In the majority in the patent litigations, the law firms opt to charge the fee on the hourly basis. However, there is a drastic shift from the hourly or periodic charges to contingency arrangements. While this arrangement can be very profitable to the law firm, it is best that the client is fully informed of the arrangement and what the implications are before agreeing to the arrangement of the patent litigation contingency fee. Generally, these cases are expensive to litigate, take a lot of time to be resolved and the outcome is quite unpredictable.
However, there is a lot to understand about writing letters, filing patent applications and even handling the lawsuits on the basis of the contingent fee. In several cases, the client ends up losing. This is due to high amount the law firm ends up taking should they charged the client on this basis.
Take an example of a client who wants a demand letter for $90,000 written on the basis of contingency fee basis. If this client agrees that the law firm keeps one third of the fee, it means that the firm gets $30,000 if the letter yields payment. However, the same letter normally costs $350 or thereabout. As such, the client is better off just paying the letter drafting fee and then keep all the proceeds.
When it comes to the filing of the patent application, the same logic applies. The legal charges for the filing can be about $5,000 to assist in preparation for the mechanical application. If the client proposes that this fee should be waived and instead the firm goes into the deal of participating in the profits from that innovation, the client can easily pay huge sums in excess of $5,000.
The law firm also stands to lose should the innovation fail to yield commercial success. In this case, after dedicating not less than two weeks working on the application, the firm gets no revenue. This is the case even though the bills related to overhead charges keep accumulating.
In reality, the quality of the patent does not have the direction in the success of innovation; instead, it depends on the marketing campaign carried out by the innovator. As such, if the innovator fails to market the product, then the law firm stands a chance of losing.
When it comes to the personal injury (PI), it is a completely different case. It is easy to understand why most PI law firms prefer contingency fee arrangements. The issue they are dealing with is the damages, and this implies that the liability is clear. To them, it is more about how much and not whether there is a payment or not.
However, in the case intellectual property rights, there is a big room to dispute the liability. The infringer who is the accused has liberty to dispute the patent liability by simply citing any prior art that had not been cited by the examiner. Most patent infringement suits lasts for not less than two years, and the full attention of at least one attorney is required all this time. As such, very few firms will accept the arrangement given that there is no guarantee that the suit will be won.
However, there is a lot to understand about writing letters, filing patent applications and even handling the lawsuits on the basis of the contingent fee. In several cases, the client ends up losing. This is due to high amount the law firm ends up taking should they charged the client on this basis.
Take an example of a client who wants a demand letter for $90,000 written on the basis of contingency fee basis. If this client agrees that the law firm keeps one third of the fee, it means that the firm gets $30,000 if the letter yields payment. However, the same letter normally costs $350 or thereabout. As such, the client is better off just paying the letter drafting fee and then keep all the proceeds.
When it comes to the filing of the patent application, the same logic applies. The legal charges for the filing can be about $5,000 to assist in preparation for the mechanical application. If the client proposes that this fee should be waived and instead the firm goes into the deal of participating in the profits from that innovation, the client can easily pay huge sums in excess of $5,000.
The law firm also stands to lose should the innovation fail to yield commercial success. In this case, after dedicating not less than two weeks working on the application, the firm gets no revenue. This is the case even though the bills related to overhead charges keep accumulating.
In reality, the quality of the patent does not have the direction in the success of innovation; instead, it depends on the marketing campaign carried out by the innovator. As such, if the innovator fails to market the product, then the law firm stands a chance of losing.
When it comes to the personal injury (PI), it is a completely different case. It is easy to understand why most PI law firms prefer contingency fee arrangements. The issue they are dealing with is the damages, and this implies that the liability is clear. To them, it is more about how much and not whether there is a payment or not.
However, in the case intellectual property rights, there is a big room to dispute the liability. The infringer who is the accused has liberty to dispute the patent liability by simply citing any prior art that had not been cited by the examiner. Most patent infringement suits lasts for not less than two years, and the full attention of at least one attorney is required all this time. As such, very few firms will accept the arrangement given that there is no guarantee that the suit will be won.
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