The New Normal
If Lawyers Sell Legal Expertise to Clients, Who Owns the Resulting Product?
Posted Apr 17, 2012 7:30 AM CST
By Susan Hackett
I’m still mulling over the implications of an article by Mark Hamblett in the New York Law Journal about some lawyers who have filed suit against Lexis-Nexis and West Publishing for what these lawyers say is the “unabashed wholesale copying of thousands of copyright-protected works created by, and owned by, the attorney and law firms."
While the article’s story is about whether authoring lawyers or their firms are copyright holders of documents filed in courts and stored as public records—especially if folks retrieving them them want to resell access to and discussion of them as Lexis and West do—I’m more interested in the corporate clients who hired the lawyers in the first place and how firms and clients are (or are not) leveraging that knowledge for reuse.
To that end, I don’t propose to offer my predictions for the outcome of this suit, but rather to share a bit of the resulting think-train that this case spurred in my mind. And I’m sharing it here in the New Normal column since I think the meaning of knowledge ownership and knowledge sharing in the legal profession has profound impacts on the kinds of collaborative, data-driven, process oriented, “stop-reinventing-the-wheel” discussions currently under way between many in-house counsel and their law firms.
More and more clients are engaging in the creation and sharing of knowledge platforms that incorporate all kinds of material—documents, filings, memos, research, templated "answers" used by the department to answer internal client questions, etc. Of course, their efforts range from a simple repository on the client’s intranet of past memos and briefs to much more sophisticated systems, databases, and extranets that share data and documents, sift and apply model past contract terms to new agreements, allow counsel to answer company manager questions online in a self-service fashion, and create the basis for new ways of focusing lawyers on routinizing those elements of work that aren’t really unique from matter to matter. (See, e.g., a few of the more intense knowledge-based in-house practices we’ve been documenting on my company's website as we’ve conversed with law department leaders who have made knowledge-sharing and experience “captures” a primary mission.)
It stands to reason that pretty much any client knowledge/experience-based system—no matter how sophisticated or developed—will include documents, materials, practices, and processes that were generated to some degree by the client’s outside counsel. Some might include a lot of them.
I'm not the copyright expert that others reading this article may be—so chime in! What I understand in general is that when retaining someone to perform services that include the provision of copyrightable material, the presumption is usually that the IP rights stay with the author who's been retained for the service, unless those rights are specially contracted to pass to the company retaining the author—the company may have some right of use for internal purposes consistent with the reason for the retention, but not an automatic right to "share."
And I know that the practical attitude of most clients is that they paid—and often dearly!—for the work that the firm provided, so they feel that they have the right to use the material provided by their outside counsel again and again, and pretty much as they wish. I also know that most retention agreements are silent on this point—the parties’ relative positions as I’ve described them are presumed.
So maybe firms won't be likely to protest when clients continue to use and reuse material the firm provided in past matters for internal purposes—even those beyond the instant matter. But what about when a bunch of clients decide that they'd like to share with each other those kinds of materials that do not constitute "confidential" advice that they're willing to swap for the access to other clients' similar treasures?
Maybe in-house knowledge managers aren't thinking of republishing these materials for general sale on Rocket Lawyer or LegalZoom, or—to use the underlying article about LexisNexis and West, for example—as a best-seller in law at Barnes & Noble. But they are sharing these materials to avoid having to pay firms to reinvent the knowledge and process that these materials document. And what do firms provide as their “product” if not the intellectual capital necessary to solve legal problems? Their knowledge and experience is what they presumably would want most to protect others from taking without paying (in the "old normal," at least).
So will the next round of suits, assuming those referenced in the article go forward, be brought by a consortium of firms suing (former!) clients for copyright violations? Will the new rate of service be $250 / hour for work that does not allow the client the copyright transfer or additional uses, and $800 / hour for work that includes the right of reuse? Or a flat fee of $50,000 of additional cost for the representation if the client wishes to own future rights in the materials the firm provides as part of their representation? What if the in-house KMers massage the work provided by the firms to a degree that they are not exact replications of the work, but considered to be somehow derivative? Just how "derivative" can they be before there’s a potential concern on the part of the firm that their IP is being reused or resold without their permission or the license assuring them a cut?
We all know that the idea I’m spinning here is a relationship-altering moment that most outside counsel will avoid like the plague. I don't see firms (unless the relationship is already gone south) telling a client that the client must stop using past work provided at great expense by the firm without some kind of permission or additional recompense to the "author." But on the other hand, the most interesting elements of the New Normal conversation are revolving around how clients and firms working together can create better, more replicable processes to efficiently produce highly valuable work going forward without each matter being treated as if it is entirely unique—as if each part of the work is completely "bespoke." And we're looking to automate as much of that process efficiency as is possible. So what do you think this means in the in-house / outside relationship context? And what lessons does this case suggest to the savvy firms out there who I see thinking about ways to package commonly offered service lines in a manner that would allow them to be sold as a “product” to in-house departments and smaller companies who haven’t afforded an in-house legal team? I should think those firms are thinking very long and hard about how they’ll seek to protect that kind of product—which will be the sum of legal analysis, process efficiencies, automated systems, expertise, judgment, and forms / policies / templates—from being shared openly in the marketplace.
What do you think about this? Is the prospect real or not for law firm service lines in the next 10 years? Remember to share your thoughts below only if you’re willing to allow the ABA reuse them without paying you a license or a fee for the privilege!
Susan Hackett, CEO of Legal Executive Leadership, is the former senior vice president and general counsel of the Association of Corporate Counsel.
Editor's note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You're invited to join their discussion.