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[klaviernista]

Long story short: I am contemplating opening my own prosecution practice on the side.  This is not a "dig" against my employer, but rather in recognition of the fact that I am not exposed to nearly as much prosecution work as I have been in the past.  Granted, the ultimate goal is to eventually leave my employer and run my own business, but that is a good ways off, I think.  Particularly in this market.

That said, I have a couple of rather broad questions for the solo practitioners on the board.  Namely:

1.  What are some of the challenges you have encountered running your own practice (apart from getting clients), and how did you overcome them?

2.  Do you have any general advice for someone who is thinking about hanging out his shingle (apart from "don't do it")

Thanks in advance.  I'm looking forward to some good responses, as there are some excellent (and long time) solo practitioners who post regularly on this board.

Klav

[Blutarsky]

Through layoffs last year I was pushed into solo practice even though I had been contemplating it for a couple of years.  While the last year has been challenging, it has ultimately been very rewarding.  I can't imagine working under anyone else ever again.  Plus, the more I work the more I am rewarded and not "the firm."

To your questions:

Running a patent practice is, in almost every way, just like running any other business.  The same challenges apply to every entrepreneur.  The balance between creating work product for existing clients, networking to keep the pipeline full, conducting administrative duties, along with client relations is the game.  Unlike working at a firm, where most of the time associates/non-partners are shielded from clients, you must learn to develop your client maintenance skill set.  This can also be the most time consuming part of the business if you are unwilling to set boundaries for clients.

Here are some ideas:

1.  Learn to manage your time effectively.  The 80/20 principle is alive and well; look for ways to implement it.  Buy "The Four Hour Work Week" book and use his ideas for managing clients, email, and phone calls. Also, Frank Sanitate has some great stuff on how to manage your practice efficiently.  Consider an a$$hole tax for perpetually difficult clients.

2.  Focus on developing a good balance between efficiency and quality.  (Read into that what you will)

3.  Learn to sell.  Everything about running a solo shop involves sales.  (Yes, even a law firm)  Learn to effectively sell your services and your ideas to people.

4.  Learn to be a good administrator (docketing, letter writing, etc.) on your own before you hire an assistant.  Until you can do every job in your office blindfolded, don't delegate that to someone else.  Once you do hire help, learn to efficiently delegate tasks.

Lastly, some personalities aren't equipped to run a solo business.  If you are not outgoing or prepared to develop a thick skin, this isn't for you.

[Pagent04]

I am considering something similar down the road, maybe in 3-5 years.  Can you do your own prosecution as an agent while working in an IP group inhouse, assuming that the technology areas are different and there are no conflicts?

[klaviernista]

I am considering something similar down the road, maybe in 3-5 years.  Can you do your own prosecution as an agent while working in an IP group inhouse, assuming that the technology areas are different and there are no conflicts?

I hope so, as that is exactly what I am proposing to do.

Blutarsky:  thanks for the tips. 

[DogDayPM 9er9er9er]

Can you do your own prosecution as an agent while working in an IP group inhouse, assuming that the technology areas are different and there are no conflicts?

I hope so, as that is exactly what I am proposing to do.

I guess it would depend on your respective companies' explicit (is it mentioned in your employment contract?) and implicit expectations?  If it's not spelled out in your employment contract, does your employer have an expectation that by working full time for it, you are working only for it?

[Robert K S]

I think if I were to go into solo practice, my secret weapon would be good recruiting and mentoring of part-time and summer law students, agents-in-training who are studying for the bar, or newly minted practitioners having no experience.  After a few months, and especially after a full year, clerks like this can start to become really productive without costing the business too much, allowing you to expand the width of your "pipeline", as it were.  To do this, I would start attending some of the local law schools' networking functions, handing out cards and taking resumes.

Best of luck, klav.

[bleedingpen]

Put away at least six months of savings.

Network with other attorneys and go ahead and start getting those relationships solidified before you leave your in-house position. 

Don't get staff right away.  I am sorry, but nothing that they do is rocket science and having them on your payroll is negative cash flow right off the bat.

Keep expenses low, but make sure to get office space.  You can't do this out of your home. 

Consider joining another solo or small firm.  The more names on the letterhead/website, the more likely that you can land decent clients. 

[bleedingpen]

Also, be "nice" to everyone you meet. 

Go out to lunch and pick up the tab. 

[scientist30]

One area I got stuck is getting insurance.  The quote I got for "tail" coverage, pretty much implies that I have to be sure to be in business for a fairly long period of 5+ years if not more.  I am not sure if there is any work around to this.  I am not sure how much protection just LLC would provide.

[klaviernista]

I guess it would depend on your respective companies' explicit (is it mentioned in your employment contract?) and implicit expectations?  If it's not spelled out in your employment contract, does your employer have an expectation that by working full time for it, you are working only for it?

Nothing explicit in my companies employment agreement (we do not have a "contract" per se).  I doubt there is any prohibition against having a side business, as several engineers in the company run their own consulting firms for non-competitive technologies.  As my technological "wheelhouse" (materials science) is very remote from my employer's technological and business goals, I see no conflict of interest.

Of course, I am not proposing that I simply open up my own shop without consulting my employer first.  I would get explicit written permission from the president and CEO before doing so.  Even if there is no conflict of interest, I do not want to risk any chance that my actions might be seen as a breach of any fiduciary duty I have to the company.

[blakesq]

an LLC provides no protection for the torts of the lawyer/agent.  Torts include malpractice.  An LLC would provide some protection of your personal assets if someone comes to your place of business and trips and breaks a leg.  But if you commit some sort of malpractice, your personal assets will always be subject to a lawsuit.  Not sure what you mean by tail coverage, and that you have to be in business for 5+ years or more.  As I said in another thread, Lincoln freed the slaves, no one can MAKE you work anymore.  

One area I got stuck is getting insurance.  The quote I got for "tail" coverage, pretty much implies that I have to be sure to be in business for a fairly long period of 5+ years if not more.  I am not sure if there is any work around to this.  I am not sure how much protection just LLC would provide.

[klaviernista]

Put away at least six months of savings.

Network with other attorneys and go ahead and start getting those relationships solidified before you leave your in-house position. 

Don't get staff right away.  I am sorry, but nothing that they do is rocket science and having them on your payroll is negative cash flow right off the bat.

Keep expenses low, but make sure to get office space.  You can't do this out of your home. 

Consider joining another solo or small firm.  The more names on the letterhead/website, the more likely that you can land decent clients. 

All good tips.  We have several years worth of savings stored up.  One of the nice things about working at my old firm was that they paid very well, but gave you no time to spend any money.  So I put a lot of cash into apple stock, made a nice buck on the oil futures I bought in 2007, and lived like a blue collar worker for ~ 5 years, even though my wife and I could have afforded a more comfortable lifestyle.  Not that we did not enjoy ourselves.  We just lived far, far, far, below our means at the time.  

There is a small (2 attorney) firm near me that is looking for an IP associate/partner.  I might give them a call and see if they want to do lunch.  

[klaviernista]

an LLC provides no protection for the torts of the lawyer/agent.  Torts include malpractice.  An LLC would provide some protection of your personal assets if someone comes to your place of business and trips and breaks a leg.  But if you commit some sort of malpractice, your personal assets will always be subject to a lawsuit.  Not sure what you mean by tail coverage, and that you have to be in business for 5+ years or more.  As I said in another thread, Lincold freed the slaves, no one can MAKE you work anymore.  

My state does not permit attorneys to form an entity that provides limited liability for personal legal malpractice, period.  All that is allowed is the so called "professional association" or "professional corporation," which permits some benefits of the organizational form (e.g., income deferral, certain tax benefits, limited liability for torts/malpractice commited by other members etc.). As to tail coverage, I think scientist was referring to insurance for malpractice committed while an attorney was a member of a prior organization.  Some insurance providers don't offer that particular form of malpractice insurance unless the attorney has been practicing for a certain number of years.

[scientist30]

To clarify, I tried to get a quote for malpractice insurance and this quote covered only for the period I am paying premium, but patents drafted/prosecuted would last for a long time.  When requested for a quote which would cover even after the business might close (I may find a great job, business is bad etc), I was given a formula where I would continue making payments but at a percentage of earlier year.  This formula depended on how long I am in business.  Thus, the formula made it impractical to open a business, unless I am in business for a long period (at least 5 years+), so that I have coverage for the length of the patents, not just the period I am in business.  For a variety of reasons, including economy, I am unable to be certain that I will be in business for that long.  Any options to get around this would be most appreciated, particularly that the LLC would not provide much protection as per earlier postings.

[blakesq]

scientist30, that is interesting and scary.  my understanding is that I pay a relatively large premium, so that if any claim of malpractice is made arising out of an act I did WHILE i was covered by insurance, that the insurance is required to defend the claim, even if it occurs after I have let my insurance lapse for any reason.  I better double check that though.