The day is not far off when the providers of free legal information services will be able to match the services provided by Lexis, Westlaw and Wolters Kluwer.
There was a time when I would have said that this was not possible. My belief was based on the idea that the free services would always be playing catch up to a moving target, as the major legal publishers continued to enhance their products with high quality content and product innovation.
The scenario that makes the seemingly impossible possible is the “attack” on all things “Editorial” in the major legal publishing houses and with it, the lessening of their ability to provide the enhancements necessary to continue to differentiate their content from that offered by the free services in the market for legal information. (I use the word “attack” for effect, not having yet found a less inflammatory word that describes that the scale of the cut backs in the editorial departments of the big three companies).
With the reduction in editorial staffing and with it, editorial enhancements, one can see the day coming when the free services are able to challenge the major legal publishers. This can be easily be done by combining secondary and primary content in similar manner to the major legal publishers.
In Canada, for example, this can be accomplished by alliances between the smaller commercial and academic publishers with LexUM and/or CANLII. LexUM in particular could transform the Canadian market by licensing or acquiring secondary content from smaller commercial legal publishers such as Wilson & LaFleur, Emond Montgomery and/or Irwin Law, and mounting the secondary content on LexUM with direct links to the primary data available through CANLII.
Real competition and real pressure to cut costs
Real competition in the market place combined with real pressure by the consumers of legal information to reduce their spending, has transformed what was comparatively easy business to make money into an industry struggling to maintain profit margins.
Revenues are declining, caused by fewer subscribers paying less for service, as customers chose one product over an another rather than buy competing services. With profit margins threatened by these developments, cost cutting has become the order of the day. From reports from various sources, it appears that this is being done primarily at the expense of Editorial, the traditional “engine of real growth” in the legal publishing industry.
Automating data processing and using search engines
Automating data processing and using search engines to create value added features is a great equalizer. Anything that an automated process can do for the commercial publishers can be equally well done for the free services. The end result is that any product enhancements resulting from such processes will be the same from every data source – anything you can do, a free service can do just as well if not better.
Primary data is the most amenable to automated processes. However, when the data is the same from every source, the only differentiation that will remain is retro data, a deficiency that can be easily remedied by the free services with a few government grants.
Scaling back Editorial
The second option being pursued is cutting staff. Specifically editorial staff. The contribution of editorial to legal publishing has always been underestimated and undervalued by corporate owners. Editorial built the business and established the standards on which the reputations of the major legal publishing houses are based.
Cutting some editorial staff is necessary but, if not done with an eye to the future, can result in the dumbing down of content and the loss of the competitive advantage that the commercial services presently have over the free services. Restructuring thoughtfully for the future needs to be at the heart of any process that reduces editorial staff if the objective is to strengthen the companies.
The major legal publishers won their leading positions in the market for legal information by providing high quality editorial enhancements over many decades. These editorial enhancements were provided in both good years and in bad. Early in my professional career, the quality of the product really did matter as much as the profit margins.
The editorial enhancements were provided by in house editors and/or freelance editors trained by the legal publishers who exercised their skills on both primary and secondary content. The work done in writing headnotes and preparing case and statute citations is irreplaceable. These require the application of the human intelligence to deliver an acceptable outcome. Cases need to be summarized in context. Incomplete and inaccurate references in judgments and texts need to be identified and expanded or corrected.
“Editorial” was also largely responsible for the key product development initiatives that drove growth. The loss is not restricted to primary content. New titles and new editions of secondary works require intensive editorial work that cannot be replaced by automated processes. The option available to the major legal publishers is to publish less, creating the opportunity for smaller publishing houses to take their place. Stripped of trained editorial staff, the major legal publishers will come to have little to differentiate themselves from the free services.
The hard won advantage that today’s major legal publishers have acquired over many years can be lost.
The history of legal publishing is characterized by the rise and fall of legal publishing houses. It has happened before and it can happen again. In Canada, Canada Law Book was partly supplanted by Burroughs, which in turn was absorbed by Carswell. It is not inevitable that the current big three continue to dominate their markets. If they make the wrong choices in difficult times, they will not.
Advantage Lost, Advantage Won Again
In the recent past, the proprietor of a publishing house would sell off a business that could no longer meet its revenue and profit margin requirements, or when the proprietor no longer believed in its potential. The examples of this practice are too numerous to mention. Most recently, think of newspaper ownership.
In the current climate, however, there are not many potential buyers. Bloomberg BNA is the one of the few with its ambition equal to its resources. In addition to having a differentiated pricing model, Bloomberg BNA believes in the potential of the legal information business. If not true, the rumours that is of the sale of Westlaw to Bloomberg BNA as reported by Sean Hocking on practicelaw.org, they should be.
One certainty is that continuous editorial downsizing can only lessen further the value of all three major legal publishers if and when a business is sold or wound up. The editorial advantage won over many years can be lost. In the hands of the right owner, it can be won again.