• Attorney Aaron Wood criticises UK law firms charging high IP litigation fees
  • Calls on businesses to push industry to consider alternative fee arrangements
  • Claims change difficult as firms treat IP as “higher level legal area than others”

Trademark attorney and founder of law firm Wood IP, Aaron Wood, has written a scathing critique on the cost of IP litigation in the UK, and the high fees being charged by law firms. Talking to World Trademark Review, he claims that high fees are preventing settlements and calls for businesses to push for change. However, he acknowledges that this could be difficult because the industry “behaves as if IP is in some way a higher level legal area than others”.

Wood’s critique was originally posted on LinkedIn, and has been circulated by UK attorneys since it was first published on Wednesday. It doesn’t pull any punches in criticising high litigation costs for cases involving trademarks, patents, designs and copyrights. He describes how he has spoken to clients and other business representatives who are afraid to file a trademark due to the costs of any potential resulting litigation – especially “the potential for massive financial loss” if they were unsuccessful (due to the UK’s approach of losing parties paying at least a proportion of the other side’s costs).

These complaints have been voiced for many years, and Wood says the UK courts system did act when it set caps for costs in the specialist Intellectual Property Enterprise Court (IPEC), as well as introducing other measures that have provided greater cost certainty. “If parties run their cases effectively they can get 100% recovery of their legal costs,” he explained. “Courts have [also] taken a far more ‘hands-on’ approach to litigation, forcing parties to limit the scope of their cases to not waste costs and refusing to allow evidence on some issues (effectively meaning that they cannot be run) because the cost of running the point outweighs the value it will bring to the case.”

However, these measures have not dealt with the cost issue, he adds: “Whereas in other types of litigation a capped costs regime has led to service innovation in the sector, in the IP sector there has been no real innovation by most firms – how ironic! Most firms still run their intellectual property litigation the same old way, seek to charge an absolute fortune and get away with it because there is no real competition in the market, ie, everyone works and charges the same way.”

One example of an “absolute fortune” being charged, he claims, was of one case where a client was charged £200,000 by their lawyers over a two month period before trial. “I read the case and there was no way that the case should have cost that at all,” he decries. “If that case had been before the IP Court the party would not have been able to recoup anything beyond £50,000, so a massive proportion of what was spent would not have been recoverable. This is the kind of behaviour that gives lawyers a very bad name.” In concluding the post, he urged businesses to challenge cost estimates and push for change. “The Emperor is dressed up in a lot of legal language and industry practices, so it is difficult to see that underneath it all the Emperor is really naked.”

World Trademark Review reached out to Wood to ask whether he expects change will actually happen when, on the face of it, law firms presumably have little motivation to reduce costs. He argues that firms may be spurred on to look at fees if clients become more aware of unnecessarily high costs – especially when they impede a potential settlement. “The difficulty in the industry is that it behaves as if IP is in some way a higher level legal area than others – there seems to be only a certain level where it is worth litigating – and cost is preventing settlement,” he notes. “Of course, even big businesses work on budgets and I know from speaking to in-house departments that the high level of costs is often a stumbling block to subsequent attempts to settle; too much has been spent to be able to settle. For firms this seems a strange step, but of course this is trust issue - no client wants to feel that they have been ripped off, and of course the bigger the loss, the more likely that the client will then sack you!”

Wood’s post encourages businesses to look at alternative fee arrangements at law firms (a topic we focused on in issue 64 of World Trademark Review). It also highlights the growing frustration that some entities have with IP litigation costs in certain jurisdictions, including the UK and US. Whether, if more parties speak out, there will be a wholesale change in litigation fee structures in the future remains to be seen. Without that pressure, the chance of change is low.

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