Boston’s biggest law firm is about to get a little smaller.
Ropes & Gray’s management has decided to spin off a group of attorneys and other employees who handle patent filings for clients, a practice known as “patent prosecution,” into a new law firm.
The new business will be based in New York and run by Ropes & Gray partner Joe Guiliano, although much about the spinoff remains unclear. The new firm doesn’t have a name yet. More than 100 of Ropes & Gray’s nearly 2,800 employees will leave to work at the new firm, although Ropes & Gray chairman Brad Malt doesn’t expect more than three to five partners to join the spinoff.
Malt said decisions are still being made about who will leave and who will stay after the spinoff takes effect in a few months. The new firm is expected to have a California office, and it may have one in Boston, too. Malt said he expects the two firms will still share many clients.
The driving force behind the change: the way law firms charge for patent filings. Malt said clients usually seek fixed prices, as opposed to hourly charges, for this type of work.
“They will be able to lower their prices, or they’ll be able to accommodate more of the fixed-price work that’s around,” Malt said of the spinoff. “They’ll be able to grow their business in a way that probably wouldn’t be possible under the auspices of a large law firm.”
Ropes & Gray has built a formidable intellectual property business over the years, aided by the acquisition of New York firm Fish & Neave more than a decade ago. The law firm’s intellectual property client list includes the likes of Apple, Samsung, and Hewlett-Packard.
Malt said the bulk of Ropes & Gray’s intellectual property group will remain, including lawyers who handle intellectual property litigation — going to court to enforce patents or defend against a patent challenge.
Even with the spinoff, Ropes & Gray will still be the largest law firm in Boston, ahead of Goodwin, based on its number of lawyers. As of Jan. 1, Ropes & Gray employed 1,188 people in Boston, including 536 lawyers, according to a spokeswoman.
Filing patent applications — patent prosecution — involves much more than just submitting the right paperwork. There’s a give and take with the administrative agencies, such as the US Patent and Trademark Office and the European Patent Office, that can last two years or longer. Some big tech companies can file for hundreds of patents in a year.
“It has become more challenging for larger law firms with significant overhead to keep it profitable,” said Jason Kravitz, an intellectual property lawyer with Boston-based Nixon Peabody. “For law firms, patent litigation can be much more profitable than patent prosecution. You get one big patent case and that’s millions of dollars for a law firm.”
Mike McGurk, a patent lawyer at DLA Piper’s Boston office, said he expects the new Ropes & Gray spinoff could thrive once it’s free to charge more competitive rates for patent filings.
“They might be able to achieve lower price points . . . and improve the amount of volume they would attract,” said McGurk, an intellectual property law cochairman for the Boston Bar Association. “I truly believe it’s a math issue more than anything else.”Jon Chesto can be reached at email@example.com. Follow him on Twitter @jonchesto.