Clients are changing: value for money, not personal relationships
- Clients will insist on cost savings, efficiencies and use of technology. Pressures on budgets will not be reversed
- Relationships will depend on value, service and flexibility rather than loyalty or personal contacts – and clients will be more ruthless
- Firms will have to transform the way they communicate with clients, with an emphasis on transparency, new tools and enhanced services
Following the financial crisis in 2008, many companies needed to cut costs, and one area that was targeted was trademark legal work. Headcount was reduced, work was outsourced, budgets were scrutinised and (in many cases) outside counsel were required to cut their rates. At the time, many IP practitioners might have thought this was part of the normal business cycle. But they would have been wrong: the changes are irreversible.
There are several reasons for this. First, companies have learned that they can manage with smaller, often more junior, trademark teams. Use of docketing and searching tools has already replaced the work of paralegals and trademark administrators, and trademark teams have shrunk. “Pressure on budgets means that many more trademark heads now report to patent lawyers, even in brand-rich companies in the FMCG [fast-moving consumer goods] sector,” says one former in-house counsel. Second, today’s biggest companies (particularly in the technology sector) have a different appetite for risk compared to those of 20 years ago and move much more quickly: the recent co-branding deal between Nestlé and Starbucks, for example, was agreed in just two weeks. Third, businesses are increasingly making use of harmonised regional and international systems to cut application and renewal costs. Fourth, many companies now have procurement or project management departments which will increasingly play a role in outsourced legal and IP work. “There’s always a procurement person involved. They will understand legal services better in the future,” says one in-house counsel. “Especially with big jobs, there is a more objectivised process for compliance reasons,” adds another. “If [you hire a firm] just because a partner takes you for nice lunches, that’s a derogation of your duties,” says a third.
These trends, which are explored further in our report on the future of in-house trademark teams, will have a significant impact on trademark practitioners in private practice. The days when clients would happily pay law firms thousands of dollars to do trademark searches are already disappearing and will be gone within a decade. Instead, clients will expect their external advisers to use the latest technology to bring their bills down, cut out routine work, eliminate duplication and improve transparency. One large brand owner says: “We want e-communication. We get rid of firms that don’t live up to those standards. We regularly replace firms, especially in third-world countries.” Another former in-house counsel adds: "Millennials are not inclined to be very loyal, so that favours low-cost competitors.” They are, after all, the ‘swipe right’ generation.
The changing nature of in-house teams will have another unexpected impact. The decade since 2008 has seen the retirement or departure of many experienced trademark and anti-counterfeiting counsel. In addition, in-house budgets for travel and training have been significantly cut, and in-house practitioners are likely to move jobs more often. This is likely to change how clients view their outside counsel: increasingly, they will not be dealing with someone they know and have met at conferences. “The days where they picked counsel personally are disappearing,” says one former in-house counsel in the United States. “Except in bet-the-company cases, value for money will be more important than personal relationships or familiarity.” Another former head of trademarks notes: “In-house counsel are generally younger and don’t have such established networks… The IP profession was very loyal to suppliers. That will definitely change. Personal relationships will stay important, but 15-year relationships won’t be so important.” One trademark practitioner at a large law firm concurs: “We see a big shift from ‘meet you at a conference’ to RFPs and NDAs. It’s all about procurement, compliance and transparency.”
These new in-house counsel will also have different expectations about communication, as one former in-house counsel says: “Millennials are used to networking and getting information in different ways. Their model is the YouTube influencer!” Paper and fax have already gone. Email could also be declining in 10 years’ time: instead, clients will want to use intuitive online systems, mobile apps and instant messaging for giving instructions, monitoring cases and tracking spending. As we will see below, law firms will have to develop or adapt tools that can achieve this, even though it may mean giving up control and automating many tasks. And they will know that if they cannot deliver what clients need, other firms down the road will take their place – as it will become easier than ever to move work. It was once the case that switching firms required a truck to carry all the records from one office to another. By 2028, it will only need the press of a button.