$15.5 billion - publishers in the legal, tax and regulatory industry worldwide
2008 was the first year they went into negative growth; came back slight in 2010; expect it to take another 3-4 years to get back to where they were pre-2008.
Three companies dominate the space: LexisNexis, Thomson Reuters and WoltersKluwer hold about 70% of the market place. BNA is next with about 2% market share. It has made it difficult for anyone else to break into the market because they keep getting "gobbled up" by one of the big players.
It is difficult to describe the major players because depending on what part you see, you see something different. We tend to think of the "big three" as legal publishers; however, they serve a number of markets. Curle has broken the top three by type of legal information; about a third of their revenues is U.S. legal information. About a quarter is non-US legal. The rest are other areas such as corporate, government, academic, tax, governance and compliance areas. So only about $3.5 billion is generally derived from US law firms.
How much revenue do law firms bring in? About $400 billion. The largest firm brings in about $2 billion. It is a very fragmented industry, making it difficult for providers who work for anything from $2 billion business all the way down to a solo practitioner.
$40 billion - the 10% of law firm expenditures that firms see as needing to cut. Legal vendors looking to expand into this space, the "business of law" such as in the IT area such as servers hosted in firms, etc. Vendors are pretty entrenched in their existing legal information areas and need to look to these ways to expand.
What do law firms do?
- Develop strategy
- Deliver legal services
- Run their businesses
- Market themselves
He uses Thomson Reuters as a case study, but similar things happened in WoltersKluwer and LexisNexis
- Thomson Reuters' role, 1996 > were not addressing these four areas
- Thomson Reuters' role, 2009 > expanding into these four areas
- Thomsone Reuters' role, 2011 > purchased services in these areas, now starting to compete with their own clients e.g. Pangea3, a legal outsourcing area; Hildebrandt and others
This transition is not unique; it is happening in other industries they are tracking. A business-to-business publisher has gone from publishing about marketing to actually doing marketing on their clients' behalf.
See Susskind's Grid: Toward an uncomfortable quadrant - describes where technological change is most likely to take place. Acquisition of Pangea3 puts Thomson Reuters in the upper right quadrant - online legal services. It involves clients directly, and it is not just about technology; it is about law firms' proprietary skill.
Questions from law firm and corporate libraries survey: How are law firms managing all of this change? Especially given the challenges they are already facing? How are law firm libraries different or similar to corporate libraries?
The responses showed that the corporate world felt the economic crisis faster than the law firms. Techniques for survival showed up later in law firm libraries. Part of strategy is comparing what you do versus what you do not do, and technology poses a number of these questions. Technology is front-and-center.
In the area of vendor relations - what techniques are librarians using to evaluate products? Law firm libraries tend to rely heavily on information provided by the vendor. They look at the products themselves, look at demos, look at the contracts, and then get feedback from some other buyers. Law firm libraries do less than corporate libraries: putting out requests for proposals, developing requirements lists, comparing products.
What can we expect from vendors and other players, and how will it affect law libraries?
- A continuing divergence of products and sub-groups; more targeted products. Offerings may even be by size of firm. LexisNexis is putting a push on to get back to smaller firms and solo lawyers, for example.
- More niche players and disrupters - especially as legal information access becomes more open. New information companies can come along and make new products out of it. In the past the three big vendors had control of the information.
- Law libraries need to invest in strategic planning and vendor portfolio management - what competencies and skills do library staff have that can serve the firms? Is there anything we need to give up doing? (He referred to Steven Lastres' comments in the KM session earlier today).
- Move toward Susskind's upper quadrant - providing more services directly to clients, the same as legal information providers are trying to do - high value, client-proximate solutions.
- Help to shake off the primary law mindset - most law graduates have a primary law mindset, jumping directly on Westlaw (or more likely Google) to pull up primary information. So much legal work is pulling up primary legal sources "in a hap-hazard way"; he sees this as a shame. What is being lost is the sense of context and legal doctrine they used to get from working with legal treatises. Small firms and non-lawyers will start to use more free and cheap legal services. Lawyers in big firms need to be able to use other higher-value sources.
- More collaboration and peer-to-peer for content creation - libraries need to help facilitate this. You get better information from getting people talking to each other than from experts (knowledge sharing among peers). Need to help corporate counsel and non-lawyers collaborating and help to create the legal information e.g. building code information. This should be part of knowledge management efforts.
- Vendor relations needs to be about data: ROI, usage and pricing. Introduce more and more data into the evaluation and purchase of products. There is no trust that vendors are providing right and appropriate data; the law firm librarians need to introduce this as an idea.
He doesn't have solutions, but hopes this talk helps us understand the dynamics going on with legal vendors.