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   What is the fair cut when you work for a firm
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   Author  Topic: What is the fair cut when you work for a firm  (Read 2523 times)
BlairTech
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What is the fair cut when you work for a firm
« on: Jun 3rd, 2007, 12:18am »
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I am thinking whether to become a Solo patent agent or to work for a firm.  I heard patent law firms charge a high hourly rate.  However, the patent agent only get a small cut (less than 50%).  Any one has an idea about what is the fair cut for the patent agent (say, 20 year engineering experience, but just turned into an agent)?  DO you get more of the cut if you work for a small firm (say just 2-3 lawyers/agents)?
 
Appreciate your input.  Thanks ahead. Roll Eyes Roll Eyes
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Bill Richards
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Re: What is the fair cut when you work for a firm
« Reply #1 on: Jun 5th, 2007, 5:41pm »
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The general rule of thumb is an associate receives one-third of his billings/billing rate.  I would suspect it's similar with patent agents.  One-third goes to the partnership and the other one-third goes to overhead/benefits, etc.
Working for a small firm is no guarantee of a bigger "cut".  A small, well-established botique might take a larger portion than a small one with less cache and experience.
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William B. Richards, P.E.
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smgsmc
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Re: What is the fair cut when you work for a firm
« Reply #2 on: Jun 16th, 2007, 3:05pm »
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Looking over previous posts (a couple of which were mine), I’m still very confused about billable hours.  Looking down the road, this is the situation I’d like to evaluate.  Agent and associate both have several years experience and work at the same pace.  Strictly patent prosecution.  No litigation.  In round numbers (just for example), agent’s billable rate is $180/hr; associate’s is  $240/hr.  Job takes 40 billable hrs.  The total comes out to $7200 if the agent does the work; $9600 if the associate does the work.  
 
From previous posts, I gathered the following info, which still doesn’t make sense to me:
 
(1) If there is no flat rate agreement, then the client gets billed $7200 if the agent does the work; $9600 if the associate does the work.  So, if a client gets billed $7200 for application #1 because it was done by an agent, he is happy and comes back with application #2 (comparable level of difficulty).  He now gets hit with a $9600 bill because it was done by an associate.  Client now is ticked off.  How is this situation resolved?  Can a client ask for an experienced agent to be assigned to his cases?  
 
(2) Using the rule of thirds, the agent gets paid $2400; the associate, $3200. I accept the fact that an associate might get paid more for the same work.  Just like a PhD chemist would get paid 5X a lab tech if they were washing bottles side by side.  But what’s in it for the firm?  The firm gets $4800 if the agent does the work, $6400 if the associate does the work.  Assuming that the agent and associate both incur the same overhead (i.e., agent also gets an office, and not a cubicle), the firm makes a larger profit if the associate does the work.  In which case, why would a firm hire an agent instead of an associate?  
 
(3) I understand why 2 hours actual work may result in only 1 hour billable.  Otherwise, the slower you work, the more you get paid.  What about the flip side?  If you’re a real hot shot, and work blazingly fast, could ½ hour actual work result in 1 hour billable?  That is, for previous comparable cases, other experienced people in the firm took twice as long for the same work.  
 
 
I'd really appreciate clarification so I have the straight scoop on which to base future plans.  Thanks.
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pentazole
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Re: What is the fair cut when you work for a firm
« Reply #3 on: Jun 19th, 2007, 2:18pm »
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while these billable hour rates are averages, in the end, you are evaluated according to your efficiency, ie, average hours you spend on a patent application or amendment.  It doesn't matter if you are an agent or an attorney, your billable rate doesn't increase if your efficiency isn't increasing.  So in the end, no matter how high your billable rate is, given two jobs that are exactly the same, an associate with a billable rate of 180 and an associate with a billable rate of 240 are *expected* to produce the application at a very similar cost, because the guy with the 240 billable hour rate is expected to be more efficient.  In the end, whether your an agent or an attorney, your billable rate is going to increase as much as you can increase your efficiency.  So if you are an agent billing at 180, yet still you are billing out all your required hours, and all your allowed bonus hours before the year is over, then your billable rate is going to increase until you can't do that any more.
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biopico
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Re: What is the fair cut when you work for a firm
« Reply #4 on: Jun 19th, 2007, 5:13pm »
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on Jun 19th, 2007, 2:18pm, pentazole wrote:
while these billable hour rates are averages, in the end, you are evaluated according to your efficiency, ie, average hours you spend on a patent application or amendment.  It doesn't matter if you are an agent or an attorney, your billable rate doesn't increase if your efficiency isn't increasing.  So in the end, no matter how high your billable rate is, given two jobs that are exactly the same, an associate with a billable rate of 180 and an associate with a billable rate of 240 are *expected* to produce the application at a very similar cost, because the guy with the 240 billable hour rate is expected to be more efficient.  In the end, whether your an agent or an attorney, your billable rate is going to increase as much as you can increase your efficiency.  So if you are an agent billing at 180, yet still you are billing out all your required hours, and all your allowed bonus hours before the year is over, then your billable rate is going to increase until you can't do that any more.

 
I agree in general that:
 
A partner ($300/hr) is 3 times more efficient than an agent ($100/hr) to get the same work done.  At the end, the cost to client is the same.
 
But I have seen an agent who is even more efficient and effective than a partner for a patent drafting.  
 
The agent makes a lot less money than the partner.  
 
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