Biglaw, Intellectual Property

Ropes & Gray Splitting With Around 100 Lawyers And Staffers

Is this the beginning of downsizing for Biglaw IP?

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Ropes Gray LLP logoIn a statement released yesterday, Ropes & Gray announced that they will be sending around 100 lawyers and staffers to form a new spinoff firm to handle an important chunk of the firm’s intellectual property work.

The details of the spinoff are not entirely hammered out, but the new firm will open offices in New York and Silicon Valley and take Ropes & Gray’s patent prosecution practice along for the ride, though “other Ropes & Gray lawyers, technical advisors and staff in the IP rights management practice” will be joining the new team. According to its statement, Ropes & Gray will retain “other IP rights management capabilities, such as trademark prosecution and patent analysis, strategy and counseling.”

From Am Law Daily, reporting on a conversation with Joseph Guiliano, the new firm’s leader:

“We realized that there were certain trends that happened in Big Law, but now there’s almost a next-level type of analysis going on,” Guiliano said. “For us, it just made sense to work at a smaller firm.”

Guiliano may prefer the generality of the “certain trends” language, but those trends inevitably relate to the Patent Trial and Appeal Board streamlining the patent dispute process — UPDATE: Or maybe not? More on this after the quote:

As noted by The American Lawyer last month, the creation five years ago of the Patent Trial and Appeal Board—a specialty for the recently departed Baughman—moved patent disputes into a less costly litigation venue. The creation of PTAB practices tightened competition in the IP arena, even as larger, general practice firms moved into the area, many by acquiring boutiques.

“Looking at IP more broadly, PTAB definitely moved litigation to quicker, more efficient forums, and a [U.S.] Supreme Court ruling reduced some IP litigation,” said [Ropes & Gray Chairman R. Bradford] Malt. “I think you see a lot of big firms now realizing that they’re a bit oversized in IP.”

UPDATE: Since this story went up, a tipster who works in the field thinks the overstaffing issue that Malt discusses is true, but that PTAB wasn’t really the driving force behind a move like this:

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The “certain trends” driving this is not really the creation of the PTAB proceedings. The IPR proceedings have really wrecked the profits in patent litigation (suing others with issued patents), but R&G is keeping its patent litigation group.  It is spinning off its patent prosecution group.  The IPR proceedings have perhaps reduced demand for prosecution (getting patents in the first place) by cooling the patent arms race. But that is rather indirect I think.
The “certain trends” that are driving this is the fact that tech companies have been more and more willing to pay solo practitioners and low cost patent prosecution boutiques to prosecute their patents. I understand this was the case before the recession, but it no doubt sped up then. As a result, patent prosecution is becoming a commodity (the firms are using this terminology), and the pricing for this commodity simply does not support the profit margins necessary for BigLaw. For instance, the price for responding to an office action (one very commoditized part of the patent prosecution process) has already pushed below $2,500 and is perhaps even down to $2,000 even for marquee clients. This means that a mid-level associate might only have 4 to 5 hours to work on this, whereas it should really take 6 to 10 hours on many of these cases. Firms have worked hard to get associate hours down to this level per office action (e.g., just being faster, have paralegals do more and more of the work, having lower cost technical specialists do the work instead of associates, etc.), but they are hitting a limit. So if associates cannot spend less time, and clients are demanding static or even lower pricing, then the firms certainly cannot raise rates in the foreseeable future… and well now they are paying associates $20K more a year.  And hence patent prosecution becomes increasingly out of place in BigLaw, thus the move to a smaller firm with lower overhead (I am assuming) and ultimately lower rates and probably lower associate salaries / partner profits (I am also assuming).

Perhaps it’s the dawning of a new era for IP boutiques after the days of Biglaw growth saw many smaller IP firms gobbled up in the mad dash for revenue — a trend that Ropes & Gray actively participated in when it merged with Fish & Neave. Now, no one is suggesting that this is an unwinding of the 2004 acquisition of Fish & Neave, even if the new firm will be led by Fish & Neave alum Guiliano. That said, the new firm has not yet come up with a name for itself.

Perhaps “Fish & Neave” hits the nail on the head.

Ropes & Gray to Shed Lawyers, Retreat From Patent Work in Firm Shakeup [Am Law Daily]

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HeadshotJoe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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