Despite the stupefying fact that The Wall Street Journal reported
late last year that 45% of Americans believe "literally" in the
Biblical story of Creation, whereas only 31% subscribe to the theory
of evolution (have you thanked a teacher today?), Darwinian selection
pressures are every bit as valid in economics-land as they are
in biology-land. I’ve talked about this before in
the context of the structure of the law firm market, but now IP
Law & Business talks about it specifically in the
context of the landscape for IP boutique firms.
Pop quiz: Which of the following IP firms (founding date
noted) is still around?:
- Fish & Neave (1878)
- Pennie & Edmonds (1883)
- Lyon & Lyon (1901)
Answer: None of the above.
But many others have survived and even grown—not, I hasten
to add, through any systematically-adopted strategy, but each through
their own highly circumstantial, "fact-specific," response to marketplace
pressures. As the article puts it:
"But in evolutionary terms, [the survivors] were either
born with traits that have allowed them to prosper in a hostile
environment — strong management, loyal clients, merit pay — or
they have adapted, rapidly."
Many are, predictably, moving beyond exclusively IP-centric practices,
such as Fish & Richardson (one of only two IP firms in the AmLaw 100).
With 350 lawyers and a respectable PPP of $755,000 in 2003, Fish & Richardson
still plays to its strength as a "technical powerhouse," to grow its non-IP
practice from its current 30% revenue share. "We can put four or five
PhD.s on the conference call."
What do the survivors have in common, and what to the road-kill
have in common? The first group has adapted and changed,
the second group never did. Evolution. For example:
- A survivor: "Any firm without strong management — general
practice or IP boutique — is generally going to have serious
issues with regard to retention of partners and firm viability." - A survivor: "The legal industry has changed — we haven’t." But the
firm is already on the right track; it has always had a merit-based
pay firm and revenue per partner is rising at a healthy rate. - A dinosaur: "Pennie & Edmonds never changed its compensation
plan." - A dinosaur: "Change is not easy. Fish & Neave
couldn’t do it." - A (potential?) dinosaur: "If I’m at Kenyon & Kenyon,
I’m sweating bullets."
Meanwhile, there are signs on the forest floor that a weird new
species may be about to come into its own: No, not mammals,
but—the IP boutique! Case in point: 10-year-old
Lee & Hayes, a 25-lawyer patent firm improbably based in Spokane,
Washington, with clients you’ve actually heard of including Microsoft,
HP, GE, BellSouth, and Qualcomm. "Bigger clients used to
hire the bigger firms, Lee says, but ‘the industry’s changed.’"
The moral of the story? Not by any means that the IP boutique—or
the boutique market niche—is dead, but rather that across
all segments of the market, Darwin rules: Adapt or die.
