are engaging, but constantly and periodically in discussion with the firm, because circumstances and opportunities change with time.

Giving up quality to save costs is the easy way out through the wrong door. So before you touch that doorknob you will do yourself a  service  by  considering  first  what  lay  behind it.