Many in-house attorneys overpay outside counsel for trademark services. I have spent the last ten years winning client work from firms that overbill and watching opposing counsel fleece their corporate clients.
So how are in-house counsel overspending for trademark services? Here are the top three areas where most “traditional” law firms are overbilling:
1. The trademark search
Most law firms do not have the in-house capabilities to perform professional-level trademark search reports. Therefore, they must hire a company like CORSEARCH or THOMPSON WEST to run a trademark clearance search. This costs between $650-$850 to merely have these companies run a search and pull relevant results in the United States. The result of the search is a phone book. A trademark attorney on a billable rate will bill time reviewing that report page by page to formulate an opinion about the viability of a trademark.
There are several alternatives to this antiquated way of trademark searching. For starters, there has been development of some artificial intelligence software that allows a somewhat accurate search to be run in the matter of seconds. Our firm has tested multiple different types of AI-enabled software and found that the best perform an accurate search about 70% of the time.
While the accuracy of the AI-enabled trademark search software on the market today is not developed enough to rely on yet, the software tools can be used to initially vet trademarks and avoid doing costly searches where the software can immediately find a problem.
With that said, the most efficient way to conduct a high-quality trademark search is developing the in-house capabilities. In my practice, we have an in-house team of experienced search professionals that work closely with my firm’s attorneys to create high quality reports without the expense of a third party vendors and multiple hours of attorney time. The bottom line is that we end up producing a high quality report at a fraction of the cost of firms that use traditional methods.
2. The trademark filing and application process
A trademark application is a complex legal document. However, any skilled trademark attorney should be able to complete an application that will requires minimal, if any, “fixes” once the document is filed.
Unfortunately, many attorneys file incomplete applications knowing that significant work will be needed to correct issues during the application process. When our firm takes over filings that have started with other attorneys we are often stunned by the choices made by the original attorney. Many of the initial choices made by an attorney billing time by the hour cause the application to require further follow-up and, you guessed it, further billing to the client.
For example, identifications (the “list of goods and services” in a trademark application) are often needlessly broad or use technical terms that are unacceptable to the U.S. Patent and Trademark Office (USPTO). When the USPTO rejects the language, the hourly attorney then needs to follow up with the client to re-draft it, instead of doing the legwork ahead of time— working with the client before the application is filed.
Our firm has always billed trademark application work, and, any follow-up needed, at a flat rate. We do our best to ensure the application meets all the technical standards required by the USPTO on the front end (that is, before the application is filed.) This puts us on the same team as the client. We want the application process to move as efficiently as possible with the least amount of follow-up.
3. Trademark enforcement
This is probably the category that I have seen the most abuse on billing from attorneys in mid-sized and large law firms. I see enforcement actions on a monthly basis that are either unnecessary all-together or simply drawn out too far in what appears to be an attempt by opposing counsel to keep billing time.
The vast majority of trademark disputes can be handled efficiently by doing two things:
a) Properly and politely communicating with the opposing side; and
b) Negotiating for settlement terms that are not one-sided, and, reasonable given the circumstances.
Seems like common sense? You would be shocked by the uncivilized and aggressive language used in demand letters sent by attorneys from large law firms. This only encourages the receiving party to fight back rather than engage in a professional negotiation. If I started business negotiations by yelling threats at someone, you would expect it to end poorly. Why do lawyers do the same with demand letters?
If the initial letter is firm but polite, it is many times more effective in opening dialogue to handle a matter. While sometimes a strongly worded letter is needed (e.g. a letter to a willful infringer), the vast majority of trademark cases do not require over-sized threats to be sent in an opening letter.
Finally, the vast majority of settlement agreements we obtain from opposing counsel are overly one-sided, or, simply do not consider terms important to our client. It can take hours of negotiation, and sometimes even further litigation, just to arrive at terms that are fair and reflect the realities of the industry and marketplace in which the two opposing parties operate.
Again, there is strategy involved in every step of the legal decision-making process. There are times that vastly different approaches are necessary given the circumstances. But in trademark law, there are:
a) Rarely ever damages awarded – the typical award is “injunctive relief;” and
b) Attorneys fees are only awarded in extraordinary cases
As a result, most trademark issues settle long before litigation ensues. So why do large law firms approach every problem with an ax instead of a scalpel? In my opinion, the requirement to constantly bill encourages attorneys to escalate issues and prolong matters instead of closing them out and moving on.
Ten years ago, my firm took a different route and developed fee structures and “best practices” for trademark services that align our interests with the interests of our clients. We use flat rates whenever possible, and, even when billing by the hour, ensure that budgets and expectations are properly set on each individual matter. This has allowed us to earn the trust of entrepreneurs and companies with $100+ million in revenue.
Do you think it is time to evaluate the bill from your trademark attorneys a little differently?