[Part 1 can be found here]
Different Kinds of Law Firms, Relationships
Law firms come in many flavors, sizes, and shapes. Some litigators will work on “modified contingency,” which usually means that the client is expected to pay expenses. In return, the law firm will take a lower percentage of any proceeds.
For the right case with the right client against the right target(s), some litigators will work of “full contingency,” which usually means that they will advance their out-of-pocket expenses. If and when funds are received, typically the first money in will be used to repay the firm’s expenses. The remaining funds will be shared between the firm and the client in accordance with the representation agreement.
- “The Deal.” Patent owners often focus on the deal first: what percent of any funds recovered will the law firm take and what percent goes to the patent owner? The split is important, but not necessarily the most important factor. Some agreements are “laddered,” meaning that the percentage that goes to law firm increases as the case reaches certain milestones. Milestones might include responding to substantive motions, discovery, a hearing before the judge regarding the interpretation of claims, trial, and sometimes appeals. The usual law firm view is that the more expenses they incur and, therefore, the higher the risk, the higher the percentage to the firm of any recovery.
- “Flippers” vs Long Term Committed. Some contingency fee firms prefer the certainty of relatively quick settlements for lower amounts prior to trial. To use an analogy, these firms tend to be high volume, lower margin operations that make their money through “inventory turns,” so to speak (think Walmart). Especially in strong cases with high potential damages against infringing products with large markets, other contingency fee law firms have a clear expectation that the case will go to trial and that a larger settlement is the goal. Naturally, different cases lend themselves to different strategies that may change as the case unfolds. Information developed during the course of the case may affect the strategy in either direction.
- Subject Matter Expertise. Some firms have relatively narrow expertise, for example, Consumer Electronics and High Tech, Biotech, Pharma, or Medical Devices. It’s important to find litigators who have a solid understanding of the underlying technologies and inventions and of markets and key players.
- Previous Experience Litigating Against Targets. It’s often very helpful to have litigators who have already been successful with infringement cases against the same infringers. The litigators may already have detailed knowledge of the target company or its major business units. The lawyers may have taken testimony from individuals who are likely to be part of the new case.
- “Personal Chemistry.” Patent owners need to feel that the individual attorneys who will be working on the case are people with whom they can work without friction. Disagreements naturally arise, of course, but patent owners need to feel that they can collaborate with the legal team to their mutual advantage. The project is, after all, a joint effort.
[Next on Friday: Substantial Risk Factors]