Statistics show that an accused infringer usually wins on summary judgment, yet the great majority of accused infringers will settle rather than progress to the merits.  The reason is that it often costs too much and takes too long to litigate on the merits.  Changing to a non-hourly based fee gives trial counsel the heretofore missing will to find the way to a faster and cheaper adjudication.

Statistics often are misleading. This said, the odds of a patent litigation surviving a motion for summary judgment are strikingly low under any margin for error. PwC’s most recent survey of patent litigation says that in instances where a final decision is reached at summary judgment, lawsuits brought by patent owners who are non-practicing entities (NPEs) are successful only 2% of the time and that lawsuits brought by patent owners who are practicing entities are successful only 9% of the time. While these odds improve to 66% if the patent owner can get to trial, the point is that this is a very hard thing to do.

So based on the empirical data there is a compelling case that the party bringing the patent litigation likely will lose a decision on the merits.

Why then do the great majority of patent litigations, 95% by some accounts, settle instead of progressing to a decision on the merits? (See RPX: From Exposing NPE Myths to Explaining NPE Math) (PwC acknowledges that “[d]ismissals that didn’t occur at trial or summary judgment are not included in this breakdown [of PwC’s reported success rates at summary judgment].”)


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Not unlike many of my colleagues, I’m spending what is turning out to be an amazingly beautiful Spring weekend in the Bay Area preparing tax returns due next week – most specifically those of my law business, Confluence Law Partners.

What I’ve discovered is that there are key components of Confluence’s model that don’t fit neatly within standard accounting practices, resulting in higher bookkeeping and tax preparation costs and exposing me and the firm to potentially higher tax liability.

While its going to take some time for the new normal shop to reduce bookkeeping and tax preparation costs, there are some things that can be done now to protect against inflated tax liability.   Furthermore, on reflection, its not surprising that current bookkeeping practices are not easily applied to the new normal model’s aggregation of outside legal and non-legal services; status quo bookkeeping practices are directed to serving insular status quo hourly law firms that don’t rely on significant outside collaborations to deliver legal services and whose model dissuades its lawyers from using outside legal services.  More after the jump.


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HInt: it’s not how many hours they bill; in fact, we’ve studiously avoided setting a target number of billable hours.

Another Hint: it’s not following the sage advice (for associate survival in BigLaw) given to me by one of my hardened BigFirm associate cronies: "Don’t Panic and Assume Nothing"

Instead, to quote from the memo we gave our new attorney on our expectations (and then sat down with them to discuss):

Your success, like that of every other person at Confluence, is judged on your contribution to increasing the firm’s net profits over the cost of producing high quality legal services.

Check out the memo in its entirety after the jump:


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