On Tuesday BloomberBNA’s President David Perla published a post on Above the Law lashing out at law firm “gatekeepers.” I am a big fan of the Bloomberg products and I think Perla brought a necessary entrepreneurial perspective to BloombergBNA. But Perla’s post was uncharacteristically condescending and well... snarky...which made me wonder if BloombergBNA was facing some kind crisis or to use Perla’s phase “an inflection point.” Was Perla really suggesting that Bloomberg’s inability to displace Lexis and Westlaw was the result of “ gatekeepers” and not at all the result of Bloomberg’s own market miscalculations? In fairness, most of these miscalculations predate Perla’s tenure….
When Bloomberg Law was re-launched in 2011, I interviewed Lou Andreozzi, the first BLaw CEO. Andreozzi anticipated that Bloomberg Law would take “significant market share” away from Lexis and Westlaw. It is now 5 years later and I think it is safe to say that BloombergLaw has not significantly eroded Westlaw or Lexis market share. Andreozzi’s statement was made before Bloomberg purchased the Bureau of National affairs publishing company – so today some of Bloomberg BNA’s market share would be attributable to BNAs “preexisting installed base of subscribers.” Since Bloomberg is a private company there are no public filings to be examined. But one way to assess market penetration would be to compare how many ALM 100 law firms have enterprise contracts for each of the three major legal research platforms. I am aware of fewer than 10 ALM law firms that have signed enterprise licenses for the full BloombergBNA legal research platform.* Lexis and Westlaw remain entrenched in the vast majority of ALM 100 law firms.
In my opinion Bloomberg Law should have been adopted by more law firms by now. It weaves business and legal content together seamlessly-- but this unique approach was not enough to overcome the market's primary objection. Bloomberg Law entered the market at the worst possible time – at the height of the Great Recession. Then Bloomberg executives made some strategic decisions which I believe have had a lasting and significant impact on the company's ability to displace its competitors.
1. The product was priced too high.In 2009 when Bloomberg Law launched, the market was ready for a disrupter… at the right price. Although Bloomberg Law was only partially built out, it was priced on par with Lexis and Westlaw. Lexis and Westlaw enterprise contracts had ballooned between 1980 and 2000 because online research costs were being passed along to clients. By the time Bloomberg Law launched, clients were pushing back and online costs were viewed as overhead to be born by law firms. Bloomberg was right that lawyers were ready to stop billing clients for online research but wrong about the price they would pay to achieve that goal. Bloomberg didn’t recalibrate the Lexis and Westlaw price benchmarks down to a level which could be easily absorbed as overhead by a law firm.
2. The citator problem. Bloomberg Law launched as a litigation research product, but lawyers didn’t understand or trust the product's citator. There were early problems with the citator which slowed adoption of the citator even after the problems were corrected.
3. Courts wouldn’t accept Bloomberg Law citations in briefs. As recently as 2015, most federal judges were not accepting Bloomberg Law citations in briefs. This is serious shortcoming for a product which is sold with a premium price tag. It also meant that firms “had to” maintain a subscription to Blaw’s competitor products. It is simply hard to me to believe that Bloomberg could not have done something to accelerate the federal judges access to Bloomberg Law... Seven years is a long time for a major product to lack this major "use case."
In recent years Bloomberg has moved beyond being a caselaw research system. Bloomberg Law Transactions offers very sophisticated workflow and analytics capabilities. But the shortcomings outlined above had already burned through some customer confidence and good will. Bloomberg executives, even to this day seem reluctant to "own" the impact of these product shortcomings.
Missing the Early Big Data Opportunity. Maybe Bloomberg should have started with a product for transactional lawyers rather than one for litigators. In 1982, Mike Bloomberg successfully disrupted the financial data market when he launched Market Master (later renamed the Bloomberg Business terminal) to compete with Telerate and Reuters. Bloomberg decided to go beyond reporting market prices and started adding calculation functions to the terminals.As a company rooted in “big data” and analytics, Bloomberg was ideally positioned to launch a truly disruptive early “big data” product for transactional lawyers …. But instead … they loaded and coded gigabytes of caselaw and attempted to compete with Lexis and Westlaw in the well established and increasingly commoditized case law research market. Was that the most innovative and "disruptive" approach to the legal market? Seems odd that Perla would find fault in law firm customers rather than in his company's strategic choices in pricing and product development.