The End of Legal Publishing?
It’s not hard to find those who argue that the end is nigh for legal and professional information publishing. The security and strength of “need to know” and “have to have” information appears to have diminished, with content seeming to be down to “prince” or an even more lowly status in the monarchical hierarchy. Those who argue in those directions do so effectively, showing how the Internet, changing profitability and competitive models and the shift in favour of workflow solutions render the publishing component no longer core. Informed commentators see the current fortunes of the main professional publishers, currently achieving 3% growth p.a. as being on a downward and unacceptable slide, the view being expressed frequently and in many ways that the game is up for those who have done well in the past. Some of the recent legal publishing initiatives and partnerships as well as expansion, through further acquisition, into new geographical markets notwithstanding, they suggest that the current owners of these companies have decided that legal publishing isn’t the business they want to be in or that they have lost faith in or their ability to create the prospect of legal information as a source of growth. The opinion expressed is that they are likely to be seeking a means of easing out of legal publishing sector altogether.
Not surprisingly, I both hope and believe that this is not the case and that we should avoid the risk of confusing delivery media, i.e. the inevitable shift away from paper and print, with the business of supplying complex, structured source and added-value content, increasingly together with documentation, workflow tools, software and other processes. As far as the content component is concerned, I think that an obsession with the medium is pointless, whereas questions of optimum quality, context, suitability and relevance change only by degree. Naturally, nothing remains the same as it was and the ways in which practitioners, students, compliance people and others want to receive and use information evolves constantly. However, it is the job of the expert publisher to understand, drive and respond to change. More likely is the shift in the balance of power as among the giants that presently dominate the global markets and the reduction of existing influences of the current market leaders, in favour of newer entrants, large and small.
I struggle to imagine a scenario, certainly in the foreseeable future, when the need for professional advisers will no longer exist. If I am correct, what will continue to distinguish the excellent from the mediocre or worse, will be the brilliance of the former, which is gained and maintained, in large part from the expert content that they are able to acquire and exploit. To that extent, the information provider, almost literally, offers the practitioner a most valuable license to advise and invoice clients. Obviously, the sources of such content and the suppliers of it are entirely capable of changing, as has always been the case but the need for it remains. Therefore, it matters not who supplies it and how, so long as it is capable of being supplied. The issue then becomes one of fairly simple arithmetic, as to who wants to provide content and how to continue to do so at some level of profitability. If they cannot do it profitably, then I would question their competence in a market where quality, engagement and commitment are generously rewarded by supportive users.
However naïve the view, I don’t see professional information publishing going the way of other industry sectors that rise and terminally fall on technology changes or, worse, fashion. It’s does not have to be like video rental stores, where the consumer desire for entertainment was seen as subordinate to the delivery medium. People continue to want to be entertained but the store became irrelevant. With professional information, who knows how it will be consumed in the future and who cares, so long as professional advice is required by paying clients.
It appears to be the case that needs are indeed expressed in changing ways. Whereas in the past, the professional publisher profited from its ability exclusively to provide detailed analysis of the law and other sources, increasingly there is a need for packaged solutions and processes, where answers are sought without the detail of the “whys” and “hows”. However, one might see this as more of an opportunity than a problem as markets have broadened to embrace both the small number of experts and a wide range of compliance officers of one kind and another.
It seems to me to be entirely legitimate for commercial publishers to want to optimise their profits for the short and long term and that it is appropriate for them to manage technology, content, pricing formulae and customer relations in ways that deliver their corporate objectives. If they get the balance among the conflicting priorities wrong, chances are that their customers will not tolerate them and their futures will be determined. I see no problem in publishers seeking to take out cost, as part of the electronic evolution process, without necessarily passing this back entirely to customers who are paying for the perceived value of the content rather than the weight of the paper. At the same time, competitive pressures ought to be such that greed and excess are measurable and therefore punished.
Rather than a time of gloom and negativity, the picture for those who serve legal and professional information markets should be bright, with ever more opportunities and services that are reasonably defined as “publishing” coming into the mix. The focus on workflow allows the publisher to understand every part of the customer’s processes and tasks and, with a knowledge of those aspects which depend on information and low, medium and high level expertise, to intervene at every possible point to aid the customer. Often I have spoken to people who serve professional advisers with services such as process software and documentation, document management, help-lines and consultancy services, who do not see themselves as being in publishing or as part of the same mix as their more obvious publishing colleagues. I do see this as a mistake, when they all have in common the same customer base and. often, the same customers’ clients in their long sights.
So, maybe it is the case that some large publishing company owners want out, if they think they can secure greater profits elsewhere but that is fine. I have no doubt that there are many others who are more than ready and able to take their places and to thrive. A few individual publishing people might appear somewhat brain dead but legal publishing is not and will survive them happily.
There is a need for electronic law journals of high quality. Formal print law journals have the serious weakness of their publication processes taking much too long. But the existing electronic journals of the “blog” nature are too informal and too often aimed at being entertaining rather than providing in-depth legal education, debate, and information. What is needed is the rigour, formality and in-depth quality of print law journal publications, but with the speed of electronic publication.
An author worries that his/her ideas will appear in, and therefore be “stolen” by an electronic publication while they await publication in print. A piece of serious writing won’t be treated seriously if it is not in serious company. By “serious” I include the academic honesty of respecting, according, and providing express due references to one’s sources. Also, electronic publication does not yet allow footnotes and appendices, which are an important part of in-depth legal writing.
The professional labour cost for editors of such a professional, electronic, in-depth law journal can be high. But with good management, and treating the prestige of editorship as payment, and not having to print, publish, and advertise on paper, collectively should provide the savings necessary to “breaking even,” and later making a profit. — Ken Chasse, Toronto
Many thanks, Dr, Chasse, for your comments.
For my part, I would be both surprised and disappointed to see any significant diminution in the volume of legal publishing that is undertaken but I would be surprised if the pace of change in formats and methods of communication, perhaps with, to some extent, a reduction in the amount of scholarly publishing, are not likely outcomes. At the same time, I would hope that where the need to ensure certain levels of profitability might deter some larger publishers, others will happily fill their places. This was very much in my mind when I wrote my Slaw column “Not All Animals are Equal”
http://www.slaw.ca/2012/05/10/not-all-animals-are-equal/.
I hope to argue in my next Slaw article, looking at the need for publishing joint ventures and partnerships, that one might envisage a not too distant future in which professional publishing is not a business in its own right but a departmental function within larger media entities that simply wish to maintain relationships with and profits from certain market sectors, such as lawyers. I would find this fairly depressing, if not surprising.
I wonder how right or wrong I shall be proved in how I see the future as opined in “Only a Fool Would Make Predictions – Especially About the Future”?
http://www.slaw.ca/2011/07/11/%E2%80%9Conly-a-fool-would-make-predictions%E2%80%94especially-about-the-future%E2%80%9D/
Interesting timing coincidence and meeting of minds as Ian Whittaker at Liberum Capital has produced a research report suggesting that Reed Elsevier should be broken up or, as Plan B, they should sell Lexis Nexis. He would see Bloomberg as a potential buyer for Reed’s business if it wanted to build scale. Reed’s legal publishing business is in a strong number two position in the market. If Bloomberg did want to expand its presence in the law market – which it has given indication that it wants to do – then buying Reed’s assets would be a very quick and effective way of building its presence. Liberum sees price between £1.3bn and £5bn.
Robert
You really shouldn’t take the comments of a backroom wonk too seriously. Whittaker is being deliberately provocative, but mistaking a peculiar headache in Lexis in the UK with various (often VC led) bubbles is mischievous at best and disingenuous at worst. legal information services is in rude health.
LexisUK is suffering from ‘snap-back’. You’ll have seen it several times in CCH UK too over the years where repeated attempts to arrest falling deferred income failed and redundancies never achieved the desired effect either in time or scale. The issue is unique to Lexis in the UK, and only part of it relates to their legacy of ‘furniture publishing’. The UK government cutting back over £30m in library costs didn’t help, but paying too much for under-performing acquisitions (again) distracted them, while flooding the ranks of middle management with bright outsiders was never going to do anything other than ramp up complexity costs.
The market facts are simpler. The legal services information market is growing faster than the economy still, and the proportion of spend by lawyers on information services is if anything slightly higher than it was 20 years ago. The shape of the spend has changed significantly, and while you are right to point to firms like Practical Law as exemplars, the lessons from the likes of Bloomsbury are different. The old duopoly is dead – it is no longer a slugging match in the UK between Thomson and Reed alone, but they still retain strong leadership positions. Lexis’s profit contribution to the group disappearing in 2010 was highlighted by us then, and predicted before then for what it’s worth, but the £1.3bn information services market overall has not been materially affected by Lexis’ malaise. That it gives a few small opportunists like Bloomsbury wriggle room is interesting, but that is not where the innovation lies. Good luck to Martin, but why anyone would want to play in the UK tax annuals market where buyer power is aggressively deployed, where end users genuinely know the value of nothing, and where any and all innovations are replicated, discounted and undermined within weeks is beyond me. LeFebrve has just merged with the Indicator team as even they found the UK tax market a fundamentally unattractive backwater. There are many much more attractive niches within professional publishing – interestingly Not around the VC hot spots of on-line documents and so-called disruptive technologies.
Have a look at my piece on Lexis’ accounts to see what their problem is,
http://www.rbponline.co.uk/blogview.asp?id=91
but bear in mind that Ian (an above average media analyst for what its worth) is probably musing on strategy shifts within Sky newspapers and frustrated at a perceived lack of vision within one of the old reliables of dividend streams in the past (Reed). We will all be much happier when professional publishing can go back to being out of the lime light, quietly kicking in 35%+ returns on the back of a growth industry.
Kind regards
d
Thanks David
I don’t really get metaphor very well but I suspect that where we might agree is that among the areas that have brought about some of the decline in profits, reputation and prospects are issues of management itself, to which you alluded. I suggest that areas such as general management, customer service and market intimacy are relevant factors. When these are in good shape, good things happen. For example, my own experience of CCH UK in the period 2002-2009 was one of modest sales growth and very respectable profit growth, that had been preceded by relentless losses and decline. Managing the product and knowing the market had a lot to do with it. I set up Lefebvre’s FL Memo in the UK and, in my personal opinion, not enough was done to understand the UK market, all the focus being on creating a formulaic product.
What I am suggesting is that there is real money to be made and growth achieved where there is commitment to the market and some real professional publishing expertise applied.
As to Ian Whittaker at Liberum Capital, I believe his view is that, funnily enough, he doesn’t think you are necessarily a million miles away. Yes, he may be probably more negative on the industry generally (just because of legal numbers declining/firms cutting costs/outsourcing of lawyers etc. rather than he thinks law firms are suddenly going to decide they don’t need information nor switch to a Google style product) but more that the old duopoly that drove profits is dead. The fact that margins have collapsed for Lexis so much in so short a time – and on not too dramatic falls in revenue – plus no recovery any time soon, suggests Lexis won’t get back to the previous margins: but that doesn’t mean other players cannot prosper.
I think we agree that the end of legal publishing has not occurred.
Interesting. Legal numbers are not declining. Law firms may be cutting some costs, but they are spending at least as much if not more on legal information services than ever, especially through the recent recession(s). Outsourcing is finding its level, but one, frankly, that is a small fraction of the hype and statistically not material yet, or even likely to be soon. Rumours of death or even illness are very premature. Legal information services are in rude health.
Glad to see that you are too – refreshing to know you are still kicking the tyres and lighting the fires.
I’m just thinking out loud. There has been much speculation as to which or who would buy over LexisNexis should it be sold and it’s all Americacentric that I’m going to speculate that Torstar Media might be added to the list. Farfetched?
Many thanks.
Interesting but I’d have my doubts.
In the unlikely event that it should ever happen, I’d be surprised if it were not some version of the Bloomberg/Thomson Reuters/Wolters Kluwer axis or, of course, venture capitalists.
However, perhaps as much for entertainment, on that very point, see:
http://www.teknoids.net/content/hypothetical-who-would-be-best-owner-lexisnexis
As someone who has been involved at the ‘sharp end’, both in tax publishing and tax consultancy, for over 25 years I would submit that most research can be completed via internet providers, but that most people still want a paper product as a book on their professional bookshelf.
I have worked for what was Tolley Publishing during a period when it was owned by different organisations – Benn Brothers, who were benevolent owners, United News & Media and then Butterworths who are owned by Reed Elsevier. I became a freelance over 10 years ago.
What is quite clear is that those who work in the editorial function in professional publishing are unhappy about the evolution of their function in the publishing profession. Some are commencing small individual publishing operations, and if I were younger I would do the same.
Thanks, John, for your comments and the benefit of your experience.
Like you, it’s hard not to be intrigued by the missed opportunities that one encounters. I think that this is what makes some of the smaller publishers, perhaps like Bloomsbury Professional, Hart Publishing or Juris Publishing, look so heroic, particularly when we know how difficult it is to succeed.
A problem, though, again citing the draft of my next Slaw article, can be that one sees some of the more traditionally-minded entrants not knowing how to evolve, not being capable of understanding processes and technical elements and being hostile to change. This is particularly the case in fear-inducing territory for some people with editorial backgrounds, where it is thought better occasionally to avoid technical and other innovation than find ways to exploit it.
Small, clever, innovative, very customer-focused and extremely market-sensitive is a different matter, though. They do represent at least part of the future.
I was extremely interested and grateful to receive the following observations from an industry insider who has been following these exchanges:
“In my experience, too often the ‘electronic evolution’ is increasing
cost, rather than eliminating it. When electronic publishing was
shiny and new (not that many years ago) inevitably the investment
costs were uncertain and substantial, but times have changed; when
$500 buys a home computer with a level of sophistication that even ten
years ago would have been science fiction, how come some large
corporations are not reaping similar technology benefits?
Thanks to fixed costs that don’t disappear within the business, we are
not surprised to see internal cross-charging at much higher rates that
can be achieved from high-quality external providers. But perhaps we
should be? Thanks to a combination of internal politics and
bureaucracy, some internal charging rates are so excessive that they
bear no relation to the actual costs incurred with the result that
potential savings are not passed onto local business units, let alone
to customers. Technical developers in the developing world are
employed to replace their domestic counterparts at a fraction of the
salaries, but language, culture and time zone differences means they
take two and three times as long to do the same work, eliminating any
true cost saving benefit to be passed down the line.
One wonders if the benefits of centralisation and off-shoring have
been fully understood?
The same applies to workflow solutions. Certainly the message has been
received loud and clear, but by whom? I suppose we should be grateful
that existing management, with their extensive print publishing
backgrounds, are, in their own minds, more than willing and able to
understand and develop such technology services, which relieves us of
the cost of hiring expensive experts into senior positions.
The result: there are clearly significant opportunities for small and
agile companies to give their larger competitors a bloody nose.
Interesting to read the comments on Reed Elsevier. However, Bloomberg
are clearly a flash in the pan and in no way a threat to established
legal publishers renowned for their agility and dynamism…
Another of the key competitors continues to toil under the burden of
an ill-judged acquisition a few years back. Whilst its professional
divisions continue to grow well they are hobbled by a finance division
which is, in every sense, the poor relation of the market leader. The
professional divisions are on starvation rations to persuade the stock
market that aggressive cost cutting demonstrates excellent management
and more than compensates for poor performance elsewhere; puzzlingly
the markets have been slow to understand the brilliance of this
position.
News Corps’ recent announcement that it was to split its fast-growing
media business from its less-than-alluring publishing and newspaper
business was greeted by a five year high for the stock price. Are the
people who sold Murdoch The Times watching?”
What strikes me again and again in reading such comments is not a wish to look backwards to some non-existent and idealised world when things were supposedly better but rather to hope for sanity and common sense in dealing with the present and future. I also find the News Corporation reference to be an interesting one.
Don’t you think the current economic turmoil has something to do with the (not so huge) decline in revenues for the legal publishers ?
Thanks Mr. Broadshaw
Fair question and it would a foolish person who would suggest that the current climate had no negative impact.
That said, legal publishing and the target markets are not like consumer ones are are more resilient to difficult times if the publisher is competent and well-positioned, with a commitment to high added value products and services.
I hold the view, pretty strongly, that the purpose of the legal and professional publisher is not simply to sell books, other publications or content in its various media but to make it clear to advisers that spending money is a genuine investment in professional practice.
More easily said than done, the publisher has to be capable of knowing how to deliver the sort of information and workflow tools that allow the professional adviser to improve the quality and effectiveness of advice, the benefits of which should translate directly to billing opportunities..
A couple of issues:
— Even in these sophisticated times, publishers, wrongly, are still inclined to sell their wares on features rather than benefits, allowing customers to measure weight rather than value to the firm.
— Legal publishing’s historical high margins have been largely based on customers’ willingness to pay for added value, where they see the benefits in terms of additional profit. However, increasingly law publishers are offering lower value services that help achieve back-office savings rather than revenue growth. This is simply less attractive.
— There is pressure and a trend towards delivering answers, however impossible, rather than the capability to apply professional expertise that distinguishes one adviser from another. There is little value in providing tools and solutions that allow everyone to offer up the same answers.
Tough times are part of the issue but I have witnessed too many self-inflicted wounds to believe they are the key factor.