My opinion stands that it is not always wise to try and predict the future, certainly for the longer-term, however necessary it is to seek to do so. Unpredictable risk for companies is everywhere and the impact of getting things wrong can be huge, perhaps in some cases immeasurably high. So perhaps rather than use prediction, it is preferable to identify a few key factors and examine the evidence surrounding them in order to anticipate trends in legal and professional publishing.
I believe that, without doubt, legal publishers, particularly the larger ones, face a broad range of challenges. They respond to and anticipate them in different ways, some of which may lead to their metamorphosis or extinction, inasmuch as they are in the business of professional information publishing. There is nothing surprising about this. What is now Thomson Reuters has previously ditched newspapers, energy, tourism and travel, education, department stores; RELX (Reed Elsevier) has its roots, in part, in paper manufacture. They manage portfolios and place their investment and efforts where they believe they will achieve best returns, relying largely on acquisition for growth and new products. Their present difficulty is, arguably, that although they find little opportunity for growth in their low-growth sector, even through acquisition, residual revenues and profit margins are often higher than those in the markets to which they aspire. It is therefore problematic in the short-term to replace legacy sources of income, particularly where newer ones that seek to address “the business of law” are not arriving or delivering to the extent that was hoped. However, this situation is hardly sustainable and through a process of strategic disposals and acquisitions, it seems inevitable that at some time in the foreseeable future, the three gigantic law publishers will exit. Thomson Reuters’ focus seems to be on financial and risk markets, with RELX on scientific, technical, medical and risk solutions. As for Wolters Kluwer, having become “more a software and service company”, the health market appears to be more appealing for them. I don’t doubt, though, that the evolution will not be linear and it’s more likely that their structures will to some extent be affected by larger scale merger and acquisition activity. Respected commentator, David Worlock, has much to say on these matters, making reference to “until Lexis Law is divested”, as if it were simply a matter of time and suggesting “Why not bring it on again ?” in relation to the question of a RELX-WK merger. This might assume that they can do it well, particularly as they address their own and their professional customers’ desire to balance growth, globalisation and industrialisation strategies with the imperatives of protecting customers’ best interests. They must manage their own reinvention while ensuring that their traditional characteristics that define professionalism are able to withstand the strains of industrialisation, management by process and the crude requirement for more sales revenue. There are risks in seeking to mix a service ethic with industrial and commercial ones and sometimes these are in direct conflict.
Markets and their structures are changing and, especially for the longer-standing incumbents, the impact of newer entrants and competitors is real. Momentarily forgetting legacy turnover and profits, failure to grow is not obligatory in these markets and there is evidence of profitable growth and innovation from more nimble enthusiasts. While at one level the future for legal and professional publishing is seen to be in the provision of transactional and workflow solutions, thereby driving publishers towards the role of software providers, that view does not necessarily address the question of market segmentation. Taking the UK for example, with its mix of solicitors, barristers, tax advisers, professional support lawyers and others, none of which group is enormous in numerical terms, there is no single way to address their needs. In total, in England and Wales there are around 15,000 practising barristers. A proportion of these, together with the handful of firms of solicitors, primarily in London, that make up the so-called Magic and Silver Circles, represent the core market. These, with the high-end scholarly, as distinct from curriculum-driven academic and professional training markets, remain key to sustaining the law publishing trade, as it has ever been. Of course there are many more law firms in all, with around 150,000 individual solicitors, together with accountancy firms, taxation practitioners and the totality of active registered companies that define the market. However, this says little about identifying the relevant market size as expressed in customer numbers for UK professional information providers. Realistically, the market is segmented, progressively less-willing to fall for old-style publisher pricing models and ever-evolving. Those publishers that are able flexibly to focus on high-profit sectors of these markets, while concurrently being not locked in the ways of the past, may find themselves becoming the new establishment. Indeed, where deep content is needed, the majors are probably not even geared up to acquiring it. It may be that the specialist competitors, via licensing, will be the profitable future collectors of legal content for themselves and the larger businesses. Perhaps, more simply put, those whose focus is on transactional process and documentation will serve the compliance, solicitor and PSL market while barristers and senior litigators will remain the customers of the deep content and research-focused law publishers.
The digital challenges that have existed for a long time and have not always been addressed, overcome or well-exploited, continue and to some extent require business models to be altered. The acquisition by Thomson Reuters of Practical Law indicates the understandable direction that the larger business wants to take. It shows that its future model will be less about providing deep, research-oriented content and more about providing business support to professional markets. At the same time, it takes them further and inevitably into a world in which the challenges of open access, social and business network competition and the impact of ever-changing technology more than changing law become the key drivers to the business. This is likely to make for more generic technical solutions to address markets with not dissimilar characteristics, to a greater extent than requiring an intimate empathy with and understanding of only a few. That model, of course, may also reveal that the transactional solutions approach rather than mainstream strategic planning and litigation, is one that is geared to the largest firms only and to a corporate market for compliance, where customers may have greater internal technical skills and enormous price bargaining power. Meanwhile, for those whose focus is more on the management of research content, there are superb examples of innovation, vision and optimism, one being in the forthcoming version of the Justis and JustCite services. For the future, the publishers see in research content the need to identify relationships among cross-jurisdictional sources combined with the full range of social and other media. Other traditional mainstays of the legal publishing trade, however, such as directories and access to markets via traditional bookstores, are likely to play only a small part of its future.
It is certainly interesting to speculate around who are likely to be the winners and losers based on current trends. I do not at all think that the downfall of the biggest names is imminent but I am of opinion that they will change to an extent that they may not be the legal publishers of the future. Based on reported financial and market growth, it is hardly the case that such businesses can continue to be regarded as winners. It’s possible that Bloomberg Law will rise in consequence but realistically, unless it makes one or more huge acquisitions involving the present international market leaders, it will remain a domestic operator of no global consequence or withdraw completely. Perhaps rather there will be opportunities for venture capitalists, private equity or even more lateral possibilities. Acquisitions and disposals in question may well include some of the respected and trusted brands presently held by the giants and they may flourish under different ownership. It is difficult to imagine those currently operating on the sidelines, such as business-to-business, STM and academic providers, taking a lead, despite the extent and quality of their asset bases. At the bottom end of the market, where the opportunity to make large amounts of money from high volume, low-priced books is disappearing, along with the reduction generally in print business, the commoditisation of case reporting and the provision of legislation and other primary sources, the picture looks bleak. That is not so, however, between the two. Practising lawyers are changing how they do business but the need for them has not disappeared. I anticipate that the winners and inheritors of the mantle will be right-sized innovators and core market service obsessives who are willing and able to grow in ambition and scale to replace the old guard. For those who hold, acquire and nurture the “must have”, added-value resources; for those who see service, accuracy, clarity and value as essential measures of optimal quality and whose future is about the creation, aggregation and curation of online, real-time information, guidance, tools, documentation, etc., the future is more likely to be theirs.
As to whether or not customers will be winners in consequence, that might be another question.