How Leason Ellis Grew Tenfold in Five Years
In just five years, Leason Ellis, an intellectual-property law firm in White Plains, has grown tenfold.
Explosive growth is generally associated these days with tech companies, but the law firm of Leason Ellis LLP in White Plains has been putting up numbers in its first five and a half years that would spark envy from just about any company, never mind the techs.
Revenue growth, for example, has registered year-over-year increases of 91.7 percent, 33 percent, and 41.7 percent, respectively, over the last three years. Change in net income, likewise, has hit the stratosphere at 77.2 percent, 21.5 percent, and 72.17 percent, according to the company.
And all that has been happening while head count has risen from just four in 2008 to 47 today, a steep fever line over the course of just five years.
The company specializes in intellectual property, a branch of law comprising patents, copyrights, and trademarks. “The kind of law we practice is very exciting,” says David Leason, co-founder of the firm with Ed Ellis. He says intellectual property law, compared to many other areas of law, comes with an undercurrent of optimism.
“People have new ideas, they want to get them to market, they’re doing licensing deals with very big companies, they’re doing manufacturing deals with companies in East Asia, they’re developing software, and they need to get their parent to sign the engagement letter because they’re only 15 years old. It’s awesome.”
Potential clients, he says, “come in with software on iPads that just blows your mind. Things that you haven't seen before, but you will see very soon. Clients who print in three dimensions—really wonderful forward-thinking that comes out of happy, optimistic people.”
Leason, 48, and Ellis, 43, formerly practiced with Darby & Darby PC, a venerable intellectual-property firm in New York City, now defunct. They left Darby during what Leason describes as a period of great change among big law firms in the mid to late 2000s, accelerated by the recession in 2007 and 2008.
During that period, big firms started adding specialties, often acquiring smaller firms to do it. Many added intellectual property services to attract clients interested in one-stop shopping for all their legal needs.
It was out of that flux, Leason says, that he and Ellis decided in 2008 to strike out on their own as an alternative to large firms, deliberately determined to practice outside of Manhattan, somewhere in Westchester.
They looked around the County, mostly up and down the Harlem train line to make reverse commuting easy for Ellis, who lived and still lives in the City. Ultimately, they zeroed in on White Plains.
“There’s nothing like White Plains [in Westchester County] when it comes to business,” Leason says. “White Plains is where it’s at. It’s a real city with great support and great services, and it’s all right around us. Sometimes we need substantial photocopy jobs, we need graphic solutions for what we call demonstrables, for court or other purposes, and there are vendors all around us that support our needs.”
Leason and Ellis were also seeking the lifestyle advantages of a suburban firm. “We have a few attorneys and other staff members who are women with children and they have timing issues where they need to be able to leave and be available for the children after school,” Leason says. “And we’re able to accommodate that a lot better, for suburban folks, than firms that are located in Manhattan.”
Another feature of White Plains, especially for a firm like Leason Ellis that deals in broad-reaching matters, is the annex to the US District Court for the Southern District of New York. “We file a lot of lawsuits on behalf of our clients a short walk from our offices,” Leason says. Many of those resulting cases end up in the main court in Manhattan, but, he says, they have to start somewhere and being able to start them with a filing in White Plains is a distinct advantage.
Once settled in White Plains, Leason Ellis began to flourish almost from the beginning, each of the partners having brought some clients along from Darby and attracting new ones. “There were a lot of clients who just didn’t want to be with a colossal firm,” he says. “We had pretty good growth pretty quickly.”
They added two or three lawyers within the first four months or so and began a steady cycle of outgrowing office space and searching for more.
By 2010, things were going nicely for Leason Ellis, then just two years old. “The clients liked us. They were paying their bills. We were busy, happy to do what we wanted in a smaller platform than most of the big firms in the City.”
In March 2010, Darby & Darby collapsed after about 115 years in business, a victim of those seismic changes in big law. “Darby was caught in the middle,” Leason says. “As a multi-office, 100-lawyer firm, it was tough for it to exist. It wasn’t super-big to attract the biggest clients and not focused enough to attract some of the smaller clients.”
With Darby’s collapse came a sudden opportunity to dramatically grow Leason Ellis by hiring some of the lawyers, paralegals, and secretaries who had been their Darby colleagues and could come aboard equipped with readymade professional relationships and skills, and, in the case of lawyers, portfolios of clients.
But that also meant signing up for an abrupt mountain of increased expenses. Cash flow, always a major challenge and concern for growing businesses, would soon take on a whole new meaning.
When Darby closed in late March, Leason Ellis had a staff of 11 people, including four partners. From the Darby ashes, it added four attorneys, one patent agent, one translator, one docket clerk, and two secretaries. Suddenly, the staff at Leason Ellis had almost doubled, from 11 to 20. And soon the numbers would need to increase more to support the new attorneys and their work.
“It was a very stressful time for our young company,” Leason says. “The image that comes to mind is a tsunami. There was this wave of costs that were just rolling in.”
For a law firm like Leason Ellis, cash flow is more complicated than, say, for a manufacturer that may have fairly predictable costs, prices, and expectations of timely payments.
For starters, Leason Ellis has a global reach, not only representing clients around the world but also doing legal work in more than 80 countries. To accomplish that, it must maintain relationships with firms in foreign countries, which know local intellectual property law and have standing in the court systems and so on. The firm also maintains staff members to help break down language barriers in communicating with the foreign firms.
But Leason Ellis has no control over fees abroad, though they do get quotes for their clients on this end. Beyond that back-and-forth negotiation is the issue of fluctuating currency exchange rates, which can be substantial. In the second quarter of 2013, for example, Leason Ellis says it paid an average of $230,000 per month in fees to foreign law firms and patent offices.
A good chunk of that was in Euros and US dollars, but a little more than 14 percent of the expenses were in 10 other currencies, including the Japanese yen; Australian, Canadian, New Zealand, and Hong Kong dollars; Swiss francs; and Chinese yuan.
With daily fluctuations in exchange rates, who’s to say a fee for services quoted at one time will retain its worth by the time payment arrives?
To help reduce the risk, Leason Ellis uses something called currency forward contracts, which effectively lock in a currency rate for a period of time to cover the span between when an invoice is presented and when payment is received.
Trademarks and patents make up the largest share of their business, which includes Internet domain names, bogus websites, and counterfeiting of luxury goods. Copyrighting, licensing, and litigation make up the rest of the business.
The firm has continued its growth and now has eight partners and 47 total employees, who have signed on from a host of other firms beyond Darby & Darby. Some have even come from such companies as Exxon Mobil and Wyeth Inc.
An example of the kind of cases the firm encounters occurred with a client who was seeking to open a factory in China. One of the prospects he had met in the process went behind his back and filed a trademark with the Chinese government, and the government at first refused to transfer the trademark and give it to the client, the rightful owner.
It turned out the surreptitious filer had an ulterior motive. “Our understanding is this guy intentionally and maliciously took the mark to make fake product and export it out of the country,” Leason says.
Through a long process in Chinese courts and through Chinese counsel, they were able to recover the trademark for the client.
Another case involved the Apple App Store and a Swiss company, a Leason Ellis client that operates in the health and fitness area. A competitor sent a “take-down request” to Apple for an app developed by the Swiss company, which would have adversely affected the app's ranking among other apps even if later restored.
“We took an aggressive position and responded to both our client’s competitor and to Apple,” says Leason, adding that the matter was resolved without the client's app losing its position in the app store.
One Westchester client is Jay Maller, founder and CEO of Eco-mail Development, LLC, a four-year-old company that has developed a way to securely send and receive mail electronically, a potential massive savings in money and environmental resources.
Early on, in 2009, he sought help from Leason Ellis for patent protection on his system and submitted, he says, a 40-page document outlining everything he wanted to protect. “I thought I was trying to patent the entire ‘system,’” Maller recalls.
But David Leason advised a more tailored approach. Maller recalls Leason saying that attempting to patent an entire system can leave gaping holes in the protection that competitors can exploit. It’s more important to focus on the parts of the system that are unique, and protect those.
“He helped me dissect it, helped me understand how to focus it,” Maller says.
In the end, Maller got his patent, and Eco-mail just may be one of those things that you haven’t seen before, but you will see very soon.