The Legal Intelligencer Blog

Will Uncertain Client Demands Continue to Fuel Turbulence in IP Marketplace?

By Anthony S. Volpe
Special to the Legal

We have seen an increase in the amount of movement, both locally and nationally, of IP attorneys in and out of general practice firms and out of IP boutique firms into smaller IP boutiques with a more limited focus on certain practice areas.

The question raised by these movements is whether they reflect client needs or the shifting needs of the attorneys in view of what they perceive to be the new order in IP practice.

There has been a continuous increase in the demand for lower costs, while at the same time there has been an increase in the demand for value-added IP services. Many of the clients searching for new firms or a new arrangement within an existing firm are stressing the need for the selected IP firms to have a firm grasp of their business models and to deliver IP services, especially patent and trademark prosecution, at commodity pricing. 

These client demands are more frequently finding their way into discussions of the firm's licensing support and litigation services, where clients are increasingly demanding defined cost controls.
So, how does the shifting client demand influence or translate into the movement of IP attorneys between and among existing firms with IP practices and newly created IP firms?

Some of this movement may be driven by the often-repeated statement that a particular lawyer moved to gain a larger/smaller platform that is a better fit for the demands of existing clients.  The size of the practice group the lawyer required to meet client needs seems to be determined by the size of the group available at the successor firm; this size is almost always the size that best fits the public relations story accompanying the move. 

My guess is that these moves are being driven more by personal views of the desired practice management than by client demands. If the attorney or group does not have the necessary level of influence within the firm's management group, the move is more often driven by the attorney's need/desire for more control in billing arrangements, or the realization that others with more influence are driving conflict decisions that hamper new client development or cross selling opportunities. I see these movements as being more attributable to the circumstances within a firm than to client demands for change.

Some of the movement may be driven by the more recent trend among some clients to view everything as a commodity that can be competitively priced by market pressures on supply and demand.

If prosecuting firms need a certain volume of work to achieve efficiencies that produce profits, unit pricing can be negotiated against a given volume of active cases. This type of economic model has lead to the creation of low-overhead firms that offer unit pricing without regard to subject matter. In these arrangements, there is often very little attention paid to a particular matter until it has demonstrated value within the IP rights portfolio.

This belated determination of value is a major problem associated with this volume/price model, and it may be a direct result of the model. If the attorney or firm has decided to price services on the basis of volume, there is not likely to be much time for consideration of anything that is not focused on the immediate task. Since the basis of the bargain is price for volume, and volume demands throughput to achieve profits, there is an operational dynamic that works against added value. This may be acceptable to the client, but it seems to be against the client’s best interest.

Because companies are increasingly aware of the importance of securing and protecting IP rights and are increasingly under pressure to control cost, there will be a continuing tension between spending on IP services and the creation of added value in the portfolio as a result of those services.  Companies will continue to search for the right model and IP attorneys and firms will continue to modify their approaches to address their perception of the clients' needs.  Since there is currently no uniform direction of the demand from clients, the currents will continue to shift according to the client's philosophical approach to cost and value. Reaction to those currents will produce continued turbulence.

Anthony S. Volpe is a founding partner of Volpe & Koenig. He can be reached at TVolpe@volpe-koenig.com.

Creating an Effective FCPA/UKBA Compliance Program

By David A. Anderson
Special to the Legal

Last month I discussed the potential risks that a company faces under the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) and the U.K. Bribery Act of 2010 (UKBA) when conducting business in foreign countries. This month, I'll present the key components of an effective FCPA/UKBA compliance program.

There are seven key components to an effective FCPA/UKBA compliance program. They are the following:

1) Establish standards and procedures to prevent and detect criminal conduct and ensure compliance with government regulations and industry standards.

2) Create a culture of compliance led by the company's senior management. This means that senior management must:

- Be knowledgeable about the content and operation of the compliance program;
- Exercise reasonable oversight of the implementation and ongoing review of the effectiveness of the compliance program;
- Assign specific senior level manager(s) overall and day-to-day operational responsibility for the program; and
- Provide the necessary authority and resources to enable successful implementation and ongoing review of the program.

3) Use reasonable efforts to exclude known violators from activities that could lead to program violations. This also requires that the company exercise due diligence in the screening of current and prospective employees for past illegal or improper conduct.

4) Provide reasonable ongoing communication and training to senior management, employees and third-party agents regarding the standards and procedures of the compliance program.

5) Monitor, audit and evaluate the effectiveness of the compliance program on a regular basis. Included within this component are:

- The establishment of a monitoring/auditing program to verify that the compliance program is being followed, which will necessitate the use of internal audit staff or external forensic auditors;
- Evaluation of the effectiveness of the compliance program at regular intervals, including analysis of monitoring/auditing results as well as use of feedback from senior management, employees, third-party agents and others; and
- The use of hotlines to enable employees, third-party agents and others to anonymously or confidentially report or seek guidance about potential criminal conduct without fear of retaliation. 

6) Establish of appropriate performance incentives and disciplinary measures that are promoted and enforced consistently within the company to support the compliance program.

7) Establish appropriate response to detected criminal conduct, and subsequent reassessment of the compliance program to reduce the risk of the same conduct occurring again. This requires that the company take the appropriate steps to report detected criminal conduct and cooperate with law enforcement. In addition, the company must take reasonable steps to modify, if necessary, its compliance program to prevent similar conduct in the future.

Of course, no program can prevent rogue employees or agents from violating the FCPA or UKBA, but a well-designed and implemented compliance program -- with effective communication and training as well as regular monitoring and evaluation -- can minimize the risk of a company and/or its employees violating the FCPA or UKBA. In addition, the existence of such a program can mitigate punishment of the company in event of violation of either statute.

David A. Anderson, CPA, CFE, is a director in the Valuation & Forensic Services Group of Citrin Cooperman, an accounting, tax and business-consulting firm in Philadelphia. He has more than 30 years combined experience in public accounting and consulting as well as service at the CFO and COO level in private and public companies. Anderson specializes in business valuations, insolvency and reorganization, and litigation support including commercial and matrimonial litigation. He can be reached at danderson@citrincooperman.com or 215-545-4800.

Rainmaking at Its Best: Focusing on Clients First

By Kimberly Alford Rice
Special to the Legal

Lawyers still struggle with cultivating and strengthening their relationships with clients and contacts. I hear over and over again that the lawyers don't want to appear "pushy" or "aggressive" in introducing the client/contact to the services they provide or that their firm provides.

My advice to them is usually a variation on the same theme: It's not about you! Too often, lawyers focus too much on what they do and not enough on what the client/contact may be interested in: their industry, their business performance, and their problems, opportunities and the constant changes they confront.

If attorneys would reflect on how they desire to be treated by their service providers, the level of service they expect and the responsiveness they require, providing that same level of service to their clients would not be too difficult (think the Golden Rule).

Have you evaluated how "client-focused" you are? Do you make a concerted effort to be attentive to your client's needs first and keep conversations about the client, not you?

Below are a few tips to keep in mind:
• Listen more, talk less;
• Ask thoughtful, open-ended questions to learn more;
• Avoid promoting your experience and that of your firm (it's the cost of admission to even get this
far);
• Find out your clients'/contacts' pain points and address how you may be of service in these areas
or offer qualified referrals;
• Under-promise and over-deliver with work product;
• Exceed expectations every time.

Never before has it so critical for lawyers to listen and understand their clients and their needs. In case you’ve been hiding under a rock somewhere, clients are why we all have a practice and income. To truly take demonstrative steps to forge a deeper relationship with your clients, you may want to follow the approach Harry Mills, author of "The Rainmaker's Toolkit," recommends as the EAR recovery formula:

Empathize. Demonstrate you understand the client's problem and his/her needs. Learn what caused them to say, "That's it, I've had enough!" Next, drill down to the heart of the anger festering inside them. Ask about the problems they've experienced with your firm previously.

Ask. After you've listened to your client's problems and concerns, ask what you can do to save the business relationship. This would be a great time to be direct and candid. You may ask, "What can we do to make right the trouble we've put you through and keep you as a client?"

Respond. This is your time to shine. Respond in a way that demonstrates that you understand the severity of your client’s complaints and that you are committed to righting the course. Low-cost or grandiose offers will only send clients running for the door -- take your time.

Use this system to help you identify which clients are about to defect and potentially how you can save the relationship. Lend an ear, ask the right questions, and then respond with a tailored solution.

In this fierce legal services environment, the client is in the driver's seat. To advance strong relationships, lawyers are well advised to adjust their mindset and best practices to be more "client centric" than ever before. You can't afford not to be. Often, this shift requires learning and practicing new disciplines and behaviors, and that's OK as long as the result is still the same: clients are happy with your relationship and it becomes long-term.

One of the services we provides its clients is professional training and coaching to help them to master the art of relationship cultivation and long-term client service skills. What could be more important than developing super satisfied clients to advance your practice? Contact us today to learn how we may help your firm maximize its client relationships in 2011.

Kimberly Alford Rice is principal of KLA Marketing Associates, a business development advisory firm focusing on legal services. As a law marketing authority, she helps law firms and lawyers develop practical business development and marketing strategies that lead directly to new clients and increased revenues. Additionally, she provides career management services to lawyers in transition. She can be contacted at 609-458-0415 or via e-mail at kimberly@klamarketing.net.

Dilworth Paxson Looks to Get Orchestra's Bankruptcy Work

By Gina Passarella
Of the Legal Staff

The Academy of Music of Philadelphia Inc., the Philadelphia Orchestra Association and Encore Series Inc. have asked the court to approve Dilworth Paxson as counsel in their Chapter 11 bankruptcy filings initiated April 16.

Lawrence G. McMichael, a Dilworth Paxson partner who worked on the bankruptcy of the parent company of the Philadelphia Inquirer and Daily News, will take the lead in the representation.

According to a filing Saturday, Dilworth has already received $319,307 from the orchestra since Jan. 16 for legal work leading up to the bankruptcy filing.

McMichael is requesting court approval to charge his client $750 an hour. Partner Christie Comerford is looking to charge $440 an hour, partner Anne Marie Aaronson will charge $410 an hour, associate Catherine G. Pappas will charge $295 and associate Meryl B. Vinocur will charge $235, according to the filing.

As part of its filing, Dilworth Paxson noted that its chairman, Joseph Jacovini, is a board member of the Philadelphia Orchestra Association. It was the board that had to vote to approve the decision to file for bankruptcy.

Dilworth Paxson said it would create a Chinese wall to block Jacovini from any of the firm's work on the bankruptcy, including barring him from being included in e-mails or viewing files.

In other related legal news, Cozen O'Connor filed an entry of appearance on behalf of the Kimmel Center, where the Philadelphia Orchestra performs. Attorneys Neal Colton and Eric Scherling of the firm are representing the center.

According to a filing by the Philadelphia Orchestra of its 30 largest unsecured creditors, the orchestra owes Cozen O'Connor $51,942.

Paul Rosen, Leslie B. Baskin and David B. Picker of Spector Gadon & Rosen filed an entry of appearance Monday on behalf of creditors Peter Nero -- the conductor of the Philly Pops -- and his company Finger Prince Inc.

Gina Passarella is the senior reporter for The Legal. She can be contacted at GPassarella@alm.com. Follow her on Twitter: @GPassarellaTLI

Law Firm Confidential: What Do You Wish Your Colleagues Knew?

By Stephanie Baum
Of the Legal Staff

Earlier this month, the Legal published an article titled, "What Do Attorneys Wish Their Paralegals Knew?"
The article, an informal survey of a handful of lawyers contributed by Kim Walker, senior litigation paralegal with Berger & Montague, generated a long list of desires both practical and not so much.

Some of the items on the "wish list" ranged from practical knowledge, like proofreading and researching, to behavioral issues like dressing professionally and getting along with others in the firm. One attorney said, "I wish my paralegal knew that I don't like to work on the weekends either, but sometimes it's just necessary."

The point of the article wasn't just for attorneys to vent, though. As Walker wrote, "Some of the wishes seem to be common sense, but all too often paralegals get complacent, especially if they've worked for a firm for a long time. Take the time to look at the list and highlight some of the areas where you may be weak."

But why stop there? We'd like to open this up to other positions with a law firm. What do attorneys wish their associates knew? What about your managing partners? And by the way, paralegals, what do you wish your attorneys knew?

We're inviting your comments! Send us your own "wish list" for your colleagues, either by e-mailing me or leaving a comment below.

Outside Counsel Training In-House Lawyers on Providing Pro Bono

By Jaime Bochet
Of the Legal Staff

It's not always easy for in-house counsel to provide pro bono services, but a program put on by a Philadelphia public interest group is allowing them to do just that.

For the last seven years, Philadelphia LawWorks, a project of Philadelphia VIP, has sponsored an annual Corporate Pro Bono Day, giving in-house counsel the opportunity to not only provide much-needed pro bono services, but also to earn CLE credits.

CPBD provides micro-entrepreneurs the opportunity to discuss immediate and ongoing legal matters with corporate counsel from various Philadelphia-area businesses at no cost. 

This year's event is taking place this evening at the Philadelphia offices of Drinker Biddle & Reath, Philadelphia VIP  is partnering with Women’s Business Development Center, a premier small business incubator that will be providing clients for this event from their FastTrac® program, a comprehensive how-to education program for starting and successfully managing a small business.

Prior to the counseling sessions, lawyers from Drinker Biddle will provide a continuing legal education seminar on the corporate formation of micro-entrepreneurs to the in-house counsel for one CLE credit.

In-house counsel who will be offering their pro bono advice are coming from Exelon Corp., Johnson Matthey, Coty Inc., Ink, Sunoco Inc., Radian, Verizon, Comcast Corp., Chartis, Johnson & Johnson, FMC Corp., Corporation Service Co., AETNA and G Powell Holdings.

Blog Buddies: GC and Outside Counsel Co-Author ACC Blog

By Jaime Bochet

Of the Legal Staff

According to an article posted today on Corporate Counsel magazine's website, a strange waltz is taking place on the Interwebs: a GC and his new outside counsel are blogging about their burgeoning relationship.

The Association of Corporate Counsel is "hosting" the blog, which they call "an in-motion case study that allows you to judge the promise and pitfalls of forming a new value-based client-firm relationship." The hope is that by observing this "case study," readers will learn what they need to do to improve their own connections with the other side, to everyone's benefit.

The article mentions some of the highlights of the blog, which is on it's 10th post since its inception in mid-June. The GC (ACC Value Challenge steering committee member Ken Grady of Wolverine World Wide Inc.) and the outside counsel (Lisa Damon of Seyfarth Shaw) hit it off well from the beginning, understanding that open communication about their common goals would be key to success. Their biggest challenges so far have been "the time commitment, the openness required and fee structure."

It's an interesting article, and just by scanning some of the blog posts they seem well-written, engaging and detailed. My questions for you, readers, is two-fold: Will you tune in, and if so, will the blog have its intended effect? Will you attempt to introduce certain aspects of this new relationship into your own offices? We're curious to hear what you think, so send me an e-mail or discuss in the comments below!

Legal Services Get Modest Increase in State Budget

State funding for legal services organizations hurting from a drop in grants from interest on lawyer trust accounts increased only $526,000 in the state budget process last week, said Samuel Milkes, executive director of Pennsylvania Legal Aid Network, the statewide coordinating organization for 10 regional legal services programs and six specialized legal resource programs.

The state budget originally proposed increasing funding by $1 million.

Milkes said that because other appropriation items were slashed even more dramatically that legal services organizations were pleased that some increase was seen in the budget.

"We also realized when looking at the treatment of other lines it certainly represents support from the governor and the legislature that we very much appreciate," Milkes said.

Total state funding, separate from a federal services block grant, is about $3.1 million.

The state funding for legal aid programs that provide direct services is distributed to PLAN, which then allocates according to the most recent census and the poverty populations in each area of the sate.

"We're appreciative of the legislature and the governor," Milkes said. "We also appreciate how much the Philadelphia bar and the Pennsylvania bar and lawyers around the state worked hard to see this increase."

In interviews with The Legal, legal services organizations have said that every extra penny will help them because IOLTA grants are down 33 percent, or $7.3 million, statewide in the fiscal year that started July 1.

-- Amaris Elliott-Engel, Staff Reporter