Strategic Legal Technology

As a legal blogger, I fear living in an echo chamber. So it’s nice to find that some hot blawgosphere topics also engage the business world. I follow blogger commentary on Bloomberg Law as I suspect many do. So I offer here a different perspective on it, that of a financial analyst who tracks Thomson Reuters for a living. 

Paul Steep is an analyst at Scotia Capital. Reproduced here with permission is his June 29th analysis of Bloomberg law.

• “Our expectation is that Bloomberg’s revised legal offering will achieve a relatively small share of the legal information market over the next several years. We believe that the firm is continuing to work on developing and building out the product, which remains at an early stage in comparison to the entrenched offerings from Thomson Reuters and Reed Elsevier.
• Our expectation is that Bloomberg is focused on using a targeted strategy by leveraging its key assets in the initial iterations of the product to gain a foothold within the legal market. In evaluating the positioning of Bloomberg Law the firm appears focused on penetrating practice areas that best fit with the firm’s core assets (e.g., a sizable real-time news gathering force, and a large knowledge base of corporate information). As a result, we expect clients choosing to deploy Bloomberg Law will be in specific practice areas, most notably Intellectual Property, Insolvency, and Securities along with use for business development purposes within law firms.
• The firm has invested in developing a new web-based solution that offers clients the opportunity to access its legal research tools without incurring the expense of installing dedicated terminals. Bloomberg had previously tried to enter the Legal market with a product aimed at law firms, which was initially launched in 2004. The company faced issues in gaining adoption in the market primarily because it was only available through Bloomberg’s own terminals. A key difference in the current product iteration is the ability to have webbased access to the system, removing the requirement for a specialized terminal.
• In this iteration Bloomberg’s legal product appears to have improved its overall competitiveness with WestLaw and Lexis/Nexis. Bloomberg has made a significant investment in building links to relevant content (e.g., U.S. Federal and State legal information), aggregating legal opinions from a number of law firms, developing their own proprietary content in the form of legal digests in various topic areas. The firm has invested significant software development work in building a product that provides the key functions of a legal terminal (e.g., search, docketing, case citation, news). The company appears to be focused on building out the core data set across the product in order to meet law firms’ requirements.
• Our view is that Bloomberg represents a formidable competitor for the incumbent providers but WestLaw appears to remain in a dominant position given the strength of its data set and new product offering. We anticipate that Bloomberg is likely to gain traction in selected practice areas that build off the firm’s strengths in serving the financial community. Our plan is to closely monitor the adoption that Bloomberg Law is achieving over the next year as it continues to market its solution to law firms.”

Paul’s analysis is consistent with the anecdotal data I hear from my law librarian friends. Do not read too much into the fact that Reed Elsevier’s LexisNexis is mentioned only in passing. This is a financial analyst’s report focusing on the potential impact of a new entrant on a company he tracks; it is not intended to be a comprehensive analysis of the competition.

Comments on Bloomberg Law welcome.

Autonomy announced on 21 January 2009 that it will acquire Interwoven. 

The Autonomy press release spells out the rationale for the acquisition:

“The combination of Autonomy’s Meaning Based Computing technologies (IDOL) (with its ability to understand content) with Interwoven’s suite of products (focussed [sic] on managing the interactions of people and content) will create a new set of technologies, updating and enhancing Interwoven’s products by significantly reducing the levels of manual effort now required… Interwoven’s products know what the customer interactions are, and Autonomy’s IDOL will allow them to know what they mean…. The combination creates the largest company dedicated to the legal information management industry with over 20,000 customers including 1,200 top law firms…. Autonomy and Interwoven have a shared vision to develop the next generation of legal and compliance software, allowing businesses to further automate the organisation, management and processing of human friendly information (text, forms, emails, voice and video) from disparate internal and external repositories. Interwoven is already a user of Autonomy technology within its products, and there are many joint customers already in place, including Bank of America, Bayer, Deutsche Bank, DLA Piper, Shell, Tesco and White & Case.”

I’m not 100% sure what this means but the combination is interesting. Autonomy is heavily advertising its e-discovery products in legal and general publications. Interwoven is a very strong player in law firm document management (and appears to have won market share from OpenText recently). That said, in large law firms, e-discovery and DM purchasing decisions are typically quite distinct. Also, firms change DM much less frequently than they do e-discovery tools.

Interesting questions include:

• Can Autonomy use Interwoven contacts to sell law firms e-discovery systems?
• Will Interwoven DM users get new search options?
• Does this reflect convergence of content management and e-discovery more generally?
• Will this change BigLaw KM strategies?
• Will this present new and better options for corporate compliance managers?
• Will this drive other acquisitions? I can imagine that managers at companies such as OpenText, Recommind, Attenex, Clearwell, Kazeon, and others are reading about this acquisition with interest.
• Will new e-discovery features emerge, either from combining technologies or the financial heft of a bigger player?

More questions than answers until I can ponder the news further.

The 2007 large law firm librarian survey is out. Some of the data surprise me. 

Competitive Advantage (big PDF) in Law Firm Inc. magazine (an American Lawyer, now Incisive Media, publication) includes results of a survey of AmLaw 200 law firm librarians conducted in the spring of 2008; 94 librarians responded. I was struck by what seems like a significant change in market share between LexisNexis and Westlaw.

The survey reports spending across four categories: electronic resources, print materials, LexisNexis, and Westlaw. From 2006 to 2007, the percent share of spending on print increased by two points. Based on what I’ve read in articles and blogs, I assume that this reflects price increases rather than an increase in quantity of materials purchased. Interestingly, the percent share of spending on electronic resources decreased by two points.

The percent share of spending on both LexisNexis plus Westlaw remained constant at 54% but LexisNexis lost three points to Westlaw. Measuring share of just the two relative to each other, LexisNexis lost five points to Westlaw. In a mature market, that’s a big percentage shift.

I will defer to those closer to online research to explain this seeming shift. I say seeming because if different librarians responded in 2006 and 2007, the results may not be directly comparable. The survey does hint at one possible reason for the shift - cost recovery. “Westlaw recovery is better” increased from 35% to 45% and “LexisNexis recovery is better” dropped from 11% to 10%. Separately, client pressure notwithstanding, 70% of law firms recover 61% or more of LexisNexis and Westlaw charges.

A final and unrelated factoid from the survey relates to knowledge management. The percent of librarians who play an active role in the firm’s KM efforts dropped from 84% to 75%. I suspect that reflects a rise in specialized KM professionals rather than firms pulling back from KM.

ALM announced on March 6, 2008 that it acquired Altman Weil Publications. 

“ALM, a leading media company serving legal and business professionals, today announced the acquisition of Altman Weil Publications, Inc. of Newtown Square, Penn. The group publishes surveys on the legal profession focusing primarily on the economics and management of law firms. Founded in 1974, Altman Weil Publications is a former division of Altman Weil, Inc., which provides management consulting services to law firms, law departments and legal vendors…” reports the ALM press release. ALM, publisher of law.com and American Lawyers, became part of Incisive Media not long ago.

ALM already has a strong research arm and publishes numerous surveys and reports. So it seems like an excellent fit. I wonder what this means , if anything, for Altman Weil’s consulting practice.

Law firms business intelligence has become a big deal (see my blog posts on BI). One of the leading BI software tools, Redwood Analytics, was acquired last week by LexisNexis. 

According to the press release, Redwood will join “the LexisNexis® Client Development Solution Line – already inclusive of a diverse set of solutions such as InterAction®, atVantage™, Martindale-Hubbell®, LexisNexis news and business sources and more”

The three large legal publishers - LexisNexis (part of Reed Elsevier Group), Thomson West, and CCH (part of Wolters Kluwer) - have acquired numerous software companies in the last decade and built some interesting products. It would be fascinating to know what percent of revenue each derives from software. Through the early 1990s, innovation from these companies seemed pretty much “we have a new database today.” Today, innovation is “we have a new software offering today” and the apparent goal is to compete hard for a much bigger share of the BigLaw wallet. The traditional players have successfully moved beyond publishing to legal productivity solutions. Now the question is, how far will it go?

Microsoft today announced its acquisition of full-text search company Fast Search & Transfer ASA (FAST). 

Jeff Raikes of MS is quoted in the the press release: “Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly. Until now organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and FAST gives customers a new choice: a single vendor with solutions that span the full range of customer needs.” [Background: FAST is a robust enterprise search tool capable of handling very large data sets. I know of at least two legal market suppliers that use the FAST engine.]

What surprises me most is that “mainstream, infrastructure solutions” do not already offer robust enterprise search. It’s easier to manage and analyze numbers, but there is a lot more data and knowledge embedded in text.

I hope that this acquisition does not augur a consolidation in search vendors and technology. In my opinion, what’s needed more than tight infrastructure integration is a conceptual breakthrough in semantic processing and natural language processing. I agree with Craig Carpenter, VP of Marketing and Business Development at Recommind who commented that the value of “customized search applications (for eDiscovery, for BI, for expertise location, etc.) will grow dramatically as vendors like MSFT improve the ‘basic’ search they offer baked into their platform products.”

Thomson, owner of West and other legal properties, has acquired Contact Networks. 

The Contact Networks home page has a notice at top:

“Thomson, the world’s leading information company, has acquired Contact Networks, the global leader in Enterprise Relationship Management, providing social networking for the corporate market. Geoffrey Hyatt, CEO and Founder, states “Contact Networks has built a dominant leadership position with ContactNet, the first and most successful product for enterprise social networking. The best companies around the world already use ContactNet to harness the power of their relationship networks. Joining forces with Thomson continues and accelerates this rapid growth with the full resources of a global leader in information and technology.”

In Something for Nothing? Enterprise Relationship Discovery (May 2007) I discussed the value of this category of software. (I spotted this news item at the LawyerKM blog. Surprisingly, I could not find a news release.)

Both LexisNexis and Thomson are bulking up their legal software and practice management offerings. It will be interesting to watch both companies and see if one emerges as the clear winner.

Anytime a large company buys a much smaller one, there are potential trade-offs. On the one hand, it can offer stability and integration across a broader suites of products. On the other hand, it can stiffle innovation, cause confusion, and limit customer service. Thomson has a pretty good track record on this front so I suspect this will be plus for BigLaw customers on balance.

Update (1/21/07): In the last week, I’ve seen numerous references to Thomson’s acquisition of Contact Networks. The Thomson press release about this is dated 1/15/08. You read it here first!

A relatively new discovery document review developer has been acquired. 

Anacomp announced it has acquired CaseLogistix. From the press release: “Anacomp Inc. (OTC: ANCPA), a leader in document and business process management solutions, today announced it has completed the acquisition of CaseLogistix Inc., a leading provider of evidence and litigation management solutions. CaseLogistix market leading solutions allow legal teams to quickly collect, review and produce any amount and type of discovery information.”

Thomson (owner of West Publishing) is an important information and software supplier for BigLaw (and SmalLaw). CIOs, librarians, and other firm managers should keep track of Thomson’s bid for Reuters. 

Forbes report of the Thomson bid for Reuters is here. Reuters itself reports that Thomson “would face an arduous investigation by U.S. antitrust authorities if it makes a bid to acquire news and financial data provider Reuters.” The Financial Post of Canada reports that Thomson “is more interested in Reuters’ financial data than its news feed.”

My guess is that long term, this would have positive impact for law firms. It will be interesting to watch this unfold.

Thanks to Simon Chester’s post at slaw for alerting me to this.

Two acquisitions occurred in recent weeks, one in e-discovery and one in outsourcing. 

Integreon to acquire CBF Group Inc (2/22/07) notes that “Integreon Managed Solutions, Inc., a global leader in complex knowledge process outsourcing, announced today that it has acquired Fargo, N.D.-based CBF Group, Inc., a business process outsourcing company exclusively focused on enterprise services to law firms.” The press release notes that the combination provides law firms with onshore and offshore solutions from the same company.

Merrill Corporation Announces Acquisition of Lextranet (3/1/07) notes that “Merrill Corporation, a leading global provider of technology-enabled services for the legal, financial, real estate and other corporate markets, today announced the acquisition of Lextranet®, a leading provider of Web-based litigation support and case management systems.”

I’ve suggested that knowledge management and electronic discovery tools might converge, given that search underlies both. My June 29, 2005 a post mentioned “the possibility that e-discovery semantic analysis tools will be re-purposed for KM.” I got it backwards. 

Recommind, known to many law firms as a sophisticated federated and enterprise search tool to support KM, announced (1/3/06) its “new eDiscovery functionality that enables enterprises to quickly and easily locate electronically stored information (ESI) that must be preserved for ongoing or anticipated litigation.”

There is more money in the EDD market than the legal KM market, so it makes more sense for KM tools to go after EDD than vice versa. In my opinion and speaking from general business principles, Recommind’s move can cut two ways for KM professionals. On the one hand, extending its reach to EDD could give the company both experience and higher revenues that support developing more sophisticated KM features. On the other hand, its focus could shift to the much bigger EDD market and over time, mean less emphasis on KM-specific features. It will be interesting to observe what happens.

Disclosure (just in case readers believe this could influence my view here): I have a consulting relationship with Practice Technologies, developer of RealPractice, which serves the legal KM and work product retrieval market.

The Thomson empire (which includes West, Elite, and Hildebrandt) now includes Baker Robbins (BRCO), one of the leading legal technology consulting firms. 

A BRCO press release states that the acquisition “provides a powerful complement to the Thomson portfolio of legal consulting services, and will be aligned with the company’s Consulting Services group…. co-founders, Chairman David Baker and President and CEO Brad Robbins, will continue to provide leadership for the firm…. David Baker said the hallmarks of objectivity and accountability remain the essence of the firm.”

From what I have see, Hildebrandt has indeed remained independent, so I suspect BRCO will as well. But the interesting question is how Thomson will create synergies with strategy and legal technology consultants under the same roof as a range of software and information services. (Hildebrandt, by the way, has had a strategic partnership with BRCO for several years.) I imagine it’s fine line between allowing the independence of consulting units and gaining synergies.

Until not long ago, it has seemed that suppliers to the legal market were highly fragmented. With Reed Elsevier (Lexis-Nexis) and Thomson acquisitions, we have seen significant consolidation. It will be interesting to see how this continues and how the competition between L-N and Thomson will play out.

The Thomson Corporation announced a re-organization yesterday. Law firms should take note since Thomson is a major supplier of both content and software. 

It will be interesting to see if this affects what Thomson - Elite - West delivers to BigLaw. The press release (10/25/06) states that a significant goal is “to focus on electronic workflow solutions strategy.” That sounds intriguing to me.

Spotted at the blog slaw.