In this week’s poll we asked our IP professional benchmarking group (x=258): What type of billing method do you primarily use for outside counsel prep and prosecution work? Using only a traditional hourly-based billing has become much less common, with only 18% reporting this method; similarly a fixed-fee only approach was reported by just 23%. The most common approach, reported by 57% of our participants, was the combination of fixed-fee and hourly-based.
The type of billing method used with outside counsel is about more than just budgeting. The financial arrangement has important implications for the nature of the relationship and ensuring proper alignment in the quality and outcomes of the work product. Using a combination of fixed-fee and hourly-rates–plus the potential for other types of fee arrangements–allows client and firm to establish a true quality focused approach that properly allocates both financial and professional resources. We see this trend continuing with “Other” methods (of which only 2% reported in this poll), to become more common. The use of long-term retained services agreements, work-block billing and auctions, are examples of alternative approaches that are being explored.
The implications are important. As corporate IP departments are forced to evaluate their operations and core competencies, previously important functions may require new approaches. It is not that docketing is not critical–of course it is–but the question is whether there is a risk management imperative that requires shadow docketing; or instead can companies employ other approaches that meet these needs? As IP operations become more innovative, companies have the opportunity to reimagine how they meet their IP legal and business requirements. New working relationships with outside counsel, the availability of online PTO data, and other technology solutions all provide interesting possibilities.