Automation will change the client-lawyer relationship

• Clients can and will be more demanding of their outside firms
• Billing will become very different, based on transparency and predictability
• In-house counsel will be expected to give more thought to how work is structured and distributed

Automation will also have a significant impact on how patent departments work with other parts of the IP ecosystem, in particular outside counsel. It will lead to law firms cutting a lot of expense out of the work they do, predicts one in-house lawyer: “This will change the client-lawyer relationship dramatically.” Clients will be increasingly reluctant to pay hourly rates for routine work and law firms will have to respond creatively – not necessarily by cutting their fees, but pricing work more appropriately and being more transparent in how they invoice.

To some extent, change is already happening. “The traditional law firm charging model is very much under threat. With nearly every job we ask for an estimate and expect to be told if there is significant variance,” says one in-house counsel. A former in-house counsel adds: “Clients are more cost sensitive than they used to be. They care about the bill and high-level service.” And one US lawyer provides a perspective from the other side of the fence: “Corporate IP departments are completely in control on fees – it’s a question of what they are prepared to pay for. It’s almost a race to the bottom.”

Companies may be more in control, but this in turn presents challenges. Procurement departments will play a greater role in monitoring costs and will want to know what happens to any savings made from outside counsel. In-house counsel may have to become more active in reviewing their outside firms and scoring them, justifying why one firm is chosen over another (particularly if it is more expensive) and more prepared to move work to other firms or cancel projects that go over budget. Greater attention will be paid to how IP departments are structured: will they be standalone companies? What are the most efficient tax structures? How should they be led – what is the role of a CEO or CIPO? Where does the budget sit – law, technology or elsewhere? There are no right answers to any of these questions, but diligent patent heads will give them serious consideration.