Wednesday, February 22, 2012

Class Action Suit Filed Against Lexis and Westlaw for Copyright Infringement

A class action lawsuit (12 CV 1340) was filed in the Southern District of New York today by Edward White and Kenneth Elan and their respective law firms  against West Publishing  dba West and Reed Elsevier dba Lexis.I know you are thinking:  law review articles, chapters of legal treatises, a book of lawyer jokes,... poetry for lawyers...Wrong. The plaintiffs are claiming copyright in the legal briefs, including things like witness lists and jury instructions which were submitted to courts.

Lexis and Westlaw have been collecting publicly filed briefs and putting them online for years now. The plaintiffs claim that by copying the publicly filed briefs into their databases and making them searchable for a fee, Lexis and Westlaw are infringing their copyrights.

Call me a cynic but aren't  a huge chunk of the legal opinions written in this country essentially "derivative works" based on other peoples arguments and analysis? Don't judges (or their clerks) take whole paragraphs from briefs and drop them into opinions? Don't lawyer's draft briefs selecting text from judicial opinions and legal memoranda?

Is the whole system of common law precedent to be pulled from Lexis and Westlaw and put through a textual analysis to see who had the first "original expression" of various issues?

Wait I have a better idea, Lexis and Westlaw can take the plaintiff's briefs and run them through a textual analysis - the kind they use to detect plagiarism in college term papers. It will be interesting to see where the plaintiff's may have derived their briefs from.

Thanks to Patricia Barbone for tipping me off to this filing.

Wednesday, February 15, 2012

"No Soup For You!" Are Legal Publishers Using A Seinfeld Episode as a Business Strategy?

Why are legal publishers using the “Seinfeld Soupman strategy” of banishing customers who "opt out" of firmwide contracts rather than maintaining relationships on which to build future good will and market share?

Buy the t-shirt at Gil's Blog.com

Lexis, ThomsonReuters and Wolters Kluwer CCH have been edging toward increasingly desperate measures in at attempt to coerce the continuation of firmwide contracts rather than listening for the new opportunities in the marketplace.

Greg Lambert's 3 Geeks post reported several weeks ago that Westlaw will end "pay as you go" access. TR Ending Legal Pay as You Go. Lexis ended "pay as you go" access several years ago, but had allowed access by credit card until mid 2011. The Lexis "rationale" for shutting down access to Lexis by Credit Card.is "explained" in an hilariously incomprehensible posting on their website. Lexis had also stopped selling the digital  Matthew Bender treatise library in order to drive use onto the Lexis platform.  Wolter’s Kluwer stopped allowing firms to purchase individual passwords to online products several years ago in order to force everyone into more lucrative, large firmwide contracts.

Take Note Bloomberg BNA
The only major publisher who continued to provide truly customized product selections was BNA, which allowed firms to have a mix of firmwide licenses and limited user licenses for individual products based on the firm’s need. I urge Bloomberg/BNA to allow this type of custom licensing to continue for non-Bloomberg Law subscribers. (Bloomberg Law subscribers will have access to all digital BNA products without needing separate licenses.)

What’s Wrong with Half a Loaf?

Would it be so terrible for the online vendors to rethink the “firmwide” approach to "flat fee" contracts? Can no one think of an innovative middle ground?

Why not acknowledge that the market place had fundamentally changed? Cost recovery for online research is declining and budgets are tightening. As law firms get larger and the array of practice and industry groups expand, selling customized slices of online content will become ever more appealing and may be the only way multiple vendors can continue to coexist in large firms.

Let’s face it, today’s mega firm may have absorbed the equivalent of 6 smaller firms, so why not regain some of that lost market share by selling to a few practice groups or the equivalent of 2 or 3 small firms if the firm doesn't want a firmwide contract?

The Myth of Indispensability

The fact is, that large publishers appear to be taking their own marketing pieces much too seriously. Or at least they want to perpetuate the myth that lawyers can't effectively practice law without their products. There are already a number of mid-sized firms that have moved to “sole source” relationships with either Lexis or Westlaw and reports from the field indicate that they are doing just fine. An increasing number of firms have given up the CCH Tax platform in favor of the less expensive RIA Checkpoint product. Losing direct access to a small subset of content, may be overcome with a little extra research effort or the assistance of the research staff, but the savings have completely offset the inconvenience.

There are lawyers who conjure apocalyptic consequences at the thought of losing their favorite resource. I suspect that this is generational characteristic.

Older lawyers who started out conducting legal research in print treatises and then moved online tend to have a stronger sense of a legal publisher’s brand and the reputation of specific products which I don’t see in the post-Google generation of lawyers.

Can “Tying Arrangements” Be Far Behind?

The trajectory of current practices suggests that legal publishers are inching toward "tying arrangements" in order to maintain revenue and force law firms to keep unwanted content, products or licenses that are not aligned with the firm's needs.

Right now, no major vendor limits the sale of print materials or ebooks to online subscribers, but this strategy may lie along the ’desperation trajectory” that is emerging in the marketplace.

Black’s Law Dictionary defines a "tying arrangement "as “ A seller's agreement to sell one product or service only if the buyer also buys a different product or service; a seller's refusal to sell one product or service unless the buyer also buys a different product or service. • The product or service that the buyer wants to buy is known as the tying product or tying service; the different product or service that the seller insists on selling is known as the tied product or tied service. Tying arrangements may be illegal under the Sherman or Clayton Act if their effect is too anti competitive.”

Law firms need to be able to select their own mix of "best of breed" sources to support their practices, at a cost that is calibrated to their own budgets and the products' perceived value. Any attempt to further restrict law firms choices for content and format is likely to backfire and will certainly not demonstrate the creativity and nimbleness of thought demanded by the new "law firm economics."

Wake Up -- This is an Opportunity and Not the Threat That You Think It Is

Perhaps the day of the “monolithic service provider” --"being all things to all practice groups” is waning. Maybe firms are getting too large and too complex and a more flexible set of assumptions will be the key strategy for legal publishers to survive the upcoming wave of “sole provider wars.”

Digging a moat around your products and pulling up the drawbridge will only further isolate publishers from the marketplace they purport to be serving.

Friday, February 10, 2012

Welcome to Bloomberg Law: No Deals No Discounts No Apology

Almost a modern day parody of Henry Ford's color palette for the Model T ("You can have any color as long as it's black.") Bloomberg is entering the legal marketplace with monochromatic contract as in, "You can have any contract you want as long as it's Bloomberg's standard contract."

So what's the Upside?

In exchange for a rigid pricing system you get transparent and predictable pricing, no excluded charges, nothing to explain to clients and a product you can launch and leave open on your desktop as a reference portal to be used as needed throughout the day.You also get the Bloomberg track record of contrarian innovation and successful disruption as a late market entrant into the financial services data and news media markets.

And Yet...

There is palpable skepticism in the law library community regarding Bloomberg's pricing claims for Bloomberg Law. After all, hadn't we been promised "flat fee" contracts before? But there was always "a rub" --- new content and or new functionality that became the "cash cow" for driving profits for the Lexis and Westlaw. It seemed that no matter how well you negotiated your contract - within a few months there would be new surprises. Content from a 3rd party vendor or a new function link appeared which triggered unanticipated charges.

The legacy of profitability models used by Lexis and Westlaw continually undermined the promises of price predictability

Can the Cycle of Skepticism Be Broken?

Here is the thought pattern: Flat fee contracts lead to increased use. The increased use was then used against the law firm to justify dramatic price increases during he next contract renewal. It is widely believed that the only way to avoid dramatic price increases is to limit use of the "flat fee" contract - thus severely impairing the value of the "flat fee" contract. Why should we believe that Bloomberg will be different?

For a Clue to the Future Look to Bloomberg's Past

In 1982 Mike Bloomberg developed his first financial terminal with a 10 million dollar severance check from Salomon Brothers.

The first Bloomberg terminal was called Market Master. It was a bond math calculator that sold for $995 for a single license. 30 years and 30,000 functions later a single license increased to $1,655. Bloomberg has had predictable increases of about 6% every two years. Bloomberg says that the price increases are used to improve the workflows, data feed, content and functionality. Today Bloomberg has over 30,000 functions and has poured terabytes of business, legal and government news and financial data into the system and none of it is excluded!

A 2007 Fortune article Bloomberg's Money Machine described Blooomberg's ever growing content:

"Bloomberg just kept adding more stuff," which is like saying the Pilgrims were followed by many more immigrants. From its start in bonds, Bloomberg gradually poured in data and analytics on commodities, equities, foreign securities of all kinds, energy, mortgage-backed securities, derivatives, mutual funds, real estate, hedge funds, foreign exchange. Its oceans of information today include earnings estimates, SEC filings, merger and acquisition facts, legal documents and data on 1.3 million people"

Yes BNA Is Included at No Additional Cost

Bloomberg appears to be staying true to the business model and is including acquisitions both big and small in Bloomberg Law at no additional cost. When they bought Business Week, it was fully integrated. Now Bloomberg is telling subscribers that as soon as all of the BNA material including all newsletters,e.g. the pricey "Daily Report for Executives" and all BNA research platforms such as the Intellectual Property Library are converted, all BNA content -- including content not previously subscribed to will be available at no additional cost to the Bloomberg Law subscribers.

Will the Wall Street Journal and Financial Times Be Next

Rumors of Bloomberg's purchase of the Financial Times have been denied on both sides. Speculation swirls around the competition for access to the Wall Street Journal when the LexisNexis exclusive deal  ends in the next 18 to 24 months. . Last week Lex Fenwick, a former Bloomberg CEO became CEO of Dow Jones which owns the Wall Street Journal. One can only assume he and Dan Doctoroff, the current President and CEO of Bloomberg have each other on "speedial."

Against the Grain not Against the Odds

An April 2011 article in Wall Street Technology entitled "Inside Bloomberg" describes Bloomberg's response to the recent recession this way: "when most of the industry was hunkering down, slashing costs and laying off workers Bloomberg did what it often does, it tacked the other way and began the biggest period of growth it has ever seen, in terms of employees and product development." One quarter of Bloomberg's 12,000 employees are considered research and development staff.

This presents a fairly stark contrast to Bloomberg's well established rivals. From Westlaw we have seen layoffs and contractions in client support. From Lexis we have seen repeated delays in the rollout of its new Lexis Advance product. Add to this, the recent rumors that both Westlaw and LexisNexis might be sold by their respective owners ThomsonReuters and Reed Elsevier. If you were a "betting man" where would you put your money?

Bloomberg's Secret Value Strategy.

One of Bloomberg's strategies on the business terminal side has been to erode dependence on other products. In educating their existing terminal customers on even a few more of the 30,000 functions they hope to wean them off other products. This has been called "Bloomberg Value Solutions." The strategy isn't  designed to sell you more, but to help you save money.

What would this strategy mean in the legal market?

For the past decade legal information centers have been subscribing to an increasing variety of specialized databases to support finance and securities practices. IP practices require all manner of scientific and technical data. Bloomberg with its deep well of financial data could well pose a value strategy which would eliminate products such as Capital IQ, Mergermarket, Bureau van Dijk, Hoovers. It's $990 Million acquisition of BNA could offer a "value strategy" aimed at CCH and Law 360. Large firms subscribe to hundreds of specialized newsletters, (covering everything from aviation to zoning). If  Bloomberg goes shopping or decides to compete in these specialty areas, this could help firms consolidate the roster of stand-alone products with their attendant raft of specialized headaches including:  idiosyncratic licensing, variant publishing formats and  password management.

Winning The Terminal Wars

A 1998 article in Investment News described Michael Bloomberg's 1981 product launch as entering a "field of "napping giants" when he created a new financial service that bore his name and "changed the standard of the industry."

A 1997 New York Times story "Traders want some Space Too" seemed to be suggesting that Bloomberg's closed data system would be doomed by the emergence of the internet. To make matters worse, Bloomberg was 3rd entrant into a field dominated by Reuters and Telerate/Dow Jones. How wrong they were! Telerate's most recent sales are listed at $664M, while Bloomberg's are estimated to be $7 billion.

Dow Jones and Reuters had hundred year jump on Bloomberg and yet, Bloomberg has thrashed Dow Jones Telerate into insignificance and today Bloomberg  rivals Reuters' share of the financial data market.

Can Bloomberg Have Comparable Success in the Legal market?

Since law firms are essentially information businesses, I have spent my career trying to harness and integrate the multidisciplinary resources needed to support the highly competitive and time sensitive information needs of lawyers. The genius of Bloomberg has been to continually integrate new streams of data that inform and transform the core data sets. Bloomberg started with financial data and built its news service to enhance the contextual value and analysis of that data.

One has to assume that Bloomberg will take a similar approach in redefining the legal information industry. As clients are demanding that lawyers not only understand the law but also understand their business challenges and related industry trends, Bloomberg's interweaving of law and business may be the very thing that every partner will want and perhaps need on their desktop n order to thrive as a rainmaker.

Sources:
Bloomberg's Plan for World Domination
Bloomberg company history
Bloomberg by the numbers
At Bloomberg, A modest Strategy to Rule the World.

See Related Blogposts::
Is Lexis the Next Acquisition for Bloomberg
Bloomberg Get's BNA's Intellectual Capital in the Capitol.
Bloomberg Law Takes on the Titans: An Interview With Lou Andriozzi
The Myth and the Madness of Cost Effective Lexis and Westlaw Training