Businessman-Technology

On Monday Thomson Reuters released its 2020 State of the Legal Market report in conjunction with the The Center on Ethics and the Legal Profession at Georgetown University Law. The good news from the report is that technology transactions and licensing practices look to be a safe bet for firms looking for areas where they can still grow their rates at time when clients are looking to reduce outside legal spend.

"The second half of the year has greatly outperformed the first in terms of demand growth and rate growth in this area. So it seems that if anything, it's picking up steam," said Joe Blackwood, an analyst with Thomson Reuters.

Per the report, which uses peer monitoring data from 160 U.S.-based law firms, technology transactions and licensing practices demonstrated the highest growth in worked rates (the rates a firm agrees to with particular clients for work on a given matter)  from 2018 to 2019, averaging an increase of just under 6%. Antitrust practices were close behind with an increase of over 5.5%, followed by patent litigation groups at an increase of more than 4.5%.

So what's the common thread that's allowing those practice areas to continue increasing work rates? Jim Jones, director of the Program on Trends in Law Practice at The Center on Ethics and the Legal Profession at Georgetown, pointed out that the practices leading the way in worked rate growth all require a particular and unique expertise.

"Clients are willing to pay for that experience in a way they might not be willing to pay for all of the activities in a normal M&A transaction, because a lot of that is work that can be done by much lower level lawyers," Jones said.

Steve Charkoudian, co-head of the strategic technology transactions group at Goodwin, attributed at least part of the boon to the overall growth of the knowledge economy. While tech startups who don't have the resources to grow an in-house legal team can represent a sizable portion of that growth, some firms may also be trying to cater to the changing needs of long-time clients who find their own business shifting in the wake of technology.

"Frankly, what you're probably seeing there is firms that didn't typically think of themselves as technology firms have clients who are starting to understand that they are a technology company even if they haven't historically been," Charkoudian said.

But while clients may have a need for technology transactions services, it's not always easy for firms to meet them head-on. Per John Gilluly, a partner and global co-chair of DLA Piper's corporate group, an effective technology transactions practice has to touch upon a variety of disciplines, from regulations to intellectual property or potentially even real estate.

He also noted that high-end clients operating in the technology space tend to be savvy about where they shop their legal needs, preferring talent that has hands on experience maneuvering deals within the industry.

"The clients will know where you have gaps in your skill set," Gilluly said.

Bringing that skill set onto the firm's payroll can be very difficult given the breadth of experience needed. Gilluly's list included legal expertise, technological prowess and an intimate knowledge of a product's marketplace. While law schools may be starting to emphasize technology more heavily within their curriculums, that may not yet be reflected in some of the younger talent firms are seeing.

Charkoudian at Goodwin noted he's probably seen only two or three associates over the last 20-years who came to the firm with a pre-existing desire to enter technology transactions. Making things harder still is that tech companies are also hunting for young legal talent with a background in technology to line their own in-house teams.

Goodwin has attempted to surmount this problem by implementing training and knowledge management programs to help grown talent, something that Charkoudian framed as hard but necessary work.

"What we've found is it's easier to train people than it is to find people laterally," Charkoudian said.