(Reuters) - Fred Fabricant led an exodus of lawyers from Brown Rudnick earlier this month to launch Fabricant LLP, a boutique patent firm in New York that eschews billable hours in favor of alternative fee arrangements.

Fabricant spoke with Westlaw about the move, why his clients use litigation funders, and recruiting in a pandemic.

The conversation has been edited for length and clarity.

Q: You've talked about wanting to do more alternative fee arrangements. What can you do now that you couldn't do at Brown Rudnick?

A: Well, I'll be doing creative alternative fee arrangements including capped fees, flat-level billing and litigation finance fees. And it's not so much that I couldn't do any of that at Brown Rudnick. I did a lot of it. It's that I now have the freedom to do as much of that work as I want to — on any case I want to — without going through various committees to see whether other people who are not in the intellectual property litigation practice like the deal or like the budget. There's a whole process you have to go through at the big firm that you don't have to when you're independent.

Q: How do you use litigation funders?

A: A lot of businesses do not have the financial wherewithal to pay for a patent litigation budget, which could be in the $7 million to $12 million range on many cases. Even a company that has a profitable business can't necessarily take out of its cash flow that kind of money for a litigation budget. Litigation funding offers the availability of totally non-recourse financing for that litigation budget. These businesses are not on the hook for it. It is paid totally and only out of success, which could mean either licensing fees, settlements, or awards at trial.

Q: And litigation funders are interested in representing patent owners these days? There are a lot of ways to lose a patent case. Funders don't find these cases too risky?

A: It's true that are many risks in any patent litigation case. You know it's going to be a complex case, with not only infringement issues but invalidity issues and damages issues. But litigation funders are very heavily invested right now in intellectual property litigation, particularly patent litigation, in my experience. The rewards can be very large. It is one of the categories of litigation where they can meet or exceed their returns.

The key is really diligence. There are three levels of diligence that every case goes through. The first round of diligence happens at the law firm, when the law firm decides that it's a strong case. Then the fund takes a look at the case with its own in-house patent lawyers and makes its own internal decision about whether this is a case that should be pursued and that the risk is tolerable. And then, if they reach that decision, they hire their own independent counsel. So, at the end of the day, when we actually bring a case that's funded pursuant to a funding agreement, it's been diligenced on three separate levels and been given the green light.

Q: Will you be able to compete with big law firms in recruiting talented, younger lawyers?

A: I think it's very reasonable to believe that we'll be successful in hiring. Highly motivated attorneys are attracted by the fact that, at a small boutique firm like ours, you will get tremendous responsibility and experience at a much earlier stage than you will at a large firm.

And, by the way, we pay the going rate at the big law firms and sometimes more depending on the talent coming in. And we match the benefits completely. So there's no decrease in pay.

Right now, we have the advantage because many firms have had a COVID salary reduction for associates. And we're not doing that. So it is kind of like a bonus for them.

Some people want to be at a big firm because it has a good name and brand. And I understand the attractiveness of that. But once you're at a big firm, the world of people you interact with on a daily basis is relatively small. It's the size of the firm I have now.