The news of the demise of ROSS Intelligence appears to be a disappointing blow for some Canadian and US lawyers; beyond their jurisdictions, it has little relevance. As litigation proceeds, in the form of an antitrust claim against Thomson Reuters, alleging research monopoly, the story may not be over, and it may be for the courts to evaluate the relative merits in that particular case; others are more competent than I am to comment on both the specific facts and legalities of it. What I read, however, is that ROSS Intelligence has shut down its operations, revealing another legal information start up business which appears to have failed.
It does not surprise me at all that relatively new and innovative businesses which address the legal market fail, for whatever reason; this happens all the time. With so many start-ups and in a global Covid environment, many of the legal technology ones, it is reported, being cash poor and burning cash at too high a rate, this results in collapses and inevitable losses of related jobs. Nor am I surprised that in this particular case, a gigantic, rich and well-established market leader took legal action against the upstart, thus, at least in part, maybe contributing to bringing it down. It would be strange if it did not use its capabilities in such a way. To neglect to do so would be akin to a predator animal not acting as a predator; it is just natural; it is the way things are. On the assumption that the predator has acted in accordance with the law and can prove its allegations, why would it not use its muscle and army of professional advisers to do that for which they are paid? It is as much a part of its competitive armoury as any other of its tactics and strategies to defeat its competitors and sustain and grow market share. “Survival of the fittest”, like it or not, depends on the ability to adapt, evolve and defeat attackers. In any case, other competitors are always ready and willing to swoop in and, with expressions of teary-eyed sympathy, gleefully grab and exploit any business opportunities arising from the downfall.
What is perhaps a little surprising is that instead of reading of a business failure, the news might otherwise be of a huge, maladroit business acquiring a small, young, innovative and agile one. This might make the latter’s owners extremely rich, while the former takes the benefits of all the characteristics which are not to be found within itself, thereby using the acquisition to help evolve the acquirer from where and what it is, to where and what it wants to be. That too is frequently the way that things are and indeed the way that some young entrepreneurs and their financial backers want them to be; it is often the very reason for their existence. Frequently, we read from them of how the upstart businesses are about to overturn the status quo, but, more often than not, these are biased and untrustworthy PR statements intended to boost their standing, but without any reasoning or evidence as to how and when the anticipated revolution will happen. It might be too much to imagine that while those now-renowned technology billionaires were at university, creating their (to some) hateful monsters, their minds were on making the world a better place, more so than becoming rich, or that youths in new pop bands put musical excellence above the hope of wealth, fame and adoring and adorable young fans. Of course, most do not succeed as envisaged in their wildest dreams, but some do and, like gambling on the lottery, that near-impossible statistic is what matters. By this argument, the system failure here is in not achieving, by normal methodology, the desired outcome, namely that of a takeover.
As is the case in many other industries, the senior and established body of the legal information and technology sector is not very much a place for innovation, entrepreneurialism and fast-moving change. There is little in its history or current activity to disprove this. Lexis Nexis itself, in relative youth, was acquired from Mead Data by Reed Elsevier (now RELX); Westlaw ended up at Thomson (now Thomson Reuters) through Thomson’s acquisition of the much smaller, though long-standing, West Publishing. Almost all the other innovative sub-brands in the market are the result of comparatively small acquisitions. This includes Practical Law, Ravel, Lex Machina, Law360, FindLaw, Complinet, CaseMap, Intelligize and many more. With Fastcase and Casemaker having merged, it might be that that combination resembles an extremely juicy gazelle, as might an enlarged Law Business Media, having acquired PinHawk.
It would be incorrect and absurd to suggest that the legal information behemoths are lacking in knowledge, talent, capacity or capability to innovate from within. Indeed, it is worth reading Jason Wilson’s incisive comments on legal technology and innovation from providers at the top and lower levels. It probably, at least in part, however, explains such consolidating deals and alliances as the bringing together of and making available over 300 legal books and journals on vLex, from the American Bar Association, Emerald publishing and Wiley, the acquisition of American Maritime Cases by Lexis Nexis and the new licensing agreement between Lexis Nexis and Wasserstein’s ALM, at the same time as ALM has agreed to license its news and information content to Bloomberg Law; this contrasts with Wolters Kluwer’s divestment of its French legal notices business, Annonces & Formalités Légales. To some extent, entrepreneurial creations are achieved in environments with fewer rules and corporate distractions, established processes, committee structures and lifelong careers to protect. It might also be that their proponents are inclined to put enthusiasm for their ideas ahead of empirical research into actual customer needs, potentially creating “solutions in search of problems” scenarios, with the outcomes that are thereby achieved. In contrast, at the other end of the scale, shareholder value, short-term budgets and forecasts, centralised technology centres and global project management often serve to drive and tweak the existing machine, meaning that acquisitive, to a greater extent than organic growth, is more normal. For the innovators, their approach matches well to an environment in which venture capital funding can drive early-stage growth within a short time, prior to the rewards from acquisition. In theory, this should free up the genius young entrepreneurs to achieve unimpeded rapid expansion, by occasionally cutting corners or without being troubled too much about real-world barriers or legal, regulatory or ethical constraints, together with having to understand and carry the burden of that which has gone before.
Both optimists and cynics might take the view that, in the long run, if the innovative ideas are truly impressive and admired by markets, and their champions are massively talented and resilient, then, inevitably, they cannot be suppressed. If there are financial fortunes to be mined, logic dictates that, by one means or another, no matter what the impediments are, they will be extracted and turned into profits for someone, not least to recoup and further grow all the venture capital funding; perhaps that will be an outcome of the case in question. I find it difficult to care too much, other than for any paid employee who may lose a job; there are more important matters about which to be concerned. The 2021 Ross, Rachel and Friends reunion, for me, certainly sounds more entertaining.