It takes a lot of guts to start a solo patent firm.
The title of this post is intentionally provocative, but I actually admire anyone who takes the step of starting their own business. I personally don’t enjoy the culture of very large organizations so when a patent attorney decides to go it alone and do it their own way, they deserve every praise. And indeed, there are multiple articles online trying to help people set up on their own. See as an example one by the American Bar Association
So why am I writing a post called “a solo patent firm – a bad idea?”. Why am I being a Debbie Downer?
Patent firms aren’t fun
Well, it starts with the reason that people go solo in the first place.
Law firms in general and IP firms in particular are notorious for being the last to follow modern working practices. Just note this article on law.com detailing when does a long list of firms plan a mandatory return to the office.
Whilst the emphasis is on mandatory and office, “office” is just a symptom. The issue is that law firms are organizations that like to tell people (lawyers included) what to do.
For a while now, the most successful companies in the world are consistently drifting towards giving people more independence. This happens in relation to going back to the office, but it is more than that. Successful companies are creating a culture that encourages employees to spend time on what they are passionate about. Law firms, despite all friendly talk, remain obsessed with billable hours.
Some people (perhaps the most creative ones) don’t like to be controlled and as a result, such people who happen to be patent attorneys are setting up hundreds of solo practices every year.
So my core argument here is that patent attorneys don’t set up solo practices because they want to be alone. They are doing it because they don’t want to be in law firms with imposing cultures.
But a solo patent firm isn’t the ideal answer
Whilst setting up on their own is the natural thing to do if you want to do your own thing, it is actually a compromise.
A solo patent practice suffers from inherent, undeniable, disadvantages. To name but a few:
- Inefficiency – solos often do their admin, go to the post office and docket deadline, arrange insurance and send invoices. These are not attorney jobs and the time spent on these tasks could be spent developing business.
- Difficulty to attract large clients – large clients are rightfully concerned about working with solos. What happens if you retire/disappear?
- Difficulty to hire – for solos, it’s hard to identify the right moment to get help and part time help is difficult. When a solo does get help, if that help leaves, it is a disaster.
- Difficulty to scale – when solos reach capacity, they work harder than ever before. Contract attorneys are the common solution but it means diluting the brand.
- Difficulty to develop business – solos get no referrals from colleagues in the same firm.
- Fixed expenses are not divided – a solo is still a business and still needs a docketing system, an accounting platform etc.
- Loneliness – there are no people to bounce ideas with and no work colleagues to share the success with. It is no surprise that many solos end up bringing their family members to the business.
- No backup – solos who succeed work extremely hard and can rarely take time off.
These disadvantages are undeniable but yet, the attraction of independence, flexibility and control lead many attorneys to go solo.
Rethinking what an IP firm is
Law firms are unique animals. There is definitely brand value to some large firms but fundamentally, law firms are platforms that make it possible for lawyers to practice law. Despite all legal tech hype, law firms rarely sell products. They sell the time of their lawyers. They are an enabler.
In their core, legal services are delivered from a lawyer to a client. They are a very personal thing. Some clients work with firms (primarily clients who feel a need to rely on a brand or client who suffer from lack of confidence). However, most clients work with lawyers. Even clients who started with a firm, often develop a relationship with particular lawyers and tend to stick to them.
As a result, the role of a law firm is to help the lawyer (or patent attorney) and the client to work together in the best way possible.
Sadly, some firms are doing exactly the opposite.
One bizarre (and very common) practice is for law firms to impose billing rates that neither a particular lawyer or their client want. This makes lawyer lose their clients and often pushes lawyers out of the firm. Many partners need to fight their firms to allow them to reduce billing rates. How odd is that?
Another example is IT departments. IT departments often see their role as preventing lawyers from using the technology used by their clients. This is commonly excused by information security but in reality, it is usually political.
Law firms that wish to be successful should think what makes them attractive to lawyers and clients.
Then comes the business model. Most law firms apply a pyramid business model. This means that the senior lawyers on top of the pyramid are benefiting from the work of the junior lawyers at the bottom of the pyramid. Often it takes many years and billable hours to climb the pyramid. We believe that the pyramid model is bad for most lawyers (apart from the few on top) and most clients.
Instead, many firms (including us) have adopted a percentage model whereby income from clients is distributed in a way that compensates the lawyers based on their contribution to bringing the client to the firm and doing the work. Percentage models are fairer than pyramid models and could improve over time.
Solo patent firm or modern patent firm?
A strong modern firm should not be a pyramid structure that imposes bad technology and high rates. Instead, it should focus on empowering the best lawyers to grow their practices by providing the best support and best tools to work with their best clients and keep them happy.
This is what we try to do at FRESH.
For questions, please write to zeev@freship.com. The writer is a founder at FRESH.
