Starting a Solo IP Practice
Alt Legal Team | January 04, 2022
It’s an exciting time to start your solo intellectual property (IP) practice. As more employees take part in the Great Resignation, leaving jobs at firms and corporations in search of better work-life balance, starting your own IP practice and becoming your own boss may be a great solution for those seeking a lifestyle change.
This guide to starting a solo IP practice will help you understand the process for setting up a solo intellectual property law firm. It includes practical tips for getting organized and essential technology tools that will help you succeed. You can also check out our eBook: Introduction to USPTO Trademark Prosecution to review the substantive law behind trademarks and gain practical guidance for filing and successfully registering an application with the USPTO.
Also, be sure to check out our webinar, Firming Up Your Plans: How to start your law practice, for a discussion on exiting your current position and setting yourself up for success in your own practice.
Getting Started – Forming Your Business
There are a few options to consider when forming your business. Depending on the state, you may choose to form a sole proprietorship, professional corporation (PC), or a professional limited liability corporation (PLCC). When choosing an type of entity to form, consider the costs, legal liability, taxes, and ultimately, firm goals.
There are no filings required to form a sole proprietorship. This type of entity is automatically formed when you start conducting business. You may consider filing a DBA (doing business as) to give your firm a name (ex. John M. Smith Law Firm). When you have a sole proprietorship, the owner reports business profit/loss on their personal tax return. One of the major disadvantages of a sole proprietorship is that the owner remains personally liable for lawsuits filed against the business.
Professional Corporation (PC)
A professional corporation (PC) is formed upon filing paperwork with the state. To maintain the corporate status, there are certain formalities you must follow. Unlike a sole proprietorship, this type of corporation helps to keep your business and personal finances separate. Generally, owners are not personally liable for lawsuits filed against the business. Also, there may be tax savings if you’re taxed as an S-corp. A disadvantage of a PC is that you may be double taxed on both corporate profits and shareholder dividends.
Professional Limited Liability Company (PLLC)
A professional limited liability company (PLLC) is formed upon filing paperwork with the state. There are fewer formalities associated with running a PLLC than with running an LLC, so you get the tax advantages of an LLC without the formalities. Note that some states (ex. California) do not allow law firms to operate as PLLCs. Like PCs, PLLCs help you to keep your business and personal finances separate and generally prevent owners (members) from being personally liable for lawsuits filed against the business. Also, there may be tax savings if you are taxed as an S-corp.
The ABA defines legal malpractice as “any act which is negligent or wrongfully executed by an attorney who causes monetary damages to his/her client.” As the definition states, the term includes both intentional and inadvertent errors in legal representation. Malpractice can apply to lawyers in any field, and about 1 in 20 private attorneys face malpractice charges every year, according to the ABA. Moreover, a 2010 study conducted by the ABA found that failure to file proper documents, failure to calendar, or missed deadlines accounted for 21.9 percent of legal malpractice lawsuits. These suits can be expensive and can even threaten an attorney’s position on the bar. Carrying malpractice insurance is not always mandatory, but practicing without it—especially as an IP attorney—opens you up to unnecessary risks.
Although malpractice insurance can be costly, many bar associations offer discounts. You may also inquire with your insurer about getting a rate for reduced/part time practice. It’s crucial to your solo IP firm’s success to acquire malpractice insurance as soon as you begin conducting business. Regardless of the type of business entity that you form, you can always be sued for malpractice in your individual capacity.
As the principal of an IP law firm, you will be responsible for monitoring all of the deadlines associated with your clients’ IP matters. IP rights are valuable, so malpractice stemming from missed deadlines could conceivably be the end of a firm that’s forced to pay damages out of pocket. To protect against such costly suits, malpractice insurance companies generally require that you maintain a two-tiered docketing system. This redundancy allows you to double-check your deadlines. Learn more about how faulty docketing can be costly to your firm, your reputation, and your career.
Beyond financial consequences, missing intellectual property deadlines can also lead to professional disciplinary action. California attorney Leonard Tachner was first suspended and then later excluded from practicing before the USPTO when his manual calendering system caused many clients to lose their intellectual property protections. Learn more about how having an IP docketing system can help you avoid ethical sanctions.
Setting Up an Office
The pandemic has certainly changed the way in which everyone is working. Many businesses are going fully remote and operating from home offices. However, you may prefer (and sometimes, you may be required) to establish a physical location for your solo IP practice. Note that some states (ex. New York) require that you have a physical address. If you are not planning on renting an office, you might also consider a co-working space, flexible space, or virtual office space. Some options for these types of workspaces include WeWork, Regus, and Davinci Virtual Office Solutions. Additionally, you could consider simply renting a USPS/UPS box to receive mail.
The Best Technology for a Solo IP Firm
We’ve produced extensive materials on the best technology for lawyers. Check out these articles, webinars, and Alt Legal Connect sessions for tips on the technology you’ll need for starting a solo IP law firm:
- Top Tech Tools for Lawyers in 2021
- Alt Legal Connect Session Summary: Top Technology Tools to Streamline Your Practice
- Alt Legal Webinar: Virtually Perfect Practice: Making your virtual law firm succeed
- Tips for Building Your Law Firm Technology Stack
- Alt Legal Connect Session Summary: From Handshakes to Elbow Bumps: Tools, tips, and technology for winning new business in the #NewNormal
- Beyond the Docket: How Derek Hawkins Uses Legal Technology to Build a Thriving Solo Practice
Generally, you’ll want to make sure you’ve got excellent technology to serve the following areas:
- IP Docketing
- Secure Email Communication
- Document Storage
- Time Tracking, Billing, and Online Payments
- Client Intake
- Legal Research and eDiscovery Tools
- Practice Management
- Calendar Management
- Virtual Receptionist
- Marketing and CRM
You may also want to consider technology for:
- Client Portals
- Mobile Apps/Remote Working
- Video Conferencing
- VOIP Phone Service
- Electronic Signatures
- Document Scanning
There are two common billing models: fixed-fee and hourly. Hourly billing is the traditional billing structure utilized by law firms. However, many practitioners now utilize other hybrid models in addition to, or instead of, hourly billing.
Fixed fees are fairly common in filings for trademarks, copyrights, and provisional applications for patents. Just remember that when choosing the fixed-fee option, the processes of filing and maintaining the IP rights are ongoing, so it is important to specify the scope of your work. Are you just going to file the application? Are you also responsible for responding to USPTO office actions? How about third-party objections? Will you be handling renewals if the rights are awarded? All of these questions should be addressed and conveyed to your client.
A third model, the success-fee model, is a hybrid that combines a fixed fee with a “success fee,” which is only payable if the client is able to successfully secure the IP rights. This model can be riskier for early-stage clients that may not be around for more than a year, but it can reduce the “sticker shock” of legal services. It is also worth noting that the success model likely means that you will be responsible for resolving any litigation issues that arise.
Lastly, you may consider a subscription billing model. This type of fee structure is quickly gaining traction in the legal industry.
One of the key tools in a solo IP attorney’s practice is an effective docketing system. While some small firms rely on traditional methods of docketing such as email/paper calendars or word documents or spreadsheets, these methods are subject to the risks of human error throughout the filing process.
IP docketing software provides an alternative to the traditional methods and adds in more security. Take for example Alt Legal, a trademark and patent docketing software company. Alt Legal analyzes data from IP office databases to automatically identify new filings and calculate filing deadlines, so attorneys and paralegals are not left to sort through the procedural complexities of IP on their own. Alt Legal then is able to transfer these deadlines into a calendar of the attorney’s choosing and provides alerts to keep filings punctual.
When developing your IP docketing methodology, make sure that it accurately and comprehensively tracks the deadlines for all your filings. Covering all your bases through your docketing system keeps you protected from missed deadlines and the accompanying fallout – damaged client-firm relationships, injured reputation and/or malpractice suits.
As you evaluate docketing software, you’ll need to decide what type(s) of system to purchase – either an all-in-one system that allows you to track all of your IP matters, or separate “best-in-class” systems that focus specifically on docketing trademark or patent matters. While the latter may be a non-traditional approach, you might be surprised to realize that splitting your docket may be more cost-effective and help you stay more organized. Learn more about the benefits of splitting your docket among separate systems for your patent and trademark matters.
We know that the costs of starting your own IP law firm can quickly escalate and taking on an additional expense with IP docketing software may be prohibitive. Alt Legal offers competitive pricing starting at $50/month for our fully-automated software. But if you’re not quite ready to use IP docketing software to manage your docket, we’ve prepared a free downloadable Google spreadsheet to help support you in this time of transition. Using a spreadsheet to monitor your trademarks will never be a complete solution to docketing, and it will require a lot of diligence on your part, but it can help you stay organized and on track as you expand your practice.
IP is a complicated global practice area. It is incredibly important to build the right network that will allow you to better serve your clients. The right network can also create new business opportunities.
To build your network, you have to stay informed, engaged, and active. Be aware of what leaders in your practice area are discussing on Twitter accounts and IP blogs – and engage with them! Join a local or national IP bar association and stay active. There are many across the country, so you have a lot to choose from.
In addition, join a major trade organization. For example, the International Trademark Association (INTA) organizes an annual meeting that over 10,000 trademark professionals from around the world attend. Communities like INTA are great resources both to improve your practice and also to network with other IP professionals.
Some additional organizations to join and follow include:
- ABA–IPL (American Bar Association – Intellectual Property Law)
- AIPLA (American Intellectual Property Law Association)
- AIPPI (International Association for Protection of Intellectual Property)
- CSUSA (Copyright Society of the USA)
- IIPLA (International Intellectual Property Law Association)
Lastly, the Alt Legal Community is an excellent resource for finding like-minded IP professionals. Get to know our Alt Legal Community at events including Alt Legal Connect and our Alt Legal webinar series. After each webinar, we host Alt Legal Community Chat – an informal, casual way to connect with webinar presenters and attendees. Talk about the webinar or related topics, ask questions, share resources, get helpful advice, and make new connections and friends.