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Law firms should worry when a new GC (or head of a practice) takes over

A point in an article about intellectual property work deserves attention (IP Law & Bus., Vol. 5, Nov. 2005 at 22). Based on a survey of Fortune 500 companies, “a new IP chief [lawyer] translates into new outside counsel less than a third of the time, or in five of 16 instances.”

I view that turnover rate, almost 30 percent in the year following the promotion of a new IP head lawyer, as quite high. After all, it is quite likely that at least one or two firms have been handling significant matters so long that replacing them makes little sense (But see my post of Aug. 14, 2005 about costs of transitions between firms.) It is also reasonable to assume that the first management decisions of a new head lawyer concern internal staffing and workflows, not outside counsel. For reasons like these, I wouldn’t be surprised if the disappearance of former lead firms and the appearance of new primary firms for IP work doesn’t reach far higher than a third after two or three years.

General counsel and heads of practices, be those areas environmental, bankruptcy, human resources, or IP, bring their own favorite law firms to the fore and ease out their predecessor’s favorites.