Between an influx of competitors and constant pressure to reduce prices, today’s IP law firms realise that the only way to achieve and maintain profitability is to grow their practices. Indeed, in a recent survey of IP law firms and their clients by CPA Global, B2B and Managing IP, business growth was ranked the top challenge by 47 percent of participants.
Achieving growth, however, is easier said than done. Firms face a multitude of challenges, many of which must be addressed to ensure growth. But, while significant, these challenges are not insurmountable. Here are the top 5 challenges listed by survey participants—along with solutions to overcome them
1. The top challenge for 59 percent of law firms is pressure to reduce prices
Today’s corporate clients expect IP law firms to provide greater value at lower cost. It’s a particularly difficult feat in an industry once (and largely still) dominated by hourly rates and practitioners that believe the surest way to success is to bill for as many hours as possible.
IP practices still abiding by hourly billing models must now compete against firms offering fixed fees, not to mention a much larger, global competitor pool.
The solution requires firms to re-evaluate how they commoditise services and capabilities, based on corporate clients’ priorities. There will always be clients who want—and will pay for—premium services backed by value-adding expertise and experience. Others simply want cheaper, fixed-fee options—even if it means a lower degree of service. Your firm needs an organisation within itself that’s equipped to handle such demands, one that’s differentiated from other superior offerings.
2. 44% named the need to maintain and increase profitability
Amidst so much pressure to reduce prices, IP firms face an uphill battle to improve profitability—especially in an industry where pricing already lags years behind inflation. Of course, with corporate clients facing their own cost-cutting mandates, the demand for lower prices will only continue, even as the cost of doing business rises.
To remain profitable, IP law practices need to decrease inefficiencies, so that they can get desired outcomes in less time, using less manpower and resources. This might mean reevaluating existing processes to eliminate duplicate efforts, or faster adoption of technologies that enable firm to perform the same tasks at greater speed. But, however you go about it, the overall outcome should be a more equitable distribution of resources that enables you to satisfy clients and your firm’s bottom line
3. Another 44% said increased competition is a major challenge
While the economic downturn of 2008 shuttered many law firms, the IP law industry itself is alive and well. Today we see a growing range of virtual and micro firms whose lower overhead allows them to offer services at substantially lower prices. Meanwhile, when there’s money to be saved, corporate clients don’t mind sharing IP work with multiple firms. They’ll assign their search business to one, docketing to another and annuities to yet another. The result? Firms aren’t just competing for single accounts—they’re competing at a granular level within those accounts.
IP practices need a strategic approach to differentiation, one that accounts for what’s most important to the clients they serve or that they want to pursue. Ultimately, firms must determine their value proposition—whether it’s expertise in certain technologies or industries, or something else entirely—and use that to establish themselves as the practice of choice for the clients they want.
4. 33% said clients are demanding higher levels of service and performance
Corporate IP executives’ expectations are consistent: high-quality services with high-quality outcomes. Moreover, many have specific benchmarks and key performance indicators (KPIs) in mind.
Some corporate clients want to file a certain number of patents or trademarks. Conversely, others are interested in filing fewer, higher-quality applications. Whatever the KPI, corporate clients want a firm that offers a more strategic, comprehensive approach with rigorously defined outcomes.
Of course, outcomes only happen after your firm lands the client. The competition today is too fierce for practices to rely on reputation alone.
The first step? Prove that you have the technical expertise and experience to help corporate clients achieve their goals—and that you’ll do it better than your competitors. This means developing a unique, cohesive value proposition, one that you clearly communicate to the clients you hope to attract.
5. Finally, 31% named technology transformation and automation as a top challenge
Few things have played such a transformative role in the practice of IP law than technology. For almost every task across the IP lifecycle, there’s technology designed to help you do it faster, more efficiently and with lower risk. But with these technology advancements come a host of questions and challenges. Technology can quickly go from help to hindrance when it’s not properly implemented, integrated and adopted.
A practice’s approach to technology should be as strategic as the guidance they provide their clients. To that end, it’s critical that evolving IP law practices evaluate whether the technology in which they’ve invested serves the intended purpose. Is technology appropriately integrated? Have your employees fully embraced and adopted your software? Is it yielding the data and reporting capabilities you need?
If the answer is no, it’s time to conduct an in-depth evaluation of your IP technology stack to fill the gaps, promote adoption and secure the best results. Ultimately, your IP technology investment should help you automate outdated, manual processes, reduce waste, eliminate human error and transform how you serve your clients.Learn about other challenges cited by participants in our global survey. Download the whitepaper.