This article was originally posted in Law 360 on May 11th, 2016

IP Partners Face A Declining Lateral Job Market

By Aebra Coe

Law360, New York (May 11, 2016, 4:08 PM ET) — Ten percent fewer intellectual property partners made lateral job moves in the first quarter of 2016 when compared with the year before, as the practice area grapples with major changes to how patent suits are litigated, according to experts and Law360 data.

The IP practice area is undergoing a major sea change, experts said, due to the U.S. Supreme Court’s Alice Corp. and Octane Fitness LLC rulings in 2014, which were aimed at limiting frivolous patent litigation; the 2012 America Invents Act, which set up the Patent Trial and Appeal Board inter partes review process; and the Dec. 18 abolishment of the infamous “Form 18,” which heightened the specificity requirements for filing patent infringement suits.

Considering the disruption to how IP law is practiced, a sense of caution on the part of law firms seems to have settled in and translated into a downturn in lateral hiring, according to Barbara Mayden of Young Mayden Legal Search.

“I think there’s a lot of wringing of hands about the recent changes,” she said. “It’s an area in flux, and there’s a lot of nervousness.”

During the fourth quarter of 2014 and first quarter of 2015, at least 118 partners at the 200 largest U.S.-based law firms by domestic headcount had made lateral job moves, while that number dropped 16 percent, to 99, during the fourth quarter of 2015 and first quarter of this year, according to data on law firm hiring collected by Law360.

In 2016’s first quarter, at least 69 IP partners made lateral moves, which is a substantial number compared with other practice areas, but is a 10.3 percent decline from the 77 partners who made moves in the first quarter last year.

The changes to IP litigation prompted by the Supreme Court rulings and recent legislation have made firms less willing to take a bet on new hires, Mayden said. She explained that firms must now often weigh whether the partner will be “another mouth to feed” or able to provide for others.

“With the nervousness, decreasing litigation and increasing use of administrative proceedings, firms are less likely to want to take that risk,” she said.

But despite an overall decline in lateral movement, there are still growing areas fueling demand for talent, according to Mark Jungers, co-founder of legal recruiting firm Lippman Jungers LLC.

One of those areas is biosimilar pharmaceuticals, drugs that are biologically similar though not exactly the same as a branded drug.

The biosimilars industry is extremely new — the first biosimilar was approved by the U.S. Food and Drug Administration just last year — which means that the impact of patent laws on the products is still largely unclear and that the need for experienced and knowledgeable patent attorneys in that area is high, according to Jungers.

“The work in this space is exploding. And exploding work often means exploding lateral movement,” he said.

Lateral Link Managing Principal Michael Allen pointed out that when there is less work in a given practice area, lateral movement does not always slow down.

Conversely, it’s not a given that the slowing lateral partner movement is the result of a drop-off in the amount of work to go around, because in such a situation, many partners may jump ship from firms that have high billing rates to those with lower rates, he said.

For example, if a partner is at one of the 20 largest law firms by revenue but can’t maintain that firm’s billing rate, he or she may choose to move to a smaller firm with lower billing rates.

“That’s something that we’re likely going to see if there’s a downturn in IP work, given Alice,” Allen said. “There may even be an increase in lateral moves, but you have to look at where they are going.”

Notable moves in 2016, according to the data collected by Law360, include six IP partner hires by Barnes & Thornburg LLP, which included a team from Brinks Gilson & Lione. Orrick Herrington & Sutcliffe LLP took on six IP partners as well — three from Kenyon & Kenyon LLP, two from DLA Piper and one from Susman Godfrey LLP — while Jones Day, Morgan Lewis & Bockius LLP and Polsinelli PC each added four IP partners.

Ropes & Gray LLP lost seven IP partners, all in New York, while Kenyon & Kenyon lost six, also all in New York, and K&L Gates lost seven IP partners, mostly in Chicago.

Allen said that he hasn’t seen a major dip as of yet in IP lateral movement but that he, and many others in the industry, are bracing for bad times ahead when it comes to patent litigation.

“I don’t know if we’ll have a big downturn, but we already see our clients positioning for one,” he said.

–Editing by Katherine Rautenberg and Edrienne Su.