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If The IP Sector Takes A Hit, The You Will Probably Take A Hit.

As our economy moves towards a market built on ideas, intellectual property practice groups have reported strong growth over the last several years.  My law firm Traverse Legal, PLC protects ideas in an online world. 

As reported over at the NIPC blog on IP and IT issues, Jane Lambert notes that many intellectual property attorneys remain bullish on market opportunities and IP group revenue.  Many lawyers are simply blind to the reality that this economic downturn creates.  Companies under severe financial stress will typically use their economic leverage to delay payment to counsel and drive representation and legal costs down, all to the detriment of the firms that serve them.  Some firms will end up getting stiffed by their clients as conditions worsen.  An idea economy still needs capital and/or revenue to keep it moving forward.  As stated by Ms. Lambert:

The authoritative Thomson Reuters PeerMonitor Index reported softness in IP notwithstanding that it is usually a high growth area. Looking at the client base Bobbie Johnson reported imminent job losses at eBay and sharp falls in the prices of leading technology stocks in In "Credit crunch hits tech sector" (The Guardian 6 Oct 2008). Most of the items on ZDNet's Management Toolkit "How the credit crunch is hitting the IT industry" are pretty negative.

I agree with Ms. Lambert that IP will take a hit in this downturn.  Not only will litigation become much harder to fund, but the market for intellectual assets will become partially constrained by a limit on capital to fund idea development into goods and services, or to extend the markets of successful companies who need to get to the next step.  I also agree that clients will start considering alternatives to the traditional service offerings which have historically been offered by most mainstream law firms.  Any competent litigation attorney who’s not simply trying to line his own pockets will spend considerable time with the client telling them that litigation is an option which is pursued in limited circumstances and often as a last resort.  As companies continue to watch their bottom-line shrink, they will start demanding better business judgment and return on investment from the legal dollars they spend.

Here are the resources cited in Ms. Lambert’s article, all of which are worth reading:

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