Recent Trends in the Trans-Tasman Patent Attorney Profession

As regular readers of this blog – and watchers of the Australasian patent attorney profession in general – are well-aware, we have witnessed over recent years a significant upheaval in the profession, including three public listings of attorney firm groups and a series of acquisitions and mergers.  The result of this (so far) is that there are now two publicly-listed holding companies – IPH Limited (ASX:IPH) and QANTM IP Limited (ASX:QIP) – which between them own six mid-to-large-sized firms across Australia and New Zealand, collectively employing (as of the beginning of September 2022) just over 20 per cent of all registered trans-Tasman patent attorneys.  The consolidation of this many attorneys under just two ownership groups has naturally led to some concerns about a reduction in competition.  However, as I reported earlier this year, patent filing data in fact shows that a greater proportion of Australian patent applications are now being filed by a larger number of smaller firms than was the case a decade ago, prior to the establishment and rise of the listed group ownership model.

Since January 2018 I have been keeping records of the employment of registered trans-Tasman patent attorneys, as reflected in the public Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB).  (For readers who have not checked lately, the TTIPAB recently revamped its website, and the new and improved version of the searchable Register can be found here.)  In this article I use this data to present some updated trends in the profession over the past four years and nine months.

Key takeaway points from the analysis are that, since the beginning of 2018:

1. the total number of registered patent attorneys has grown by just 4.2%, from 1023 to 1066;
2. the number of attorneys providing for-fee services to clients through identifiable firms or solo practices (regardless of ownership structure) has barely changed, and now sits at 753, compared with 768 in January 2018;
3. the number of attorneys employed in corporate roles (e.g. in-house counsel) has grown, but so too has the number that are unemployed, not employed in traditional patent attorney roles in Australia or New Zealand, or whose current employment status cannot be determined from information on the Register;
4. the proportion of attorneys employed by listed group firms – mostly within the IPH group – has declined significantly to reach the current figure of 20%, down from 27% in January 2018;
5. nearly 60 new practices have emerged – more than half of them prior to July 2019 – with over 90 attorneys now working within firms or solo practices that did not exist prior to 2018; and
6. the overall number of identifiable firms/practices offering for-fee patent attorney services – which is one possible measure of the level of competition in the market – has increased by around 7%.

So let’s dive into the details, and some charts.

Distribution of Patent Attorneys Across Employment Sectors

I have classified employment of trans-Tasman patent attorneys into six sectors:

1. listed – ‘private practice’ attorneys employed by listed group firms in Australia or New Zealand (where by ‘private practice’ I mean attorneys providing for-fee services to clients irrespective of the attorneys’ ownership structure);
2. private – ‘private practice’ attorneys employed in privately-held practices in Australia or New Zealand (including equity owners, self-employed, and sole practitioners);
3. corporate – attorneys employed in professional IP roles within non-attorney corporations (e.g. in-house counsel, IP managers, etc);
4. research/university – attorneys employed in professional IP roles within public research institutes (including CSIRO) and universities;
5. government – attorneys employed in government bodies or departments, other than research and education, whether or not in specific professional IP roles; and
6. other/unknown – includes attorneys employed in overseas firms, in roles (including corporate and consulting roles) that are not primarily professional IP positions, along with those who are unemployed or whose employment status cannot be determined from the available information.

The chart below shows the number of trans-Tasman patent attorneys in total, along with the break-down into these six employment sectors, as reflected on the Register at the beginning of each month since January 2018.

The total number of registered patent attorneys has grown by just 4.2% over this period, from 1023 to 1066.  About half of this growth has been taken up by the corporate sector, and it might be regarded as an encouraging sign that Australian and New Zealand companies seem to be seeing increasing value in having in-house IP expertise.  The ‘other/unknown’ sector is around 32% larger than it was at the start of 2018 (now 162 attorneys, up from 123).  This may be due to some attorneys choosing less traditional forms of practice (I would include myself in this category), some pursuing opportunities outside Australia and New Zealand, and some failing to find suitable roles within the profession.  The number of attorneys working within the public sector, including research, university, and government roles, has remained relatively low, and stable.

Attorney Drift From Listed Groups to Privately-Held Practices

The most notable trend in the employment sector data is a shift of patent attorney numbers from listed group firms to privately-held practices.  Since 2018, the number of listed group employees has fallen from 280 to 215, while the number of patent attorneys working in privately-held practices has risen from 488 to 538.  This trend has been maintained despite acquisitions of Cotters in Sydney by QANTM IP and of Baldwins in New Zealand by IPH-owned A J Park, in May and June of 2020.  As shown in the chart below, the total number of patent attorneys providing private-practice services has barely changed overall.  This chart also identifies the number of attorneys employed under each of the two listed holding companies, IPH and QANTM IP (QIP), showing that most of the attrition from the listed group firms has been from IPH.

A consequence of these trends and changes in combination is that there has been a significant reduction in the proportion of trans-Tasman patent attorneys employed within the listed sector.  I observed back in 2016 that a quarter of Australia’s patent attorneys were set, at that time, to be employed by listed group firms.  By January 2018, just over 27% of all trans-Tasman patent attorneys worked for a listed group firm.  However, as the chart below shows, that proportion has been in steady decline over the past five years, and is now sitting at around 20%.

The Rise of New Practices

Another interesting trend to look at is the establishment of new practices, along with the disappearance of previously established practices.  This is illustrated in the chart below, which shows the total number of distinctly identifiable patent attorney practices and firms, broken down into extant practices and new practices established since January 2018.  In looking at this data, keep in mind that all of the new practices, and most of the extant practices, are small or solo operations.  Currently, there are 59 new practices that did not exist in their current form in January 2018, which collectively account for 92 registered patent attorneys.  The largest of the new firms presently employ no more than six patent attorneys, although there are indications in recent staff movements that some of these may be in the midst of a growth phase.

Notably, between the beginning of 2018 and mid-2019, there was considerable net growth in the number of trans-Tasman patent attorney practices.  Not coincidentally, this was a period following the expiry of restrictive covenants that had been preventing a number of former equity partners/principals of firms acquired by the listed entities (primarily IPH) from leaving and setting up in competition with the businesses that they had sold.  Since then, however, the total number of patent attorney practices has remained relatively stable, suggesting that a ‘churn’ of small practices ceasing operations while new ones are established may be a normal and ongoing state of affairs within the market for patent attorney services.  Unfortunately, I do not have data from prior to the ‘listed group era’ that I could use to investigate this hypothesis historically.

Conclusion – Smoother Sailing Ahead?

About half of the decline since January 2018 in the number of registered patent attorneys working within the listed group firms occurred in the first year of my available data, i.e. prior to 2019.  This coincided with (or slightly preceded) a period of the most rapid establishment of new practices.  Since then, the total number of identifiable firms/practices has stabilised, as has the proportion of attorneys employed within listed group firms.

Merger and acquisition activity in Australia and New Zealand by the listed holding companies also appears to have abated.  QANTM IP announced on 14 July 2022 [PDF 138kB] the ‘integration’ (i.e. merger) of its smaller Sydney firm Cotters into larger firms Davies Collison Cave and FPA Patent Attorneys.  Beyond this, further opportunities for acquisitions or business simplifications in Australasia by either QANTM IP or IPH seem limited, which perhaps explains recent activity by both companies being directed to overseas markets.  In August, QANTM IP announced the expansion of Davies Collison Cave into Hong Kong [PDF 508kB], and IPH announced its acquisition of the Canadian firm of Smart & Biggar for CA$348 million.

Perhaps, following some tumultuous years, we can now look forward to a period of relative stability within the trans-Tasman patent attorney profession?  We shall see.

Tags: Australia, New Zealand, Patent attorney profession