Digitisis, Part Three: Expedition and Erudition
The major strategic shift of the past two decades in professional publishing is the decline of the historical duopoly. Lawyers never really wanted to deal with more than a few reliable tradesmen (typically Butterworth and Sweets as was in the UK) and the owners of the primary sources certainly didn’t want just anyone playing with their gems of wisdom. This supply-side duopoly propped up Lexis and Thomson/West in the UK for many decades. It coincidentally conferred on them financial supremacy: deeper pockets than the rest. Pockets they used to ramp up acquisition prices, R&D, front list development, etc in ways that kept others at bay quite effectively.
Now, partly though the increasing ease of access to primary sources, but more importantly due to a decline in its perceived relevance, the only real duopoly that matters is the financial one. To litigators, primary sources such as cases are of course the life blood of their competence, but the driver in law is transactions now (and increasingly specific and niched ones to boot). It’s not that erudition is declining, it just hasn’t been the dominant consideration since the early noughties. The legal IT market has also been a consistent growth sector especially throughout the recent recessions. This category of spend, proves time and again that law firms invest in the expedition of business, not the ‘polishing’ of, or erudition of their talent. This is not the disruptive technology theory of some futurists, however. The technologies that stick are entirely supportive of legal services development. Law firms were late arrivals at the enterprise software trough, but they have been enthusiastic participants and have spawned a good range of specialists to help them. There’s nothing revolutionary in this at all. Spend on legal IT solutions in the UK over the period 1995 to 2013 has risen from 12.4% of the market overall to 17.2%. Solid growth, but not the biggest market change. The Practical Law Company will this year be about the size of the whole legal IT market was in 1995. They are a much bigger business than the whole of the Elite group in the UK. That PLC captured this market while others dozed is to their credit; but it was always there for the taking.
The Cure for Digitisis
PLC was a team which never suffered from digitisis. They were always a child of the future. They thought digitally; they designed digitally, they sold and delivered digitally. It was no big deal. They took erudition for granted; it was a recruitment issue, nothing more. They delivered expedition for busy commercial law teams. They did so with or without the permission of librarians or other gatekeepers. Partners recognised it and wanted it. GCs loved it and specified it. So what was it about PLC?
Yes, PLC‘s content is all delivered online and for the most part always has been. But that’s not why it’s so relevant to clients – they just expect that anyway.
Yes, their ‘magazine’ is high profile and well respected. But they never were a magazine company.
Yes, they produced precedents and template documents aplenty: the practical stuff lawyers use daily. But so did Sweets’ Common Law Library, Lexis’ EF&P, the old FT Law’s Encyclopaedia etc and many, many more.
Yes, they did vanity publishing directories to make the link between private practice and GCs. But so did Chambers, Euromoney, Legal500, and LBR; ‘vanity publishing’ was not their forte.
Yes, they employed highly paid and experienced ‘refugees’ from practice. But so did BNA, CCH in their tax and legal titles, and Butterworths was also full of former practitioners in editorial roles. The margins of difference and emphasis are small but highly significant here; PLC simply did it better for longer.
With so many constituent parts of PLC‘s services already in their own shop windows already, how on earth did legal publishers decide that ‘they (PLC) weren’t publishers’? Clients didn’t give a hoot; or to be more precise, the end users didn’t give a hoot. Librarians love abstruse categorisations and often agreed that PLC really didn’t fit the boxes designed by Sweet & Maxwell and Butterworths, and yet front line partners and in-company counsel bought the PLC service whether librarians ‘allowed’ them to or not.
PLC was founded by two practitioners who saw the gap between what publishers offered and what practitioners needed. They were also lucky that that gap was only going to be driven wider and wider by the publishers. PLC were not rule bound by publishing processes, they were lawyers. PLC was just focused on how lawyers really worked. They understood professional support lawyer roles and other issues that librarians simply didn’t allow the traditional publishers access to. And they had a ‘non-of-the-above’ vote of confidence from the end user that is the envy of every large company; in particular not being Lexis was a major plus in the UK.
They were also well led. Having seen many firms where senior management spend 80% of their effort staying in place and less than 20% doing their job, this team which had that balance right – namely 99% focus on doing the job, and the position takes care of itself. Rob and Chris kept that focus from 10-20-200-500-750 staff; a rare achievement in any market. In 1995 PLC’s turnover in the UK was around £115k. In 2012 the group’s revenues were £66m (north of $100m) up 24.8% and still motoring very profitably. The point is they didn’t just put their tanks on Lexis’ lawn, they drove right through the kitchen, living room and built a new house in the sun. PLC is the solution of choice for all commercial transaction support work among major law firms and GCs; end of.
What did PLC get right?
PLC understood transaction lawyers, they ‘got’ what practice support lawyers did all day. These distinctions were often too arcane for most publishers, especially those blinded by digitisis. Even when they saw them, they didn’t appreciate the significance of them; they couldn’t. Denial takes a long, long time to move through anger to negotiation.
PLC saw that deal makers needed documents up quicker, better and requiring fewer drafts; there is always some pride in a law firm’s perfect precedent, but there is much more pride in the speeded up deal. They needed support for transaction lawyers likely to face esoteric nuances, so PLC’s maintained documents did just that. They needed ‘in-the-cab’ or ‘in-the-lift’ style summaries of bang-up-to-date legal technicalities designed for negotiators on the hoof: Practice Notes and Briefings did just that. Negotiators could agree to start with the PLC precedent, knowing they could rely on its veracity, quality, and get through the boilerplate issues quickly. PLC’s suite had many components of ‘publishing-style’ materials, but the net effect was an outsourced support service. They were as much outsourcer as publisher, as much a quality mark as an outsourcer. They experimented with automating every aspect of the service that would lend itself to it – as outsourcers always do. They not only maintained their precedent bank on a current basis instead of the traditional publishers getting some barristers to check it over again every two years; they maintained it with partner level authors. They were the first to offer PSLs in firms the facility to call for advice about drafting points on current issues, a service which is still growing and as much to do with outsourcing as publishing. No doubt there is much more to come in their new home too, but they are frankly streets ahead of even the one or two direct copycats now in play.
So Be Careful Who You Listen To
Pats on the backs, bonuses and more are currently being doled out among legal publishers for achieving eBook status on some front and even back list titles. Yeay! But it’s not enough; not even close.
Arguments about whether 25/55/75% of your revenue still comes from ‘legacy’ ie old/paper formats are irrelevant now. If you are not over 80% online, and genuinely online, you are already relegated to nice-to-have or boutique status; fine as far as it goes, but not mainstream.
So get back to basics. It’s not the format, it’s not the author, it’s not the document type – it’s who relies on you for what. Get that clear and redesign and realign the components you can manage, and you can get back in the game. Meanwhile, the lawyers who are spending cash, are spending it in ever larger tranches outside the solutions traditional ‘publishers’ offer. The 2013 legal information services market is £1.4bn and growing; just not where it used to. The trouble is that what works in the States is not necessarily what works best in the UK or Australia. What worked in academic, technical or scientific publishing – some of whom hit these issues earlier – is not necessarily what will work best here, either. Medics are no help. Dotcom refugees, data warehousers and credit firms think they have all the answers, but they don’t. Ask big firms, small firms, GCs, government, judges and accountants what’s needed and you’ll get very different answers. Tricky, isn’t it? But that’s also where the fun lies.
[This is the third of three entries on the legal publishing industry’s “digitisis.” Here are the links to Part One and Part Two.]
I’ve found the Digitisis posts very interesting. Indeed, PLC read the economic signs correctly, i.e., law firms wanted to cut costs. Librarians and libraries are becoming redundant as part of the cost cutting scheme in order to keep costs in line; outsourcing not offshoring would be the better bet hence a company like PLC. Which brings me to the point that hasn’t been been mentioned in the post. How much of a role if any does national loyalty play in a company like PLC’s success? As I’ve mentioned outsourcing not offshoring.
Whether consciously or not there has been no mention that Reed Elsevier owns Lexis (RE is a British/Dutch conglomerate); however, emphasis has been laid on Lexis owning Butterworths. You stated: “The trouble is that what works in the States is not necessarily what works best in the UK or Australia.” I’m aware that the head offices of both parties in the duopoly are located in the U.S. How does the perception of ownership play a role in how customers choose which company they are going to support? In other words, is national loyalty playing any part in any of this?
Many thanks Verna
International branding is a complex and subtle area. For a while recently the Lexis team in the UK actually ran with possibly the longest corporate brand in history, namely Lexis-Nexis-Butterworth-Tolley-IRS-Eclipse. Notably absent was the Reed Elsevier parentage. Ironically the fee paying users would also not have recognised many of this schrapnel on the headed notepaper, but knew brands like Halsbury or All England instead.
Before a decade or more as PLCs non-exec, I was the UK negotiator for Wolters Kluwer in the UK during the abortive merger discussions in the late 90s. It was a thankless task, but it did involve mapping (and quantifying) every single legal publishing brand in the UK at the time from book title to global corporate. What was clear was that clients had some loyalty to title brands, but precious little to the corporate brands. The UK’s OFT made much of this, while the EU competition team ignored it, taking an exclusively supply-side view of the competitive landscape. Putting this another way, global branding was irrelevant largely in a demand side analysis – end users want empathy and practicality in their tools, no more. At the time the ‘Lexis’ brand was frankly rather toxic as the years of clunky terminals had done them no real good at all and the Reed and Elsevier brands were irrelevant to lawyers.
In the UK successful inroads by ‘foreign’ brands have been made. CCH in the tax field almost exclusively did well head to head with Butterworths, although culturally this was an Australian expeditionary force, not a Minnesota one. Similar attempts in this field by Francis LeFebvre have been less successful, although Indicator (another low countries team) may revive their fortunes. Perhaps it is worth noting that these are in the accountancy client fields where client loyalty is notoriously fickle and price driven.
While Bloomberg made strong inroads even in Reuters’ heartland, this was not so in legal publishing, and even BNA and some other US brands singularly failed to make any presence felt in the 51st state.
This is not, however, due to any inherent prejudice against foreign brands, but rather that the scope for innovation within the crowded legal market is limited and the quality of indigenous entrepreneurs high. BNA could have come up with the PLC formula, as could CCH, but neither did. The central theme of the Digitisis piece explains my take on why this could be so.
That the duopoly remains and co-incidentally is managed by two US conglomerates still means very little to busy practice support lawyers or budget pressed GCs (in a demand-side competitive landscape). Outsourcing the parochial know-how was never a serious option and the trend currently is more toward on-shoring in this regard, but essentially primary sources are becoming more freely available, support staff powered by PLC are better at getting front line negotiators up to speed than librarians ever could be and GCs preach penury but practice recruitment.
For now the Thomson team in the UK have the upper hand and a much more diverse position from which to drive forward. Lexis are heads down in the trenches. The profession cares little and GCs are increasingly doing it for themselves in any event. If anything the Big brands are more likely to have negative connotations than positive ones and this is creating a climate which favours the entrepreneurs.
David, thanks for this insightful clarification.