patent attorney comments

It is Shiva here. My Australian Attorney friend sent me an email shared below.

As an Australian patent attorney who sold their practice, I am often asked why so many patent attorney practices are listing and whether they should buy the stock.

My reply is you are asking the wrong question. The correct question is why are the partners of so many patent attorney firms selling now.


Most of the larger Australian patent attorney firms have listed or been sold. Sprusons, Pizzeys, FAK, Callinans, Cullens, Shelston Waters, Davies Collison Cave and Freehills Patent Attorneys and Watermark. Phillips Ormonde Fitzpatrick are exploring options, leaving Griffith hack and FB Rice.

I was a partner at a large firm, to get there you have to be smart and work hard, 12+ hour days and Saturday in order to make the cut for partnership. You do this because with partnership you get money, privileges and power. So why are so many partners selling and going back to being an employee?

The numbers tell the story.

Xenith IP is buying Watermark (WM) for 9.5m cash and 10m shares (19.5m). WM has 90 employees and 13 or 14 partners, so each partner gets 1.4m from the sale. A partner of a large firm like Watermark makes in the order of 600k to 1.2m a year which you put through your family trusts or companies. After you sell you become an employee attorney on a salary around 180 to 200k inc super.

If profits stayed the same then staying on as a partner for 2 years will make you a lot more money than selling out. Selling out now only makes sense if you need to retire or if firm profits and the value of your equity will collapse within two years.

Selling the firm does not help profitability. There can be some efficiency benefits but firms exploit the labour of ambitious attorneys, who work hard for the promise of making partner. That promise is broken when the firm is sold and those attorneys consider other options. Some time ago there was post on the patents job board about the large number of attorneys looking to leave firms and go in house or otherwise change career.

So why are so many partners selling? I sold because of the threat of ePCT national phase and because it is easy to start a new firm. Clients follow their attorneys even after restraint periods.