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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 2507 times)
smgsmc
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Re: What is the fair cut when you work for a firm
« Reply #5 on: Jun 19th, 2007, 6:11pm »
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Iím getting even more confused, because the responses Iím getting arenít comparing apples to apples.  Maybe my premises are totally wrong.
 
(1) After X years of experience, an agent or associate will reach  peak efficiency.  That is, after X years, the incremental efficiency with additional years of experience will be small.  When I was interviewing, three firms told me that  an agent or associate will reach ~99% efficiency after ~3 yr.  That is, if after 3 yr experience I take 100 hr to process an application, Iíll be able to knock it down to only ~99 hr with additional yrs of experience.  I think thereís truth to this because most posts Iíve seen require 3 yrs experience.  But regardless of whether X is 3 or X is 5, at some point your efficiency saturates.  This is true for many other fields.
 
 
(2) In response to a previous post, I was told that a client is to be billed at the rate of the person actually doing the work.  That is, if an agent does the work, the client gets billed at the agentís rate.  And if an associate does the work, the client gets billed at the associateís rate, which usually is higher than the agentís rate.  Do others agree with this premise?
 
(3) At my firm, it is my understanding (and Iím likely confused here), that if an agent and an associate work at the same efficiency (that is, if they were both to finish the same project in 100 hr), the associate would get paid more than the agent.  Now is this a common practice?  But, what Iím hearing from the last two replies is that two people working at the same efficiency, regardless of whether they are agent or associate, should be billing at the same rate.  I still need clarification on this point.  Thanks.
 
 
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tehe
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Re: What is the fair cut when you work for a firm
« Reply #6 on: Jun 19th, 2007, 8:54pm »
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Some firms pay attorneys more.  For instance, agents might take 1/4-1/3 of billing rate whereas attorneys might take 1/3-1/2 of billing rate.  Other firms pay agents and attorneys equally.  There is no concrete rule; it depends on the firm.  Your firm may be one that differentiates between agents and attorneys.  Why don't you just ask your managing partner?
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JohnDoe
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Re: What is the fair cut when you work for a firm
« Reply #7 on: Jun 20th, 2007, 10:57pm »
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Another thing to consider is that agents, unlike attorneys, are not permitted to provide legal advice.  Many times during invention disclosure meetings, topics of IP strategy, possible infringing activities (by either the client or competitors), trade secret options, licensing, etc. are raised and discussed.  During these times, an agent would have to tread very carefully.
 
As to merely drafting applications or prosecuting files, agents and attorneys may be on roughly equal ground.  There may be some advantage as an attorney having attended law school when faced with understanding and incorporating the latest rulings (e.g., KSR) into responses and appeals.  Also, many attorneys have attended a multitude of CLEs or classes during law school that cover basic legal principles, which some agents may not have had exposure to.  However, a good agent will probably come up to speed on these types of legal arguments in time as well.
 
At my firm, attorneys take between 33% and 40% depending on seniority and billing rate.  It's odd, but the higher you bill, the more you retain.  And typically, you won't be allowed to raise your billing rate above a certain level related to your seniority.
 
Interestingly, we only have one full-time agent.  We have several agents who are law clerks, but they were not and will not be retained merely for their agent status.
 
As far as budgets go, yes, sometimes one attorney or agent will be able to complete a project at a lower cost than another attorney or agent.  That's life.  If a $500/hr partner tries to draft an app versus a $150/hr associate, guess who will draft a longer app for the same money.  Then again, guess who will draft more comprehensive claims for the same money.
 
Typically, clients enter into an agreement with a firm that places a budget expectation or a cap on each project (e.g., $2000 for prosecution responses, $2500 for appeals, $9000 for applications, $1000 for foreign filing).  If you come in under, then the client is happy.  If you come in high, then the billing attorney will probably truncate your time down to the cap and bill the cap to the client.
 
However, some clients may also be set up with flat fee costs.  This may help their budgeting for quarterly or annual projections.  Firms usually like it because then there's no "penalty" for being efficient and finishing a project quickly.  But fixed fee projects need to be set accordingly - I've worked on many that were set too low and that's not fun.
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MrSneed
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Re: What is the fair cut when you work for a firm
« Reply #8 on: Jun 21st, 2007, 9:41am »
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on Jun 19th, 2007, 6:11pm, smgsmc wrote:
Iím getting even more confused, because the responses Iím getting arenít comparing apples to apples.  Maybe my premises are totally wrong.
 
(1) After X years of experience, an agent or associate will reach  peak efficiency.  That is, after X years, the incremental efficiency with additional years of experience will be small.  When I was interviewing, three firms told me that  an agent or associate will reach ~99% efficiency after ~3 yr.  That is, if after 3 yr experience I take 100 hr to process an application, Iíll be able to knock it down to only ~99 hr with additional yrs of experience.  I think thereís truth to this because most posts Iíve seen require 3 yrs experience.  But regardless of whether X is 3 or X is 5, at some point your efficiency saturates.  This is true for many other fields.

 
In my experience, when law firms talk about efficiency, they are talking about how close a person comes to maximizing the ratio between hours billed and hours credited.  If you bill 100 hours for a job that only has a budget of 50 hours, then you are not efficient.  You could conceptualize it with dollars too.  If you bill $10k for a job that has a cap of $5k, you are not efficient.  Either way, you'll get hours cut (you work those for free in a sense).
 
To get to 100% efficiency, an attorney (or agent) needs to work within their budgets every time.  If you get credited every hour you bill, then you're working at 100% efficiency.
 
As an aside, billing practices may be different at different firms.  At my firm, you record your hours worked, the billing attorney reviews those hours, and if you're over budget, then your hours may be cut to conform with a pre-existing client agreement or some notion of fair billing for a particular project or type of project.
 
So, using your scenario.  After X years, if both the agent and the attorney are at 100% efficiency (that is, they both can complete the job within budget), but one works faster than the other, then the faster worker will be able to bill higher and get paid more in salary or bonus.
 
on Jun 19th, 2007, 6:11pm, smgsmc wrote:
(2) In response to a previous post, I was told that a client is to be billed at the rate of the person actually doing the work.  That is, if an agent does the work, the client gets billed at the agentís rate.  And if an associate does the work, the client gets billed at the associateís rate, which usually is higher than the agentís rate.  Do others agree with this premise?
 
(3) At my firm, it is my understanding (and Iím likely confused here), that if an agent and an associate work at the same efficiency (that is, if they were both to finish the same project in 100 hr), the associate would get paid more than the agent.  Now is this a common practice?  But, what Iím hearing from the last two replies is that two people working at the same efficiency, regardless of whether they are agent or associate, should be billing at the same rate.  I still need clarification on this point.

 
The same comparison could be made between a first and fourth year attorney.  However, the bottom line is usually a budget cap, which neither one can exceed.
 
In the scenario here, if both the attorney and the agent worked for 100 hours and the attorney was billing at $200/hr while the agent was billing at $150/hr, you have to look at the budget available.  Assuming a $15k budget, the attorney will have hours cut ($5k/200=25 hours).  Because salaries are based on billable rate, the attorney is getting paid more during that time, but having 1/4 of the work cut on a consistent basis will not look good at review time.  On the other hand, the agent is at 100% efficiency ($150/hr * 100 = 15k) and may get a bonus or a raise (which may mean that next year, he'll have to complete the 100 hour project in 95 hours instead to remain at 100% efficiency).
 
 
I hope this is clear.
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