Reciprocity: time to challenge the orthodoxy?
For many law firms, reciprocal arrangements with firms in other jurisdictions are a vital element of their IP business.
And on its face, it makes a lot of sense: all firms need agents in other jurisdictions to refer work to; why not develop a mutually beneficial relationship with a preferred supplier to ensure you get something in return for your referrals?
A recent blog from IP Centrum CEO Simon de Banke challenges this orthodoxy, arguing that “reciprocity breaks things”, and that the practice is likely to result in lower quality work and higher costs for clients in the aggregate. Specifically, he argues that there is an inevitable conflict between reciprocal arrangements and ensuring your clients get the highest quality representation, not least because if you were looking for the best partner, and your referral firm were too, then if you both fit the bill, you wouldn’t need a reciprocity arrangement!
Similarly, de Banke says, if you receive a large amount of work from a firm under a reciprocal arrangement, it’s far harder to challenge pricing, since you would be risking a productive relationship on the altar of fees you just pass on. This means your clients are ultimately likely to lose out.
De Banke acknowledges that it’s harder for a law firm to work without reciprocity arrangements than it is for an IP service provider. The service provider service model is about targeted efficiency against a finite number of processes, (in IP Centrum’s case, EP Validations, renewals and recordals) at high volume whereas the law firm’s model is primarily about competent and qualified advice delivered through fee earning time.
Asked for comment on how IP Centrum selects a foreign associate for a given case, de Banke’s says that it uses a sophisticated algorithm, which selects from the company’s agent network taking into account a trust score, continuity of service for the client, speed of work and others, but never reciprocity.
The law firms approached for this article didn’t comment on their arrangements, but we’d be very interested in publishing the other side of the argument. Are there advantages of reciprocity that outweigh the risks? Are there significant costs to making new assessments about who to refer to? Does reciprocity create trust? Is there a way of ensuring clients don’t lose out, either through lower quality or higher costs? Let us know.
Similarly, if you agree that there are problems with reciprocity, let us know that too. Do you work for a firm that doesn’t use it? And are there other IP business orthodoxies that need challenging?
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