IP and TMT associates left behind in a promotion round to forget

Compared with last year, 2008 has been an unexceptional promotion round for many senior associates in the top 100 firms. But for those in the IP and technology, media and telecommunications (TMT) departments, it was just another year of being almost completely overlooked.

Although Linklaters is yet to make its announcement, the magic circle firms have so far made up just one in total – Freshfields Bruckhaus Deringer‘s Torsten Schreier in Frankfurt. More worryingly for IP associates, not one has made partner in firms that traditionally place more emphasis on the IP and TMT practice areas, such as Addleshaw Goddard, Pinsent Masons and Herbert Smith. Addleshaws almost doubled its promotions this year, from five to nine, but could not find space for an IP lawyer. Similarly, at Herbert Smith a record 18 associates were promoted to partner – but not one of them works in IP or TMT.

Meanwhile, IP and TMT stalwart Bird & Bird set aside a smaller percentage of its promotions this year for its core areas. The firm may have promoted more in IP and TMT than most firms in the market, but even it has shifted towards a more full-service approach.

The four new TMT partners at Bird & Bird make up 28 per cent of the total number of promoted associates. Last year IP and TMT promotions were running at 71 per cent.

Market observers say the downturn in Western economies prompted by the credit crunch has meant firms have restricted access to partnership for IP and TMT associates, which has made it harder for them to make a business case for their promotion.

The risks to the business include intense competition for the top slice of IP work and variable hourly rates, which can often be lower than in transactional areas such as corporate. Even more damaging are the risks of conflicts. The opposite side of the patent courtroom is the last place a corporate firm wants to see an institutional client.

Herbert Smith has taken steps to grow its IP litigation practice over the past three years, but with lateral hires rather than promotions. Partners with a ready book of business are less of a risk than a newly-promoted partner. As practice areas go, IP looks full up.

Nick Gardner, head of IP at Herbert Smith, says: “We’ve got six partners at the moment, which is a good old size for a London practice. The question is, how big is the market and how much can it support? I don’t think the London IP market is hugely expanding, and there’s a question mark over whether it can support more people coming in. But the firm is committed to this practice area and it’s not a sign that we won’t promote people next year or the year after.

“The challenge in this market is that there are a lot of people chasing the IP work around and there are a lot of US firms that have come into the market. That’ll be hurting a lot of people. The challenge is to do the right work at the right rates.”

It is a bleak outlook for IP and TMT associates in the big firms, and opportunities are few and far between. With profits under threat, it is logical to share them with fewer people. But it is a short-term logic and one that is not shared by all the market players.

There are pockets of hope for despairing IP and IT lawyers. Lovells made up four IP associates this year out of a total of 18 promotions. Last year the firm promoted two IP lawyers from a total of 31. Wragge & Co made up two for the first time in two years, while CMS Cameron McKenna made up one in TMT.

Lovells is revamping and relaunching its international IP group, while Wragges sees plenty of long-term opportunities for the practice area. There are contrasting opinions about the IP market, highlighted by firms that have promoted and those that have not.

Those firms that did promote associates in that area are optimistic about the amount of work available.

Morag Macdonald, joint head of the IP group at Bird & Bird, says: “I think in corporate-focused firms it is extremely difficult for an IP associate to make partner. But what we’re seeing is a significant amount of IP advice and strategy work out there, and a lot of that sort of work requires close partner attention. Our clients would not be happy if we pushed that work down to associates. There’s more partner-led work in IP now than ever before.”

At Wragges, IP makes up 9 per cent of firm revenue and is on course to hit around £11m this year. Head of IP Gordon Harris says the overcast economic climate creates openings for firms such as his. “IP, or at least contentious IP, is pretty recession-proof,” he adds. “Unless you’re really strapped for cash, you’re going to fight something like a patent infringement. A lot of these cases are bet-the-company disputes.”

Once the IP work is done, there is always the chance to introduce the client to friendly colleagues in corporate and finance. Like many firms, Wragges uses IP to open up the firm to a more varied client base.

Harris says: “The Wragge & Co client base has not been affected yet by the credit crunch, but bigger firms might have been hit. Firms in our tier will do well – there are opportunities out there. IP is a Trojan horse product for us, and we’ve introduced major clients to the rest of the firm.”

Harris is happy for competitors to cut IP and TMT promotions. “Some people like me see this as an opportunity,” he says. “There’s going to be a backlog of a lot of frustrated people out there. The IP market is still promising and we’ll see more of a European approach developing in the next few years.”

This may sound like good news, but the outlook is still more gloomy than bright for IP lawyers in London. Of the eight IP lawyers that have made the cut at Lovells and Bird & Bird, just two work in the capital: Patrick Kelleher at Bird & Bird and Mark Taylor at Lovells. Last year, three out of the five IP and TMT promotions at Bird & Bird were in London.

IP is an increasingly international practice area and what few opportunities there are in the future will have to be shared out around the various offices. To get a bite at partnership, associates will either have to brush up on their German or go in-house and come back later with a stronger business case for promotion. Either way, there is no easy path to partnership.