Is There A European Patent Attorney Deficit?

In order to discuss this, I would like to group potential Clients for European patent attorneys roughly into four groups as follows:

• Big enterprises: These companies are most liked by many attorneys: Once a business relationship is established, they appear to provide a more or less constant flow of work pouring in. An in-house patent counsel on the client's payroll makes sure that there is a professional counterpart for the external patent attorneys, greatly facilitating co-ordination of work.
• Small and medium enterprises (SMEs): They are in particular in Germany of great importance as potential clients because of there are so many of them. As most of them do not have an in-house patent counsel, more work is needed to explain legal options to the client. On the other hand, if the business relationship flourishes, the patent attorney can be the king in his realm because of his superior knowledge of the legal area in question, unchallenged by some in-house counsel standing on equal footing.
• Entrepreneurial start-up companies and individuals: These surely are the most thrilling challenges for a patent attorney because of the entire fate of the start-up may, under some circumstances, depend on the IP strategy as advised by him or her. However, if a start-up is insufficiently funded, trouble begins. At least entrepreneurs running a start-up usually are well aware that patents are available at a price. But approaches like offerings to patent attorneys to convert open invoices into shares of the start-up might, in some countries, be highly problematic in view of applicable Regulations of the free profession.
• Non-entrepreneurial individuals: Here I think e.g. of, say, teachers or civil servants or employees having a fixed monthly income who, in their spare time, have developed something new which they believe might make them rich at some later point in time, after having obtained a patent. Such individuals are often insufficiently funded to pay for any reasonable multi-country patent project, let alone legal problems emanating of their employee or quasi-employee status (do they really own the invention they have made in their spare time?), And, in many cases they do not have any particular ideas as to how to make any money from the invention.

Now to Mr Wild's assertions.

1. Big business:

In my view, big enterprises currently do not have any problems to recruit sufficient pools of external European patent attorneys for their work. They are, however, increasingly determined to cut the costs in particular for patent and trade mark prosecution work; fixed fees or flat rates for patent and/or trade mark related work are getting more and more common. One of the major aims appears to be a greater differentiation of work: Low-level work like drafting of patent applications or responding to Office actions during prosecution is not tolerated to be billed any more at senior partner hourly rates.

In Germany, law firms operating in the field of patent law are generally seen as being quite conservative. In particular, they appear not to be that eager to experiment with outsourcing solutions.

But in the anglo-saxonian world things might develop more rapidly. According to Wikipedia, the Rio Tinto Group is a diversified, multinational mining and resources group with headquarters in London, England and Melbourne, Australia. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto river, in Huelva, Spain from the Spanish government. Since then, the company has grown through a long series of mergers and acquisitions to place itself among the world leaders in the production of many commodities, including aluminium, iron ore, copper, uranium, coal, and diamonds. Although primarily focused on extraction of minerals, Rio Tinto also has significant operations in refining, particularly for refining bauxite and iron ore. The company has operations on six continents but is mainly concentrated in Australia and Canada, and owns gross assets valued at $81 billion through a complex web of wholly and partly owned subsidiaries. This means it is really big business.

On June 18, 2009, CPA Global published this press release reporting a major deal with Rio Tinto:

"Major cost savings projected from new approach to legal work

Rio Tinto today announced that it has entered into a legal services outsourcing agreement with CPA Global that is projected to save Rio Tinto up to 20% annually in legal costs.

Under the agreement, CPA Global, one of the world's leading providers of outsourced legal support services, are providing a team of lawyers in India to support Rio Tinto's in-house legal function on a global basis.

Initially, the work undertaken by CPA Global includes contract review and drafting, legal research, and document review. However, it is anticipated that the scope of work will expand to cover other routine legal services work traditionally handled in-house by Rio Tinto or shared amongst the company's panel of law firms.

Rio Tinto's managing attorney, Leah Cooper, said: "We took a long hard look at our internal costs and the amount we were spending with outside counsel and saw an opportunity to make significant changes to the way we deliver legal services to the group. We have developed a ground-breaking legal model with CPA Global that will generate tremendous savings and serve the business without compromising quality.

"By shifting work to CPA Global our internal team will be freed up to get involved in some of the more complex and challenging legal matters, which in the past might have been sent to outside counsel at significant cost.

"As more of our standard legal work is filtered though to CPA Global, we will have more time to lift our heads up from the day-to-day reactive delivery of legal services and focus on being more proactive. We will have more time to spend with the business, develop stronger relationships and understand what we can do to prevent legal issues developing in the first place with a stronger focus on prevention rather than cure."

Andrew Loach, CPA Global's Vice President, Legal Support Services, said: "We are delighted to have been appointed as Rio Tinto's legal services outsourcing partner. Rio Tinto have really done their homework on this and recognised that there is a better, more cost efficient way of structuring your legal services work, without sacrificing quality or security."

Bhaskar Bagchi, CPA Global's Country Head - India, added: "CPA Global's India team will serve as an extension of Rio Tinto's internal legal department. They are handpicked, well trained legal professionals who will work on a whole range of Rio Tinto legal matters from across the globe."

Commenting on the choice of CPA Global, Rio Tinto's Leah Cooper said: "CPA Global provided us with fresh thinking about how to unlock real savings on our legal costs without altering the level of service we offered our internal clients. What we particularly liked about CPA Global was that they are legal outsourcing specialists, not generalists, with a global size and scale."

[...]

With clients in over 100 countries, CPA Global is one of the world's leading providers of legal process outsourcing (LPO) services. Now celebrating its 40th year of operations, CPA Global provides lifecycle management services for intellectual property such as patent, design and trademark searching, watching, renewals, and portfolio strategy. CPA Global is also a leader in the growing market for outsourced document review, contract management and litigation support services, helping law firms and corporations to realise value by managing risk, cost and capacity. Founded in Jersey, Channel Islands in 1969, CPA Global today employs more than 1,200 people in 16 offices in eight countries. For further information, please visit: www.cpaglobal.com or contact our media relations team."

In order to have a full understanding of the depth of this deal, which caused some stir in particular in the United Kingdom legal community, I can only recommend to fully watch a video clip provided by LegalWeek and showing a talk on Legal process outsourcing by Mr Richard Susskind OBE and Ms Leah Cooper, managing attorney with Rio Tinto. I do not have any particular knowledge as to whether or not the services provided by CPA Global actually also do cover patent and/or trade mark related work but it appears to me that it is obvious that the overall scheme of this contract could also be applied to workload of European patent attorneys.

For getting some background on Mr Susskind's view on the future of the legal profession I also would like to point to his recent book 'The End of Lawyers? - Rethinking the Nature of Legal Services' wherein the author argues that technology and standardisation will make lawyers less important, According to the author's summary, IT renders conventional legal advice redundant, clients and lawyers are collaborators under the one virtual roof, disputes are dominated by technology if not avoided in the first place, and online systems and services compete with lawyers in providing access to the law and to justice. For the conservative legal adviser, the message is bleak. For the progressive lawyer, an exciting new legal market emerges. In this context I also can highly recommend to listen in to a podcast by Mr Mike Semple Piggot a.k.a. Charon QC wherein he discusses the future of the legal profession with Professor Richard Susskind OBE. (MP3).

Hence, if, at the end of the day, Mr Susskind should be right and attempts like that of Rio Tinto become commonplace, the work of patent attorneys for big companies will change dramatically. More significantly, European patent attorneys will most likely be hired merely for high-end activities whereas low-level routine work will be done by other support staff in India or elsewhere on the globe. It is likely that European patent attorneys will soon need to acquire more knowledge about the business-related aspects of patents and trade marks, not only the legal ones as of today.

2. Small and medium enterprises (SMEs):

Due to their huge number, SMEs are a very attractive target market for European patent attorneys. However, experience shows that many SMEs are not that much IP-aware. Some are outrightly ignoring it, others apply some tactics of muddling through. Moreover, a few of them have adopted an anti-IP rhetoric and policy originally provided by campaigning groups like FFII and the like. Hence, when discussing figures on how many SMEs do exist throughout Europe, caution must be exercised as to a number of them is at best merely part of something like a 'latent market' of IP related legal services. On a structural level, it might be wise for European patent attorneys to contribute to the education of top SME staff on IP matters.

3. Entrepreneurial start-up companies and individuals:

This group of clients usually is highly IP-aware. However, it is a commonplace to say that Europe in general and Germany in particular are not generally seen as the best places for creating a start-up company. In order to foster cutting-edge research the EU recently has set up the European Institute of Innovation and Technology (EIT) which might, if fully operational in 2010 or so, also help to create more technology start-up companies in Europe. However, from the perspective of a European patent attorney, not so much can be done for increating this market for legal services. As a matter of fact, the number of entrepreneurial start-up companies can't be increased at will.

4. Non-entrepreneurial individuals:

Here more education appears to be necessary to help individuals to take a proper decision as to whether or not set up some entrepreneurial project for which IP makes sense or to prevent wasting money.

To summarise up, I am very much in doubt as to greatly increasing the number of European patent attorneys (by order(s) of magnitude as suggested by Mr Wild) is either possible or would do any good. The structure of the patent attorney's business will probably change significantly over coming years, and time will tell if this means that more or even less European patent attorneys are needed.

Concerning the extremely uneven distribution of European patent attorneys over Europe, the current practice of the European Qualification Examination (EQE) might be challenged; see my earlier posting there. Beneficiaries of the so-called 'Grandfathers Clause' are still dominant in many countries, and the character of the examination makes it extremely difficult for Europeans from other countries than DE, GB, and FR to pass.The regime of professional representation before the OHIM (where there is no counterpart to EQE) gives a hint that also a system of decentralised qualifications can work in practice.

(Photo: (C) 2009 by chjab via Flickr and licensed under the terms of a CC-BY license)