Law firms left sweating as clients ramp up in-house IP capabilities

But the trend of IP lawyers going in-house may not necessarily be bad for law firms. By Ben Moshinsky

The demand for IP lawyers from in-house legal departments is rising as more companies start to focus on innovation and brand awareness as part of their blueprints for future growth.

In recent months large multinationals, including the likes of Kraft and easyGroup, have been on the hunt for IP lawyers, while The Walt Disney Company, Takeda Pharmaceuticals and Royal Mail have appointed lawyers into newly created IP roles (see box).

Royal Mail recently concluded a board-level review into how the company will compete in a deregulated postal market.

Trademark and patent protection came top of its list of priorities. As a result Royal Mail has created two new IP positions, and although these roles have been filled by lawyers, in an unusual move the individuals will be based outside the legal team and will work more closely with the different businesses.

Commenting on the growth of IP in the companies, Stephen Reid, IP counsel at Imperial Tobacco, says: “IP as an issue is gaining more prominence in the boardroom.

“I thought a lot of my time would be spent educating our commercial people about IP, but that hasn’t been the case. Everyone’s very IP savvy already.”

The trend poses two risks to IP departments at law firms.

The market for quality IP lawyers in the five to 10 year-PQE bracket is already exceptionally tight. The right IP lawyers are scarce, making it more difficult to build up IP groups.

Siobhan Kinsella, an in-house recruitment specialist at EJ Legal, says: “A lot of the bigger companies with IP at the centre of their businesses, such as Unilever, will often be continually seeking dedicated IP lawyers.”

Demand for in-house IP roles has led to more firms sending associates on IP secondments. In turn this has raised the profile for in-house roles among lawyers who would not have necessarily considered moving in-house before.

Reid, who recently joined Imperial Tobacco from Simmons & Simmons, says: “As IP roles become more common they become more attractive to private practice lawyers and there’s more awareness of them.”

Although the relationship between firm and client benefits from secondments, some firms may be advertising their lawyers to companies unwittingly. Reid himself completed secondments at Simmons’ clients, including GlaxoSmithKline.

One of the chief worries for firms is that companies will begin to handle more IP work in-house after recruiting a greater number of IP lawyers.

“There’s a real value attached to IP at the moment and bringing the expertise in-house can be seen as cheaper,” says Kinsella.

Firms can rest easy, however. Although hiring more lawyers in-house can be a way of saving on outsourced work, new IP positions are there to structure the work rather than to change the system completely.

The amount of IP work that companies outsource is largely dependent on the way they structure their legal teams.

At Imperial Tobacco Reid is the main IP point of contact. The company outsources almost all of its work to law firms and patent and trademark attorneys, such as Stevens Hewlett & Perkins.

And even GlaxoSmithKline, which has a large team to keep routine IP housekeeping in-house, has a large IP panel to outsource patent disputes and contentious IP protection work, upon which its business is based.

Simmons deals with patent disputes and Rouse Legal, Lovells and Redd Solicitors all pitch in with international trademark protection and anti-piracy advice.

Nicola Dagg, IP partner at Allen & Overy, says: “Bringing senior associates in-house will probably mean some of the day-to-day work will be absorbed, but when you hit a significant problem, such as a patent lawsuit, it will still be outsourced.”

With an IP-focused in-house lawyer managing this work, communication between the company and the law firm’s IP department is likely to improve, with instructions likely to be clearer.

In fact, new IP roles are more likely to benefit law firms and lead to more work in the long term, rather than threatening revenue streams overall.

Kinsella says most general in-house roles now have an IP component as the boardroom wakes up to the business case for a defined IP promotion policy.

Directors will expect their general counsel to know what measures are being taken to protect the company’s R&D and brands.

Crucially, this means that cross-selling opportunities have developed for law firms with strong IP practices, which can act as the first point of contact. Dagg says: “If law firms can offer a top-notch IP service by solving problems and adding value, then going forward the corporate and finance departments can see it as a way in the door.”

The rash of new in-house IP roles is a trend private practice lawyers will be keen to monitor.

It will affect their client relationships in the future and make it more difficult to hire and hold on to ambitious IP lawyers.

But among these changes lie opportunities for firms with strong IP practices to forge new bonds with clients, improve levels of communication and eventually bring other practices of the firm into the relationship.