Law Firms and For Fee Legal Information
July 22, 2013
I know a couple of attorneys. In most cases, I recall the line from Henry VI, Part 2, Act 4, “The first thing we do, let’s kill all the lawyers.” I think Dick the butcher may have been over-reacting. Those with legal training may wish to consider the flip side of over-reacting.
I read “The Last Days of Big Law: You Can’t Imagine the Terror When the Money Dries Up.” Maybe the story, like some azure chip consultants, are making bologna? Maybe the story has a grain of truth?
The main point is that the good old days of lawyering seem to be drifting into the hazy past. Quaint notions like a nuclear family and near-universal literacy for a high school graduate, the legal profession is undergoing some dramatic changes. The write up asserts:
“Stable” is not the way anyone would describe a legal career today. In the past decade, twelve major firms with more than 1,000 partners between them have collapsed entirely. The surviving lawyers live in fear of suffering a similar fate, driving them to ever-more humiliating lengths to edge out rivals for business. “They were cold-calling,” says the lawyer whose firm once turned down no-name clients. And the competition isn’t just external. Partners routinely make pitches behind the backs of colleagues with ties to a client. They hoard work for themselves even when it requires the expertise of a fellow partner. They seize credit for business that younger colleagues bring in.
The paragraph could be applied to MBAs at some consulting firms or to managers at a search or content processing company.
I am not concerned about lawyers. I will leave their fate to Shakespeare’s Dick the Butcher.
The real impact of this story on me was that it underscores the financial challenges ahead for firms dependent on lawyers for online revenue. There are only a handful of commercial online services which deliver the information lawyers need to help their clients prevail. The free information is usually spotty and somewhat inconsistent. When I was a callow youth, I assumed that the various governmental entities would make certain types of legal information available to the public. So far the best bet to track down certain types of information is to use a for fee online service from a company like Thomson Reuters (WestLaw), Reed Elsevier (Lexis), Wolters Kluwer (many information services), and some generalist for fee services like ProQuest or Ebsco.
If the New Republic story is accurate, the market for often costly, commercial databases containing legal information is getting smaller. The firms which are left may be shrinking as well. There will be exceptions such as the US and other governments’ appetite for one-click access to laws, regulations, and more mundane information like procurement data. But when the market seems to be shrinking, what are the options available to the commercial publishers, value-adders, and aggregators of legal information? I thought of three:
First, the firms will just sell out. If this scenario plays out, there will be a Google or Amazon of for-fee legal information. Depending on what MBA course you completed, this is [a] great, [b] inevitable, or [c] two of the above.
Second, prices will rise. The cost of creating commercial databases is high. Despite the chatter about smart software, crafting a commercial database which is accurate, current, and reasonably easy to use takes a lot of money. The database publishers have, in many cases, already chopped costs to the bone. The result will be rising prices and probably some drop off in quality. I don’t see the excellence funded by the glory days of “get everything” profligacy returning.
Third, some of the commercial outfits will go out of business. I have watched a number of commercial databases spiral into debt. One trajectory is that the database back file gets snagged by a bottom feeder (a term of endearment for companies which buy failing proprietary databases but do not maintain them at their former level of quality). In some cases, a service goes away.
I can envision some other options, but I think that the New Republic article makes a good case for watching what happens in the legal sector of the professional publishing information business. Will reality influence the news releases and marketing of the for fee legal products and services? Not too much. I find the disconnect between the marketing and the reality of an eroding market quite interesting.
Stephen E Arnold, July 22, 2013
Sponsored by Xenky
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