This piece is well worth a read. They introduce their article by saying..
Over the last two years, the Australian patent and trade mark attorney profession has seen a number of significant changes. The 2013 amendments to the Patents Act 1990, meant that Australian patent and trade mark attorney firms could incorporate. This led to the consolidation of some of Australia’s biggest patent and trade mark attorney firms. These consolidated firms have subsequently listed on the Australian Stock Exchange to raise capital and have since been on an aggressive acquisition spree to achieve market dominance.
- In November 2014, Spruson & Ferguson listed on the Australian Stock Exchange as Intellectual Property Holdings (IPH Limited). Since then, IPH has acquired Fisher Adams Kelly, Pizzeys, Callinans and, most recently, Cullens.
- Shelston IP publicly listed as Xenith IP Limited in 2015 and is now in the process of acquiring Watermark.
- In August 2016, Davies Collison Cave and Freehills Patent Attorneys publicly listed under the holding company, Qantm IP.
All of these activities will have a significant and long-lasting impact on the IP industry and profession.
Higher Returns for Shareholders or Better Service for Clients?
For inventors and owners of intellectual property, consolidation of the intellectual property market in Australia will have long term consequences. At the very least, the listed entities’ acquisitions of Australian patent and trade mark attorney firms is likely to impose additional pressure on the holding companies to meet investors’ lofty expectations and maximize shareholder returns.
To date, news coverage of activities within the sector has focused on firm valuations, share price fluctuations, and speculation about the financial windfall that will be enjoyed by the former partners or owners of the acquired firms. Little has been written about the interests of the acquired firms’ clients.
As attorney firms corporatize and list on the Stock Exchange, then acquire other firms, the debate about the conflict between the clients’ interests and shareholders’ interests becomes increasingly relevant and must be considered by clients.
Earlier this year, The Australian Financial Review reported that High Court judge, Justice Geoffrey Nettle, when considering the legal profession, raised concerns that accounting rules and complexities associated with the public listing of a law firm could ultimately work against the interests of clients. Justice Nettle specifically pointed out that the public listing of law firms can visit additional pressures on lawyers working for those firms.
In short, there are inherent conflicts of interest when an individual or entity is obliged to act for both clients and shareholders.
The large sums of money expended by the listed entities to secure their acquisitions is also creating unrealistic expectations among investors. As a result, there is pressure on the parent companies – IPH and Xenith IP – to find new and innovative ways of maximising returns for their shareholders.
Over the coming years, that pressure will be transferred to the attorneys employed by the listed firms. Clients may ultimately have to foot the bill for some of those acquisitions.
Read the full article at http://www.ipwatchdog.com/2016/10/30/australias-listed-ip-firms-doomed-to-fail/id=74185/
