In Canada and elsewhere, we have seen a seemingly endless series of reorganizations in the multinational legal publishing houses. The pattern is one characterized by the acquisition of smaller legal publishing houses, followed by serial changes in their reporting lines, and ending with their disappearance altogether, as old established brands are dropped and replaced by the corporate brand. These changes are attempts to conceal a sad truth – that “global legal publishing” has proven to be a bit of a bust. Was it a bad business idea in the first place, or merely a good idea that was overwhelmed by unforeseen developments. The Canadian experience may provide a few insights into the matter.
Limited opportunities for growth
Global Legal Publishing always had limited opportunities for growth. The practice of law is primarily domestic. If a matter arises in another jurisdiction, the general practice is to obtain the services of a lawyer in that jurisdiction to advise and handle the matter. In Canada, lawyers rarely research the law in another province let alone in other country.
The use of legal information from other jurisdictions is primarily a leftover from failed empires. Canada was one of only a handful of countries where British legal publications were used on any scale. Butterworths and Sweet and Maxwell were the primary sources of this information and had created a sales network to maximize revenue from the sale of English common-law publications in the common law provinces of Canada. Juris Classeur played a similar role in selling civil law publications in Quebec.
As well, there was some demand for legal information from the United States, most notably in commercial law subjects, but also cases dealing with human rights in the early years after the Charter of Rights and Freedoms took effect.
Unfortunately, the demand for this international information in Canada had peaked by the time that Thomson, Reed Elsevier and Walters Kluwer determined that there was a great future in global legal publishing. For whatever reasons, the multinationals were blind to this fact.
Legal publishing was a small business then and remains a small business today.
Why legal publishing?
The strategy to acquire legal publishing houses was based on the view that these businesses were exempt from market fluctuations because they sold essential products with to a profession dependant on access to current and authoritative legal information.
As important as the dependant relationship with the legal profession was the belief that there were virtually no limits to the potential for growth in legal publishing. Synergies in the form of transferring publishing concepts from one market to another to grow the business in each country, as well as the leadership and direction that would be provided by the multinational, were seen as ensuring that these companies would flourish and grow when acquired and consolidated into international publishing groups.
Another source of the growth was the opportunity provided by the digital revolution and the belief that the creation of national and global databases of legal information by migrating data from hard copy would be a bonanza for legal publishers. Global platforms would be built to meet what would prove to be the perceived demand for international legal information.
As it happened, the digital future did not unfold as expected.
The Digital Future
The belief in the digital future was absolute and all pervasive. In the corporate boardrooms, everyone was an expert and definitive on all matters digital, even as the ground was shifting underfoot. For a time, technology was “god”, as everyone raced to absorb and restate the techno-babble spouted by these new masters of the world of legal publishing. In fact, no one really knew what was coming.
Missing was a realistic plan to transition from print to digital. Missing was any understanding of the pace of change and any accurate projection of future demand. Outsourcing was the answer for all issues related to costs. In a small market such as Canada, the business model for print was always fragile. In the online world, the business model was fictitious.
No one foresaw the rise of free services and the loss of the commercial publishers’ control of the profitable business of recycling court decisions. No one foresaw the downward impact on prices the head to head competition between Lexis Nexis and Thomson after Lexis acquired Quicklaw and Carswell was linked to Westlaw. No one foresaw the collapse of subscriptions to loose-leaf services that accompanied the relentless price increases intended to shore up multinational demands for top line and bottomline growth while waiting for the digital pay off which never seems to come.
Global Publishers – By Accident or By Design
In all likelihood, the multinationals pursued the idea of global legal publishing by accident rather than by design. For example Thomson acquired Carswell as part of the acquisition of a British publishing house. Reed Elsevier acquired Butterworths Canada in much the same way. If either company had used all the information available to it at the time of the acquisition it would have known the limitations to growth in print and digital formats and decided against acquiring additional legal publishing houses in legal markets other that countries with large populations such as the U.K. and the U.S.
As for synergies, Canadian legal publishers were never reluctant to steal a good idea from the United Kingdom or France, but the best ideas, the viable ideas, may already have been taken. It remains to be seen whether the current investment in practical law initiatives by Carswell Thomson and Lexis Nexis will pay off. In any event, the revenue expectations from these projects will not be met.
Is Global Legal Publishing A Bad Idea or Not?
The Plus Side. From the perspective of the consumer, the reviews are definitely mixed. On the plus side, the acquisition of Carswell by Thomson pushed Carswell into the digital age. Carswell’s large collection of law reports were digitized and are available to consumers briefly on CD ROMs and subsequently in online databases. While Carswell was experimenting with online databases at the time of its acquisition by Thomson, the real push came with the acquisition by Thomson.
The same is true with Lexis Nexis where the acquisition of Quicklaw gave that company a major presence in the market for Canadian Legal information. The product itself was dramatically improved by the expansion of the scope and quality of the data offerings, combined with new platforms for the delivery of legal information. Lost in the process, however, was the slightly erratic definitely whimsical “wild west” character of product development at Quicklaw.
Another plus for the consumer has been the dramatic drops in the prices of digital information resulting from the competition between Thomson Reuters and Lexis Nexis and the competition with the free services offered by CANLII. No one could ever have imagined Thomson Reuters and Lexis Nexis in a price war, competing with each other and with a free service.
The Downside. On the downside, the absorption of several smaller legal publishers (most notably Canada Law Book Yvon Blais) into Thomson Reuters has reduced the number of publishers actively developing new products. Competition in the industry was further weakened when Wolters Kluwer bowed out of legal publishing altogether after transferring its legal publications to Lexis Nexis.
Another downside has been the unresolved looseleaf saga whereby falling subscription numbers combined with ever escalating prices and tension with the legal research community, has put the future of some print publications at risk.
From the publishers perspective, the real issue is, of course, the lack of any real payoff from their investment in Canada. Numbers are flat or falling with no prospect of improvement. In times past, publishing houses would have sold the business. At the moment, there does not appear to be a buyer, leaving reorganization and rebranding the only option.
A good idea in theory only
In summary, Global Legal Publishing may have been a good idea at a theoretical level, but it did not prove to be one that made good business sense. Clearly no one thought it through, the numbers were never there. While no one could have foreseen the transformation that was to take place in the legal publishing industry, it always was and is a small business that, if it had been carefully nurtured and managed as a small business, could serve both the customer and publisher well. That isn’t what happened. What a waste.