It was only a matter of time. We all know that Lexis and Westlaw watch the emerging legal content providers closely. The rumor of the week is that some sort of alliance is brewing between LexisNexis and legal newsletter publisher Law360. It has also been rumored that both Lexis and Westlaw lost out to Bloomberg in the bidding for the acquisition of the Bureau of National Affairs another legal newsletter publisher last year. Would this be part of the same strategy or is it about something else?

Law360 is a relative newcomer to the legal publishing market. A story on the Talking Business website Why Law360 Is Succeeding and Making Money From Covering the Business of Law reports that the company was founded in 2006  by Magnus Hoglund and Marius Meland in a Starbucks cafe. The first newsletter focused on securities law developments and was followed by a bankruptcy law newsletter. Six years later they have spawned over 30 new topical and regional newsletters that focus on litigation and business law issues as well as the legal industry itself. Hoglund was also quoted as saying that they were growing at about 40% a year as of 2011. While not a direct competitor to BNA, which has the largest roster of reporters on Capitol Hill and deeper regulatory and legislative expertise, both publishers cover litigation trends and other legal developments. Law360 is decidedly more focused on personalities in the law….  a sort of TMZ approach and regularly includes interviews with leading lawyers as well and competitive law firm rankings.

Acquisition or Alliance? It is unclear whether this rumored deal would take the form of an acquisition (like Matthew Bender) or an exclusive license (like the recent American Lawyer Media deal)

Characteristics of Bloomberg BNA Deal – What Bloomberg does is as important as what Blaw does not do!

Subscribers to Bloomberg Law are reporting that Blaw has been true to its word and all BNA content is being added to their Blaw licenses (including BNA content not previously subscribed to.) Much to their credit, Bloomberg allowing law firms to subscribe directly to BNA’s electronic newsletters and libraries without requiring them to subscribe to Blaw. This strengthens Bloomberg’s stated goal to provide law firms with a new approach to procurement of legal information and to be a disruptive force in the marketplace. Even a free trial password has access to all BNA content. BNA content remains available on competitor services Lexis and Westlaw but one has to assume that this will end when BNA’s agreements with these two companies come up for renewal.

Characteristics of the LexisNexis American Lawyer Media Alliance

In mid 2011 Lexis entered into agreement with American Lawyer Media to become the exclusive source for the complete American Lawyer Media archive. This archive includes the granddaddy of law firm and legal industry news sources, “The American Lawyer” which was founded by lawyer Stephen Brill in 1978, as well as a collection of regional legal newspapers. As a result of this deal, ALM content was pulled from Westlaw in 2011 but when added to Lexis, was treated as “excluded content.” Lexis subscribers had the choice of signing a separate contract to add unlimited access to ALM content or to pay a premium cost for accessing on a pay-as-you-go basis. Law firms can still subscribe directly to ALM publications for current news, but these subscriptions include only a 6 month “rolling archive.”

Will this be another “Poison Pill?”

Blogger Greg Lambert, posted a comment to the I’m So Confused post  on his 3 Geeks and a Law blog and described the Lexis – ALM deal as a “poison pill” because it was essentially designed to discourage law firms from dropping Lexis and going to a sole research provider option with Westlaw or Bloomberg. If Lexis purchases Law360 the big question is whether they will take a page from Blaw and allow law firms to subscribe to Law360 without a Lexis contract. Even if the  rumored deal involved an exclusive license rather than an outright purchase, we may see a approach similar to the ALM deal where Lexis allows firms to subscribe directly to Law360 newsletters but requires a Lexis contract to access the Law360 archive. Since Law360 is primarily a current awareness service which reports on developments that are also reported in multiple legal sources, the loss of access to an historical Law360 archive will have minimal impact on researchers who have no access to Lexis.
So would such an alliance in whatever form be about content or perception?

Everyone likes Law360 newsletters in their current form. In fact, I think the native Law360 format is more unique than its content. They have developed a nice format including navigable lists of all law firms and the companies mentioned in each issue. But would some of the Law360 appeal be lost if delivered in a standard Lexis clip? One also has to wonder if the content so unique that it will not be largely redundant of the ALM practice and jurisdictional content? Law360 is mostly a current awareness service, so is there a compelling reason to pay a premium to maintain access to its archive? Are the news stories so unique that access to a permanent archive is required? I think the answer is “no” on both counts.

So I am inclined to think the rumored alliance would be more about perception than content. Lexis is bulking up on “exclusive” content in an attempt to slow its loss of market share and perhaps even reverse that trend.

But What  Strategy Do Law Firms Need?

The law firms which legal publishers sell to, have faced a market reset and are examining, streamlining and repricing their core business models The fierce competition between Lexis and Westlaw has been further complicated by the entrance of Bloomberg into the legal market. All three are competing for a shrinking law firm budget pool. Exclusive content alone will be tough sell to justify the hefty cost of two let alone three premium service providers when those costs can no longer be passed on to clients. If Lexis and Westlaw want to stay in the game, they may need to hit the reset button on their pricing and content strategies as well.

EB First Edition from Wikipedia Commons

A story in the New York Times today, Britannica is Reduced to a Click” reported that The Encyclopaedia Britannica, one of the “grand dames” of the library reference shelf was going  completely digital. After 244 years the publisher would stop printing the 129 pound, 32 volume set. The print  EB was a victim of both technology and Wikipedia, the  “crowd sourced” upstart which boasts 4 million English language articles.

The EB was no doubt, my trusted ally in completing dozens of long forgotten homework projects,  but it was also the source of my first encounter with the fallibility of reference books. In the mid 1960’s I went to a friend’s house to witness the unpacking of the family’s personal set of Encyclopaedia Britannica. I selected the volume containing the only topic about which I considered myself a true expert… “The Beatles.”  I found the right page and to my horror confronted a reference to the “Fab Four” as The Beetles! This no doubt explains my continuing professional recommendation that researchers perform fact checking, by consulting  multiple sources.

My second thought was about A.J. Jacobs the author of the Know it All — a book about  his personal adventures reading all 44 million words in the Encyclopaedia Britannica. AJ  was the guest speaker at  the 2011 PLL lunch and  made the audience of private law librarians roar with laughter at the deep vein of serendipitous discoveries he mined from the 4 pound tomes.  I wondered how AJ would have approached reading the digital EB in a “pre-iPad ” world. I imagined AJ…. strolling into an IRT subway car with a laptop computer strapped to himself  like an accordion or pushing a desktop computer in a shopping cart while strolling down Broadway. So I checked in with AJ tonight and he reported that he was “sitting shiva”… on a stack of  encyclopedia. He has  also posted a  response  to the demise of Encyclopedia Britannica in print on the NY Times “Room for Debate” web page. Enjoy!
A class action lawsuit (12 CV 1340) was filed in the Southern District of New York today by Edward White and Kenneth Elan and their respective law firms  against West Publishing  dba West and Reed Elsevier dba Lexis.I know you are thinking:  law review articles, chapters of legal treatises, a book of lawyer jokes,… poetry for lawyers…Wrong. The plaintiffs are claiming copyright in the legal briefs, including things like witness lists and jury instructions which were submitted to courts.
Lexis and Westlaw have been collecting publicly filed briefs and putting them online for years now. The plaintiffs claim that by copying the publicly filed briefs into their databases and making them searchable for a fee, Lexis and Westlaw are infringing their copyrights.

Call me a cynic but aren’t  a huge chunk of the legal opinions written in this country essentially “derivative works” based on other peoples arguments and analysis? Don’t judges (or their clerks) take whole paragraphs from briefs and drop them into opinions? Don’t lawyer’s draft briefs selecting text from judicial opinions and legal memoranda?

Is the whole system of common law precedent to be pulled from Lexis and Westlaw and put through a textual analysis to see who had the first “original expression” of various issues?

Wait I have a better idea, Lexis and Westlaw can take the plaintiff’s briefs and run them through a textual analysis – the kind they use to detect plagiarism in college term papers. It will be interesting to see where the plaintiff’s may have derived their briefs from.

Thanks to Patricia Barbone for tipping me off to this filing.

Why are legal publishers using the “Seinfeld Soupman strategy” of banishing customers who “opt out” of firmwide contracts rather than maintaining relationships on which to build future good will and market share?

Buy the t-shirt at Gil’s Blog.com


Lexis, ThomsonReuters and Wolters Kluwer CCH have been edging toward increasingly desperate measures in at attempt to coerce the continuation of firmwide contracts rather than listening for the new opportunities in the marketplace.

Greg Lambert’s 3 Geeks post reported several weeks ago that Westlaw will end “pay as you go” access. TR Ending Legal Pay as You Go. Lexis ended “pay as you go” access several years ago, but had allowed access by credit card until mid 2011. The Lexis “rationale” for shutting down access to Lexis by Credit Card.is “explained” in an hilariously incomprehensible posting on their website. Lexis had also stopped selling the digital  Matthew Bender treatise library in order to drive use onto the Lexis platform.  Wolter’s Kluwer stopped allowing firms to purchase individual passwords to online products several years ago in order to force everyone into more lucrative, large firmwide contracts.

Take Note Bloomberg BNA
The only major publisher who continued to provide truly customized product selections was BNA, which allowed firms to have a mix of firmwide licenses and limited user licenses for individual products based on the firm’s need. I urge Bloomberg/BNA to allow this type of custom licensing to continue for non-Bloomberg Law subscribers. (Bloomberg Law subscribers will have access to all digital BNA products without needing separate licenses.)

What’s Wrong with Half a Loaf?

Would it be so terrible for the online vendors to rethink the “firmwide” approach to “flat fee” contracts? Can no one think of an innovative middle ground?

Why not acknowledge that the market place had fundamentally changed? Cost recovery for online research is declining and budgets are tightening. As law firms get larger and the array of practice and industry groups expand, selling customized slices of online content will become ever more appealing and may be the only way multiple vendors can continue to coexist in large firms.

Let’s face it, today’s mega firm may have absorbed the equivalent of 6 smaller firms, so why not regain some of that lost market share by selling to a few practice groups or the equivalent of 2 or 3 small firms if the firm doesn’t want a firmwide contract?

The Myth of Indispensability


The fact is, that large publishers appear to be taking their own marketing pieces much too seriously. Or at least they want to perpetuate the myth that lawyers can’t effectively practice law without their products. There are already a number of mid-sized firms that have moved to “sole source” relationships with either Lexis or Westlaw and reports from the field indicate that they are doing just fine. An increasing number of firms have given up the CCH Tax platform in favor of the less expensive RIA Checkpoint product. Losing direct access to a small subset of content, may be overcome with a little extra research effort or the assistance of the research staff, but the savings have completely offset the inconvenience.

There are lawyers who conjure apocalyptic consequences at the thought of losing their favorite resource. I suspect that this is generational characteristic.
Older lawyers who started out conducting legal research in print treatises and then moved online tend to have a stronger sense of a legal publisher’s brand and the reputation of specific products which I don’t see in the post-Google generation of lawyers.

Can “Tying Arrangements” Be Far Behind?

The trajectory of current practices suggests that legal publishers are inching toward “tying arrangements” in order to maintain revenue and force law firms to keep unwanted content, products or licenses that are not aligned with the firm’s needs.

Right now, no major vendor limits the sale of print materials or ebooks to online subscribers, but this strategy may lie along the ’desperation trajectory” that is emerging in the marketplace.

Black’s Law Dictionary defines a “tying arrangement “as “ A seller’s agreement to sell one product or service only if the buyer also buys a different product or service; a seller’s refusal to sell one product or service unless the buyer also buys a different product or service. • The product or service that the buyer wants to buy is known as the tying product or tying service; the different product or service that the seller insists on selling is known as the tied product or tied service. Tying arrangements may be illegal under the Sherman or Clayton Act if their effect is too anti competitive.”

Law firms need to be able to select their own mix of “best of breed” sources to support their practices, at a cost that is calibrated to their own budgets and the products’ perceived value. Any attempt to further restrict law firms choices for content and format is likely to backfire and will certainly not demonstrate the creativity and nimbleness of thought demanded by the new “law firm economics.”

Wake Up — This is an Opportunity and Not the Threat That You Think It Is

Perhaps the day of the “monolithic service provider” –“being all things to all practice groups” is waning. Maybe firms are getting too large and too complex and a more flexible set of assumptions will be the key strategy for legal publishers to survive the upcoming wave of “sole provider wars.”

Digging a moat around your products and pulling up the drawbridge will only further isolate publishers from the marketplace they purport to be serving.

Almost a modern day parody of Henry Ford’s color palette for the Model T (“You can have any color as long as it’s black.”) Bloomberg is entering the legal marketplace with monochromatic contract as in, “You can have any contract you want as long as it’s Bloomberg’s standard contract.”
So what’s the Upside?
In exchange for a rigid pricing system you get transparent and predictable pricing, no excluded charges, nothing to explain to clients and a product you can launch and leave open on your desktop as a reference portal to be used as needed throughout the day.You also get the Bloomberg track record of contrarian innovation and successful disruption as a late market entrant into the financial services data and news media markets.

And Yet…

There is palpable skepticism in the law library community regarding Bloomberg’s pricing claims for Bloomberg Law. After all, hadn’t we been promised “flat fee” contracts before? But there was always “a rub” — new content and or new functionality that became the “cash cow” for driving profits for the Lexis and Westlaw. It seemed that no matter how well you negotiated your contract – within a few months there would be new surprises. Content from a 3rd party vendor or a new function link appeared which triggered unanticipated charges.

The legacy of profitability models used by Lexis and Westlaw continually undermined the promises of price predictability

Can the Cycle of Skepticism Be Broken?

Here is the thought pattern: Flat fee contracts lead to increased use. The increased use was then used against the law firm to justify dramatic price increases during he next contract renewal. It is widely believed that the only way to avoid dramatic price increases is to limit use of the “flat fee” contract – thus severely impairing the value of the “flat fee” contract. Why should we believe that Bloomberg will be different?

For a Clue to the Future Look to Bloomberg’s Past

In 1982 Mike Bloomberg developed his first financial terminal with a 10 million dollar severance check from Salomon Brothers.

The first Bloomberg terminal was called Market Master. It was a bond math calculator that sold for $995 for a single license. 30 years and 30,000 functions later a single license increased to $1,655. Bloomberg has had predictable increases of about 6% every two years. Bloomberg says that the price increases are used to improve the workflows, data feed, content and functionality. Today Bloomberg has over 30,000 functions and has poured terabytes of business, legal and government news and financial data into the system and none of it is excluded!

A 2007 Fortune article Bloomberg’s Money Machine described Blooomberg’s ever growing content:

“Bloomberg just kept adding more stuff,” which is like saying the Pilgrims were followed by many more immigrants. From its start in bonds, Bloomberg gradually poured in data and analytics on commodities, equities, foreign securities of all kinds, energy, mortgage-backed securities, derivatives, mutual funds, real estate, hedge funds, foreign exchange. Its oceans of information today include earnings estimates, SEC filings, merger and acquisition facts, legal documents and data on 1.3 million people”

Yes BNA Is Included at No Additional Cost

Bloomberg appears to be staying true to the business model and is including acquisitions both big and small in Bloomberg Law at no additional cost. When they bought Business Week, it was fully integrated. Now Bloomberg is telling subscribers that as soon as all of the BNA material including all newsletters,e.g. the pricey “Daily Report for Executives” and all BNA research platforms such as the Intellectual Property Library are converted, all BNA content — including content not previously subscribed to will be available at no additional cost to the Bloomberg Law subscribers.

Will the Wall Street Journal and Financial Times Be Next

Rumors of Bloomberg’s purchase of the Financial Times have been denied on both sides. Speculation swirls around the competition for access to the Wall Street Journal when the LexisNexis exclusive deal  ends in the next 18 to 24 months. . Last week Lex Fenwick, a former Bloomberg CEO became CEO of Dow Jones which owns the Wall Street Journal. One can only assume he and Dan Doctoroff, the current President and CEO of Bloomberg have each other on “speedial.”

Against the Grain not Against the Odds

An April 2011 article in Wall Street Technology entitled “Inside Bloomberg” describes Bloomberg’s response to the recent recession this way: “when most of the industry was hunkering down, slashing costs and laying off workers Bloomberg did what it often does, it tacked the other way and began the biggest period of growth it has ever seen, in terms of employees and product development.” One quarter of Bloomberg’s 12,000 employees are considered research and development staff.

This presents a fairly stark contrast to Bloomberg’s well established rivals. From Westlaw we have seen layoffs and contractions in client support. From Lexis we have seen repeated delays in the rollout of its new Lexis Advance product. Add to this, the recent rumors that both Westlaw and LexisNexis might be sold by their respective owners ThomsonReuters and Reed Elsevier. If you were a “betting man” where would you put your money?

Bloomberg’s Secret Value Strategy.

One of Bloomberg’s strategies on the business terminal side has been to erode dependence on other products. In educating their existing terminal customers on even a few more of the 30,000 functions they hope to wean them off other products. This has been called “Bloomberg Value Solutions.” The strategy isn’t  designed to sell you more, but to help you save money.

What would this strategy mean in the legal market?

For the past decade legal information centers have been subscribing to an increasing variety of specialized databases to support finance and securities practices. IP practices require all manner of scientific and technical data. Bloomberg with its deep well of financial data could well pose a value strategy which would eliminate products such as Capital IQ, Mergermarket, Bureau van Dijk, Hoovers. It’s $990 Million acquisition of BNA could offer a “value strategy” aimed at CCH and Law 360. Large firms subscribe to hundreds of specialized newsletters, (covering everything from aviation to zoning). If  Bloomberg goes shopping or decides to compete in these specialty areas, this could help firms consolidate the roster of stand-alone products with their attendant raft of specialized headaches including:  idiosyncratic licensing, variant publishing formats and  password management.

Winning The Terminal Wars

A 1998 article in Investment News described Michael Bloomberg’s 1981 product launch as entering a “field of “napping giants” when he created a new financial service that bore his name and “changed the standard of the industry.”

A 1997 New York Times story “Traders want some Space Too” seemed to be suggesting that Bloomberg’s closed data system would be doomed by the emergence of the internet. To make matters worse, Bloomberg was 3rd entrant into a field dominated by Reuters and Telerate/Dow Jones. How wrong they were! Telerate’s most recent sales are listed at $664M, while Bloomberg’s are estimated to be $7 billion.

Dow Jones and Reuters had hundred year jump on Bloomberg and yet, Bloomberg has thrashed Dow Jones Telerate into insignificance and today Bloomberg  rivals Reuters’ share of the financial data market.

Can Bloomberg Have Comparable Success in the Legal market?

Since law firms are essentially information businesses, I have spent my career trying to harness and integrate the multidisciplinary resources needed to support the highly competitive and time sensitive information needs of lawyers. The genius of Bloomberg has been to continually integrate new streams of data that inform and transform the core data sets. Bloomberg started with financial data and built its news service to enhance the contextual value and analysis of that data.
One has to assume that Bloomberg will take a similar approach in redefining the legal information industry. As clients are demanding that lawyers not only understand the law but also understand their business challenges and related industry trends, Bloomberg’s interweaving of law and business may be the very thing that every partner will want and perhaps need on their desktop n order to thrive as a rainmaker.

Sources:
Bloomberg’s Plan for World Domination
Bloomberg company history
Bloomberg by the numbers
At Bloomberg, A modest Strategy to Rule the World.

See Related Blogposts::
Is Lexis the Next Acquisition for Bloomberg
Bloomberg Get’s BNA’s Intellectual Capital in the Capitol.
Bloomberg Law Takes on the Titans: An Interview With Lou Andriozzi
The Myth and the Madness of Cost Effective Lexis and Westlaw Training

Firms have been deleveraging (reducing the ratio of associates to partners) for the past decade in response to client pressure to reduce costs. Although the economy is recovering, deleveraging is expected to continue to impact law firm staffing for the foreseeable future.



Life After Leverage ALM Legal Intelligence

 American Lawyer Legal Intelligence recently released a new report “Life after Leverage: New Models of Law Firm Staffing.” The report was based on a survey of Am Law 200 partners, associates and paralegals in November 2011

Key findings outlined in the report include:

1. The deleveraging trend will continue. Partners have been doing more work relative to associates and this is expected to continue over the next 3 years.

2. Firms are likely to have 2 tiers of non-equity partners and 2 tiers of associates. Non-equity partners will be divided into permanent and temporary (with a shot at equity partnership). Associates will also have two tiers permanent or career associates and partner track associates.

3.Paralegals will become more important. As client pressures continue, paralegals who bill at lower rates will take over an increased proportion of associate work.

4. Law Firms and Legal Departments will increase their use of outsourced services. Routine work will go to LPOs. More complex work will be sent to lawyer staffing firms who will provide highly qualified lawyers for more complex project based work.

5. Performance Measurement for both partners and associates is of increasing importance. Performance will not only measure billable hours, but also business development skills and industry expertise.

6. Laterals Rule. A law firm’s reputation has become less important to clients who are now increasingly searching for expertise. The rivalry for partners with expertise is reshaping the marketplace.

Implications for Information Professionals. Librarians and information professionals are not mentioned in this survey. However it is easy to recognize how they could present comparable, if not greater benefits than paralegals in the new leverage models. Librarians have specialized research skills which can be harnessed to improve efficiency of research assignments and projects. As clients focus on the value of expertise, firms should not overlook the value of in house research expertise. Many law librarians hold JD degrees but bill at lower rates than associates. As physical libraries shrink – the proportion of client support work performed by library and research staff will increase. The transformation of libraries will accelerate the transformation of librarians into specialized research experts  who are tightly aligned with practice groups*  where they will gain visibility and more easily be assigned to “leverage enhancing” projects.

*See: Cindy Adams recent blog post on “embedding” library staff at 3 Geeks and a Law Blog post Out of Sight Out of Mind

Today, Bernstein Research. released a report: Reed Elsevier: Voices Calling for Asset Divestitures Should Grow Louder, and Perhaps Fall on Deaf Ears which includes some significant implications for the legal publishing marketplace. The report recommends that Reed Elsevier divest some units including LexisNexis and suggests by implication that Bloomberg Law is standing by and ready to purchase those assets.

The report also notes that interviews with U.S. law librarians were a key source used in the report.

The report bluntly describes the LexisNexis problems as” intractable.”

These problems include:

1. Reed Elsevier’s lack of investment in core legal content has hurt Lexis’s competitive position.

2. Although the legal industry is slowly recovering from the 2008 downturn, law firms have not fully recovered and Lexis is currently signing renewals at deep discounts.

3. LexisNexis’ recent product innovations have lagged significantly behind those of ThomsonReuters. WestlawNext was released about a year ahead of LexisAdvance.

4. Bloomberg Law has become a real competitor. Acquisition of the Bureau of National Affairs (BNA) demonstrated both Bloomberg’s seriousness in claiming a stake in the legal market and the fact that Bloomberg has a lot of cash to do it.

Lexis strategies briefly noted in the report:

1. They plan to charge for future releases of Lexis Advance. This idea will not be cheered by the subscriber base.

2. Taking a more modular approach to new products  by targeting specific types of users and practice areas. I see little evidence of this in the large firm market. The report doesn’t explain what it means – but I think I speak for others on the consumer side of the market when I say a modular approach. would be very appealing to many “soon to be ex-customers.” Lexis and other legal publishers need to recognize that it’s time to let  customer’s choose the modules of content which they need. The market has shrunk, law firms are focused on cost control and redundant content is an easy target. Hunkering down in the delusion that the “gravy train” of the 90’s is pulling back into the station is likely to backfire and accelerate outright cancellations.

The Report’s Recommendation

Reed Elsevier should stop trying to wish away Bloomberg and consider selling off LexisNexis while it still has some value.

Although Reed Elsevier outperformed the market in 2012, Bernstein report indicates that there will be continued shareholder pressure to dispose of assets. Management may be nearing the point of considering this option.

What the report does not say:   Law firms remain focused on cutting expenses and  redundant content is rampant in the many “iconic” digital products traditionally subscribed to by large law firms. Law firms are beginning to do the math and recognize that they are paying “a king’s ransom” for the marginal benefits of maintaining access to a small subset of truly unique content offered by each vendor. The retrenchment in the legal industry means that clients are less willing to pay for online research. The decline and perhaps impending abolition of cost recovery means that there will be less tolerance for the support of two major vendors. Oh wait a minute, there are now 3 major vendors: Lexis, Westlaw and Bloomberg. I hear the sound of some large contracts “falling off the table.”

Implications for Potential Bloomberg Subscribers. One of the most appealing distinctions of the Bloomberg Law subscription is the “all in” approach. Unlike Lexis and Westlaw contracts which traditionally drove revenue and enhanced cost variability by “excluding” new content and functionality from existing contracts, Bloomberg will take the opposite approach and enhance predictability. They have repeatedly stated that they will include all new content and functionality in existing subscriber agreements at no additional charge. This means that current existing Bloomberg Law subscribers will not have to pay extra to get access to BNA content. By implication in a hypothetical purchase of Lexis, all Lexis would be absorbed in the same way.

In today’s Strategic Legal Technology, my friend and former colleague Ron Friedmann posted a Open Letter to BigLaw Managing Partners: Four Imperatives for 2012 and Beyond

Here is my reinterpretation of Ron’s recommendations for thriving the “new normal”  which includes both mandates and opportunities  for information professionals …with some additional insights for Managing Partners.

1. Improve value by working more effectively.  Bring in your research experts – early and often.

Consider using librarians as research project managers to control cost and reduce time and manpower invested in complex research projects. While partners bewail the cost and the inefficiencies of associates research skills, most firms have not leveraged the research skills of the research staff as a strategic process management component of their AFA strategy .
As clients demand better value, lawyers need to become more efficient. Librarians and information professionals routinely deliver more value than they are credited for.

2. Diagnose and Improve your Business Operations

Any library Director who has not begun to plan for streamlining and centralization of processes is dangerously behind the curve or “tone deaf” to the drumbeat of the market place. Do not wait to be asked to streamline – by then it may be too late. Law firm partners should also consider how the well honed  expertise  of research professionals, using highly specialized resources can analyse complex research problems and deliver analytical reports on a range of issues from companies or  industries to securities trading histories to dossiers on expert witnesses. These same projects which a librarian can deliver quickly,   could take days, if assigned to paralegals or project assistants that lack specialized skills and training.

Research and knowledge staff are also at the forefront of building intranet based “gadgets” and “self service” tools which allow anyone at the firm to quickly retrieve dockets, cases, patents, statutes, in one click without any specialized research training and without incurring client charges. All of these activities contribute to the streamlining of headcount which would have been required in more labor intensive approaches which prevail in the absence of specialized research expertise and guidance.

3. Engage Your Clients

This is my personal favorite on this list. “… to truly engage clients your lawyers need to know their business. Partners must read the news …about their business and legal problems.” Librarians have been out in front of this one too. Information professionals are investigating the next generation of monitoring services Linex, Attensa, Manzama, Ozmosys “Open Alerts” which go well beyond looking for company names in news stories but can can aggregate, generate trending reports, word clouds and other graphical reports for heightening your expertise on a client’s “pain points” and opportunities.

4. Adopt Metrics and Formal Governance Mechanisms

For me the “holy grail” of strategic information management would involve having firmwide metrics on information seeking activities undertaken by lawyers and staff in order to analyze opportunities for streamlining workflow and to optimize the matching of research activities with staff skill sets or identifying training or resource needs to improve productivity.

Information professionals should continue to improve the collection and analysis of research staff activities by implementing research “help desk” applications which will not only improve workflow but also provide vital data on staff activities which can be used for developing benchmarks for processes and the measurement of the ever elusive “value” metric. The measurement of resource value can be tackled with the implementation of bar-coding of print resources to measure utilization by lawyers. Although Onelog ,Research Monitor and Lookup Precision have offered many firms substantial benefits in measuring utilization of digital resources within the firm’s network, these products will have to be upgraded to address the growing population of “un-tethered” resources, As lawyers migrate to portable libraries and ebooks on I-pads, tablets and smart phones, the current generation of monitoring tools may hit a wall but the need for utilization metrics will not.

“It Takes a Team”

Ron saved the best for last. He concluded his post with a recommendation that law firms drop use of the term “non-lawyer.”  A phase so pervasive that frankly until this moment  I had not noticed the absurdity of defining about half of the average law firm population in terms of what they “are not.” Other professional services organizations such as consulting firms are decades ahead of law firms in recognizing the importance of other professionals in building a cohesive client  support team. Since the practice of law is an information intensive profession which requires effective research and knowledge management skills, the “new normal” should create new opportunities for information professionals to have enhanced and important new roles on client teams and  in modeling innovative value enhancing strategies.

Related Posts: Centralization as a Value Strategy

Since thirteen or fourteen years is an eternity in the world of business cycles, here is a bit of history for the young ‘uns about an earlier merger/purchase. In 1998, at about the time of the Frankfurt Book Fair (early-mid October), Wolters Kluwer and Reed Elsevier announced a merger. This was pretty shocking news to our profession, and tons of ink were spilled on the subject. The merger eventually fell apart. The official story was that competition law considerations, particularly in Europe (Mario Monti was just taking charge of that particular EU bureaucracy, and as any of you who may be Microsoft shareholders know, he was tough tough tough), scuttled the merger. The informal chat was that the finances, especially given the volatility of the respective stock prices, could not be made to work. Your correspondent is unable to say with any authority how much truth there may have been to that.

The major impact that the merger announcement had on the U.S. legal publishing industry is that it sent Times Mirror, owner of Matthew Bender (where I worked at the time), into deliberations. Times Mirror was a publicly-held company largely controlled by the Chandler family, and the thinking went, “Even if this particular merger does not work, there will be others, and we shall sit here with one little legal publishing company, Matthew Bender, facing huge combines, and it will not survive.” Thus it was that five months later the entire, and I mean entire, NY-based Matthew Bender workforce gathered in a movie theater on East 34th Street at 3:00 P.M. to hear the announcement that Times Mirror was seeking a buyer for Matthew Bender. We were held in the movie theater (closest to cops-and-robbers, or SEC enforcement, most of us ever got) until the stock market had closed for the day and the announcement had been made to the public.

The following months were a period of uncertainty but not much mystery. A year earlier, Times Mirror and Reed Elsevier had jointly acquired the Shepherd’s citation service from McGraw Hill through a product swap and partnership agreement, and had assigned operational responsibility to, respectively, Matthew Bender and Lexis-Nexis. The “conventional wisdom” had it that Reed Elsevier would be the only suitor for Matthew Bender, which would be folded into Lexis-Nexis. In this case, the conventional wisdom was just right, and it happened as predicted.

In the subsequent decade plus, the pace of consolidation has been frantic, especially compared to that pre-1998 era of tranquility. New providers and platforms are swallowed up as quickly as they show either profit or potential, and even established and very successful (e.g. BNA) entities are not immune. Thus as momentous as the Bender sale to Reed Elsevier was in 1999, it is by today’s measure pretty small potatoes. It also gives those of us who experienced it a new insight on the famous “you think it’s tough now, just wait” sentiment of Aeneas (Aeneid I.203): Forsan et haec olim meminisse iuvabit.

Perhaps someday it will be pleasant to look back even on these times.

Contributed by Guest blogger: Chuck Lowry,  legal publishing industry veteran.
Chuck is currently in enterprise sales at Fastcase. The opinions expressed here are those of the author and not his employer.

It’s not just the logos  that suggest an interesting symmetry! 

Today Exane BNP Paribas released an equity research report suggesting that the time may once again, be ripe for a Thomson Reuters/Wolters  Kluwer merger. While the US legal publishing units Westlaw and CCH are not the main focus of this speculation, it is clear that the professional publishing units in the US would be ”in play,” in any such combination. The primary driver for Thomson is to reduce it’s exposure to the troubled financial services industry and to generate $450M in cost savings.

Exane BNP Paribas has been speculating on a TR+WK deal for the past 10 years. They retreated from this position in May 2011 based on TR’s announcement that they would dispose of their Healthcare business. TR’s disposal of legal publishing assets in northern European markets also ran counter to such a deal.

Factors Favoring Such a Merger

1. Thomson Reuters Leadership Changes.Exane BNP suggests that TR appears to be “in restructuring
and crisis mode” since they failed to achieve top line growth through some new products including Westlaw Next.. The new CEO Jim Smith with his track record in legal, tax and scientific professional publishing may be better positioned to create new value from asset consolidation than top line growth.

2. Wolters Kluwer May be Ready to be Acquired. Former WK executives suggest that a merger has always been viewed as a good exit strategy if top line growth could not be achieved. CEO and Chairperson Nancy McKinstry has been in the Netherlands for 8 years and has not delivered expected revenue growth.

3. TR’s new IT  Platform Designed for Mergers. Since both companies generate over 80% of their revenue from electronic software and services, TR has the infrastructure to allow both companies to consolidate and reduce their IT costs. Apparently TR’s new IT platform was specifically designed to be able to integrate content from acquired companies. I have also heard this comment  from insiders at TR. (I whole heartedly agree that at least in the US, WK’s technical infrastructure as demonstrated by their “new ” Intelliconnect platform would benefit from an IT overhaul). Both companies have been trying to go global and have expanded their sale forces in some new and similar markets. The proposed merger would allow them to reduce duplicative effort in expanding their global footprint.

4. TR’s Balance sheet is Ready. TR’s balance sheet has absorbed the Reuters acquisition and the company  now has the financial capacity to launch such an acquisition over the next 12 months.

Insights From the Report:

Mergers are a Value Drivers in Professional Publishing. OK we all knew that. Cost savings can be derived by combining IT, marketing as sales costs. The report cited several successful mergers in the past 5 years which lead to cost benefits, Reed Elsevier-Choicepoint, Wolters Kluwer-LexisNexis German, Wiley-Blackwell. Recent cost savings have resulted in 15% savings from the target cost base. We are all waiting to see how the Bloomberg/BNA  merger fares – but we may never know since Bloomberg is a private company. But given the firm’s pedigree in the financial arena – we will stipulate that they were aware of these benefits and will some day let us know how financially successful the merger was.

Minimum Regulatory Hurdles. In North America, the merged ThomsonReuters-WolterKluwer would have a dominant market position of about 60% share. The tax segment would be particularly vulnerable to regulator scrutiny. The report suggests that at worst 13% of WK’s revenue’s would need to be disposed of.

Enter Bloomberg. The report also suggests that Bloomberg might be standing in the wings to take any divested WK assets since Bloomberg, as we know, is increasing their portfolio of legal, tax and regulatory content.While the newly acquired BNA has some significant editorial content in the tax area, including the Tax Management Portfolios and the Daily Tax Report, they don’t have anything comparable to the fully integrated federal and state tax  libraries which are the core of the CCH Tax products.

The Thomson Family Track Record. Since the 1930’s the Thomson Family has track record of making opportunistic asset shifts away from troubled markets into more promising segments. In this case, they would be shifting away from financial services and into growing segments of the knowledge economy. Wolters Kluwer would expand Thomson’s global markets.

Post Script
Lexis: The company that was not there. As a veteran observer of  decades-long legal publishing rivalries, the most striking “take away” from this report was the absence of name LexisNexis from the discussion. In law library community, there has long been speculation that CCH might be acquired by Reed Elsevier to strengthen and globalize it’s legal and regulatory products. But the Exane PNP report doesn’t even acknowledge LexisNexis as a contender if Wolters Kluwer is “in play.”  Bloomberg Law, a relative new comer to legal and regulatory publishing and “upstart extraordinare” waltzes into the discussion and drops comfortably in the back up position (for now). One has to wonder if there isn’t a coded message when you play with Bloomberg Law’s new marketing slogan and  Westlaw’s newest product name: “Bloomberg First, WestlawNext.”