Tuesday, February 22, 2011

Centralized Licensing as a Risk Management Strategy

In talking to large and midsize law firm colleagues, I am somewhat amazed at the level of decentralization that is supported and sometimes mandated by the larger firm organization.

There are obvious benefits in having local staff available for “high touch” projects and to provide special expertise in supporting practice and jurisdictional research. But the cost control and risk management implications of remaining totally decentralized cannot be ignored.

As law firm mergers increase in frequency and size, and as law firms expand their footprints across the country and around the world, librarians may be the only professionals in the organization focused on the magnitude of the copyright and licensing risks facing a firm if they do not review, combine, resize and renegotiate their licenses to fit the workflow and access needs of the lawyers they support.

Librarians are acutely aware of the $20 million dollar judgment against Legg Mason which arose from a misguided attempt by an administrative department (not the library) to save money by purchasing a single license to a newsletter and then posting it on the organization’s intranet for wider consumption. Lowry's Reports, Inc. v. Legg Mason, Inc., 271 F. Supp 2d 737; retrial denied Lowry's Reports, Inc. v. Legg Mason, Inc. 302 F Supp 2d 455.

As the Internet has expanded and the risks of piracy and misappropriation have grown, publishers have crafted licenses with increasingly restrictive language. By squeezing out all risk to the publisher these un-negotiated licenses almost squeeze out all value to the subscriber.

If a firm has three offices and three separate, geographically restricted licenses, this does not equal a firmwide license. A lawyer in California may not have the right to share digital content with a lawyer in NY who is under a separate license for the same content.

Centralized licensing does trigger the benefits of “economies of scale” for the pricing for most digital resources. A firmwide license can be negotiated to provide one click access via IP recognition at a lower cost. Conversely, the “law of increased overhead” also applies to the de-centralized approach. Not only do you pay more for less access to content, you pay for the additional management and staff time that must be invested in negotiating multiple licenses, managing passwords for individual users, and addressing needs of lawyers who are denied access to resources.

There are also strategies for negotiating limited firmwide licenses. After assessing the needs of a user group, the benefits of a full firmwide license (IP recognition) can be achieved by negotiating for a “simultaneous user license.” This eliminates the risk of password sharing and the overhead of password management, by simply limiting the number of people who can access a resource simultaneously. This works well for specialized resources that have a low volume of use but which are needed in multiple offices.

Products like Onelog, Research Manager and Lookup Precision can also provide a powerful management tool for, restricting unauthorized access while also managing individual passwords and measuring the volume of use of both small and firmwide licenses. Reports from these services can provide important leverage license renewal negotiations.

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