On March 16, the U.S. patent system underwent a major shift – going from a first-to-invent to a first-to-file system. The change in law will not only have a dramatic effect for clients, but for lawyers as well. Adapting to the changes of the new law are just one of the challenges facing Sterne, Kessler, Goldstein & Fox managing director Michael Ray.
One of the distinguishing features of Sterne Kessler is the firm’s focus on intellectual property law. All of the firm's lawyers—there were 111 attorneys at the end of 2011, according to the Legal Times 150 survey—work from a single office at 1100 New York Avenue, N.W., in Washington.
Legal Times sat down with Ray on March 13 to discuss the new law, the challenges and advantages of the firm’s sole focus on IP and the renewal of the firm’s lease.
What are some of the advantages to being solely IP focused?
Ray: In the current legal marketplace, clients want expertise. They are not looking for one-stop shopping. They are not looking for generalists. They are looking for specialists. For the client to best be served by lawyers, they need absolute experts in whatever the topic is. Individual lawyers here have discreet expertise. That is what distinguishes us from other law firms. We think that having niche expertise is very important for future success in the practice of law. We're very focused on that. An example of that is our partner Tracy Durkin, who is an expert in design patent law. That is a subspecialty within patent law that not a lot of people have.
What are some ways that the America Invents Act has changed IP law?
Some new proceedings were created under the AIA. They are post grant proceedings at the Patent Office. One is called inter partes review. One is called post grant review. The Patent Office, last year, issued the rules under which these new proceedings would move forward. The proceedings are for the first time going through the Patent Office. The patent office has never done them before. Practitioners have never done them before. We are very focused in this area in building expertise and we have been focused on it. This is a niche expertise that your typical patent attorney wouldn't just jump into. We have invested thousands of hours as a law firm in knowing the procedures and internal training, educating our clients and filing these proceedings. There are currently 24 of the pending inter partes review proceedings that we are handling here at the law firm.
What are some ways that Sterne Kessler attorneys have prepared for the changes in the law?
We realized when the law was first passed, that this is very significant. It's not business as usual. We needed to immediately get on top of this in reviewing our internal training and procedures. We questioned everything that we were doing, spent hundreds of hours in required, mandatory internal training for all of our timekeepers to train them in the new law. We've been doing those for the past year and continue to do those.
It was a big opportunity for us to educate our clients. Our clients with in-house legal departments and patent lawyers faced the same challenges. Many of them turned to us for training, which we were happy to do. We have shared that with our clients in terms of webinars, client alerts, articles that we publish as well as internal training. The opportunity is for us to get closer to our clients, spend more time with them and to add value on a non-billable basis has been good, and our clients really appreciate that.
What are your thoughts on the overall legal market?
Financially our firm is extremely strong. Our revenue continues to grow. The legal marketplace is absolutely changing and clients are demanding more efficiency. They are demanding delivery of legal services at a lower cost. It's been coming for a long time and that trend is going to increase. Law firms have to respond. All areas of law will feel that. The more specialized you are and the more niche practice you have so that you are distinguishing yourselves, the more of a commodity you are. If a client can't pick from 50 firms to provide a service, you are somewhat insulated from the price pressures. Even then, because our clients feel the price pressure in the marketplace, they pass it on to all their vendors. The pressures are there now and not going away.
What are some ways the firm has responded to these client pressures?
There is still competition at all levels, including in our niche expertise. Many of our clients want to engage us in discussions about how to control costs. We engage our clients in discussion and for some practice areas and some clients we have agreed to some fixed price work. We have agreed to some capped work, and we have agreed to some discounts as well. Not across the board. There are times where a client is really pushing hard on prices and we have had circumstances with clients where we have agreed to go our separate ways. They are looking for the work done and their primary metric is price. If that's the primary thing that is driving their work, they will be better served elsewhere.
What are some of the challenges of a midsize firm with a singular focus?
We are big enough and have enough attorneys here that we can't accept all the work offered to us because of conflicts of interest. We have competitors both coming to us and asking them to represent us in the same area. It can be a real frustration to our partners who are trying to bring the work in when they can't bring in a piece of work because of a conflict. We are big enough that it's something we have to deal with on a daily basis and it's something we have to deal with on a firm level. We have to make strategic decisions on what clients we'll pursue and what clients we won't pursue.
How do you manage your leadership responsibilities with those of your own practice?
That is the biggest challenge for any managing partner. I view the firm as my client. It's a very demanding client and has a huge appetite for my time. It's a daily struggle to spend enough time between my personal law practice and my law firm. My goal is to do a 50/50 mix, but I am a little more focused on the managing side.
In November 2011, the firm renewed its lease. What factors contributed to that decision?
We have been in this space now for 20 years. We signed for another 10 years and we are taking about 50 percent more space than we did before. We have had a nice, steady growth – about 4 percent a year. While a lot of law firms that are renewing leases are taking less space, we took 50 percent more. That is because we are optimistic about the future of patent law and the future of our firm. We're renovating in place, so that can be pretty disruptive, so we'll be going through that for the next year or 18 months.
Has the firm considered opening an office elsewhere?
There is no substitute for personal interaction. When we renewed here, we considered opening an office in Virginia and maybe an office in Maryland. How would we work together? How would it affect our culture? How would it affect the glue that binds our partnership together? We were concerned about the negative effects, of having the firm split, so we opted not to do that. We think it was the right decision.
What are some of your hobbies outside of the practice of law?
Motorcycles are a big passion. You're either a motorcyclist or you're not. My earliest memory as a kid is I wanted nothing in the world more than a motorcycle. So I saved my money. I had a little dirt bike when I was a kid. When I was 16 years old I bought my first street bike. When I was about 19 years old I started road racing. I started riding a lot of off-road about 10 years ago, but I do less of that now. My current street bike is a BMW R 1200 GS. It's an adventure bike. Then I have a Suzuki DR-Z400 SM.
This is part of a series of Q&A sessions Legal Times is conducting with D.C.-based law firm managing partners. Photo by The National Law Journal's Diego M. Radzinschi.