I am writing this blog post on the plane as I fly back to Toronto from Halifax, having just spent the last three days at the CALL/ACBD annual conference. The conference was fantastic, highlights for me included an opening session with Jordan Furlong who suggested we are entering an era of Legal Intelligence – a topic near and dear to my heart, a stellar lunch keynote from Janet Maybee on the wrongful conviction of Pilot Francis Mackey in respect to the 1917 Halifax explosion, and of course a meet up with fellow 3 Geeks blogger Greg Lambert. I think my colleagues from Thomson Reuters Canada showed him just how the vendor client relationship can actually be quite strong and positive. But all of that pales in comparison to the many great one-on-one conversations that I was able to have with people about the state of the industry, the position of law librarianship, the influence of legal tech – AI, Machine Learning, predictive analytics and what the (very exciting) future holds for all of us.
In about 10 days, I will be presenting as part of a panel at the Thomson Reuters 24th Annual Marketing Partner Forum. The session I will be presenting will be focused on differentiation in a highly competitive market. Aside from being a hugely important topic at this moment in time generally as we usher in 2017, the topic is a reaction to the 2017 State of the Legal Market Georgetown/Peer Monitor Report which is now available. The report tracks firm financial and other performance metrics in the US over the course of the last decade since the “Great Recession”. Not surprisingly, the report paints a somewhat bleak picture of the current state of legal services – from an operational point of view. I will leave you to read the report, but the Coles Notes (Cliff’s Notes) version indicates that:
- demand growth is flat;
- there is declining productivity;
- firms are experiencing growth in expenses, and
- increasing cost of leverage; despite
- ability to raise rates 2 to 3 percent a year, which is countered by;
- steadily declining realization rates.
- a buyer’s market;
- death of the billable hour pricing;
- erosion of the traditional law firm franchise;
- declining effectiveness of traditional leverage; and
- growing segmentation within the market for law firm services
It’s a bleak and scary picture, one that in my mind doesn’t even take into account the effects and affects of technology on the profession, in practice and in operation.
|Image [cc] Vyperx1|
We very often hear from bloggers on this site regarding the struggles associated with change and innovation. Fear of failure, lack of inertia, protecting territories—all seem to be stumbling blocks that many firms face when initiating change. It seems, however, some organizations have found a way to successfully encourage and nurture new ideas internally.
I had the pleasure of speaking to Karl Florida, Managing Director of Small Law Firm Business Segments and Innovation Champion, at Thomson Reuters, about a new innovation program the company has instituted.
While Thomson Reuter’s program appears mostly devoted to product development, law firms could certainly take advantage of this sort of model to solicit and promote ideas from within regarding client service and delivery, along with development of administrative efficiencies. The model, along with variations, allows and in fact, encourages a small, but safe space (with funding!) to experiment with new ideas without the associated pressure and demands to be “the right” solution out of the gate.
FYI, if you want to learn more about innovation tournaments, I highly recommend the book, Innovation Tournaments: Creating and Selecting Exceptional Opportunities, by Christian Terwiesch and Karl Ulrich (hat tip to CCH, for giving me the opportunity to see Karl Ulrich in action). Because don’t we all need some more peanut butter cups?
|Image [cc] Scazon|
The year started out with a trio of mergers in the legal information field when Thomson Reuters announced it was acquiring PLC, and Learnlive, and LexisNexis announced it was acquiring Knowledge Mosaic. The activity tappered off a bit after that initial first week flurry, but there have been a number of mergers, acquisitions and partnerships throughout 2013 and we thought we’d review what has changed this year.
- LexisNexis Acquires Knowledge Mosaic – Jan 2013
- Thomson Reuters (TR) Acquires PLC – Jan 2013
- TR Acquires LearnLive – Jan 2013
- TR and CQ Roll Call Alliance – Jan 2013
- Lexis Acquires 55 Titles from Oxford University Press – Mar 2013
- LexisNexis Acquires Sheshunoff and A.S. Pratt – May 2013
- IntApp Acquires DTE Axiom – June 2013
- Hein and Fastcase Announce Publishing Partnership – July 2013
- TransUnion Acquires TLO – Nov 2013
- Mergermarket sold to BC Partners – Nov 2013
- Sirsi Acquires EOS – Nov 2013
I’m sure we’ve missed a few other activities that happened in 2013. Feel free to add those in the comments.
Let’s see what 2014 brings in the great shrinkage of legal information providers.
According to Thomson Reuters’ Second-Quarter 2013 Results, the revenues coming in from WestlawNext has hit the 80% mark of total Westlaw revenues. For some of us, it may seem that it took a long time since the launch of WLN in early 2010 to hit this threshold, but with all the fluxuation in the legal market, and the intitial clumsy sales pitches to existing clients, it actually seems that we are well on our way to a phase out of Westlaw Classic. If I had to guess, I would say that Westlaw Classic probably will go away at the end of 2014, with exceptions made for clients under existing contracts. Of course, as many of us user see each day, that means that all of the content that hasn’t been converted to WLN will need to be completed.
The rest of the quarterly report looks pretty good for Thomson Reuters:
- Looks like the Financial Sector is finally giving in and buying the Eikon desktop (up 30% from the first quarter of this year.)
- Print is still declining. This quarter US Print Revenues were down a significant 7%.
- Academics and Governments are cutting – but only a 1% decrease in Thomson Reuters’ revenues. This is surprising to me. I thought it would be more.
- The PLC purchase hit their margins in legal (an astonishing 38.5% margin at that…), but I imagine that they can turn PLC into a cash cow.
So, for those of you that thought that the stagnant legal demand that is fueling the articles on the Death of BigLaw would also mean the Death of Big Legal Publishing, it doesn’t look like Q2 of 2013 is trending that way.
|Image [cc] Tax Credits|
Back in January, Tom Wolfe wrote a Newsweek article called Eunuchs of the Universe where he articulated the new style of Wall Street versus the Wall Street that most of us knew. Instead of a raucous gathering of traders in a pit, scrawling information on sheets of paper and signaling wildly to buy or sell the next trade, today’s traders work on computer networks designed to take advantage of milliseconds and use it as a strategic advantage over competitors or to find flaws within the system to nearly guarantee a profit. High-speed networks were optimized and placed along specific geographical corridors in order to have bids, orders and sales conducted ahead of other traders. These days, speed, technology, and out-geeking the next trader is where it’s at. A few milliseconds meant the difference between a good deal and a great deal. It was no longer about being Gordon Gekko and the sexy, ruthless player in a pinstriped suit… now the hero of Wall Street would be to find Doctor Who and travel milliseconds back in time to make trades.
Imagine how powerful you could be if you could beat the competition by two-seconds? Wolfe would have had a field day in his article had he known that a mere $6,000 a month could buy you that information a full two-seconds earlier than your competition. I’m sure he would have written an entire chapter on that story and how the geeks could upload financial outlook reports into massive supercomputers and have trades ready to buy or sell a full one-second before the competition even had the report in hand. What a story that would be.
The only problem is… it isn’t really fiction at all. Turns out that Thomson Reuters has been doing this very thing with the University of Michigan’s Consumer Confidence Index. It pays Michigan an amount North of $1 million each year to release the information five-minutes before UM launches it on its website. The money management companies pay a premium to Thomson Reuters for the information. That practice is well known. It is the secondary practice that goes on that has caught the eye of New York Attorney General, Eric T. Schneiderman. Apparently, a five minute head start over the public is not good enough. A five-minute and two-second advantage has been given to an elite group of about a dozen clients from Thomson Reuters. Schneiderman seems to think that this little group may be receiving an unfair advantage and investigating whether this preferential treatment is a fair and appropriate business practice.
Thomson Reuters claims that the tiered pricing is not illegal and that as a private company it can disseminate the information any way it pleases, so long as it disclosed to those purchasing the information. Schneiderman seems to be channeling his inner Eliot Spitzer on this one and is bringing out the Martin Act to challenge practices that are deemed unfair, even if technically legal. Regardless, it would be naive to think that this type of tiered access is limited to this one report.
Luckily for us in the legal field, we aren’t tied to milliseconds like our counterparts in the financial industry. However, what if we could pay a premium to Thomson Reuters to let us know of law suits filed against certain companies a few minutes before they let our peer firms know? Would law firms pay to be on the top-tier of that knowledge? It makes me wonder if anyone on the financial side of Thomson Reuters is brainstorming of ways to bring this practice over to the legal side of the house as a way of enhancing revenues? What could law firms do with a few two-second head start over our competitors? Most of us believe that law firms are far to slow to react to this type of advantage, however, the idea is a fascinating one to contemplate.
|Image [cc] billychic|
Usually, I ignore unsolicited emails that rant about a vendor or association or how I could benefit from having a real editor review my posts before hitting “submit.” Every once in a while, however, I do get some gems, and this weekend I got one I wanted to share with you. The email comes from someone named “Phil Batman” (which I am assuming is a pseudonym) and it was sent to me and 19 executives at Thomson Reuters. I guess Phil thought that I would appreciate the humor, even if some of it is ‘inside baseball’ and may not be understood by most folks that don’t have a good understanding of the current set of players at Thomson Reuters. Hint: a quick Google of some of these names may clear up why they are being mentioned.
So, straight from my in-box to your browser, I give you “Phil Batman’s Top Ten Items on the Reuters To Do List”:
10. Learn difference between a product and a hole in the ground
9. Review pay package of CTO James Powell
8. Rehire Tom Glocer to sell toasters door-to-door
7. Lead story on every Reuters newswire: “Eikon products still dependable and affordably priced!”
6. Three words: “Eikon With Porn”
5. Find out who the hell this “Dave Thomson” is (Singers enter)
4. Have Anna Nicole Smith keep marrying rival executives until they’re all dead
3. See if Powell’s engineers can help Albert Lojko use his cache of iPhones, iPads, & MacBooks
2. Assemble all employees for a huge party followed by massive layoffs
… and the number one item on the Reuters To Do List:
1. The Late Show With Phil Brittan
Big hat tip to my friend Jason Wilson in pointing out the new rebranding of Westlaw into the new “Legal Solutions” product, and for pointing out that Thomson Reuters is using a very familiar looking color and layout design that seems to be borrowing heavily from the Bloomberg Law product. Perhaps Orange, Gray, Black, and Blue are just the hip trends in New York these days. But, seriously, if you took away the mention of Bloomberg Law and Thomson Reuters’ Legal Solution, you might be hard pressed to tell the difference in the two products. [Note: an Arthur Andersen alum pointed out that they actually had this color scheme by in 2002 way before TR or Bloomberg started using it.]
Jason sums up my thoughts quite nicely on the similarities:
TR pages are getting dangerously close to the same color scheme of Bloomberg Law, and it makes me wonder why they are trying so hard to compete with something that hasn’t seen widespread adoption?
Alright Lexis… apparently you’re late to the game. Time to switch Lexis Red, and go with a Bloomberg Orange! After all, anyone that is in the know, knows Lexis is much more in the crosshairs of Bloomberg than Thomson Reuters is.
Judge for yourself (FYI – Bloomberg=Left; Thomson Reuters=Right):
|Image [cc] Global X|
Thomson Reuter’s flagship financial product, Eikon, is turning out to be more like the Titanic after hitting an iceberg. According to reports from the New York Observer, Thomson Reuters has laid off around 3,000 employees, most from the financial sector, including sales, training and analysts’ divisions. In addition to these, it is also reported that there were also layoffs in the Editorial ranks, including big names like:
Peter Bohan, editor of Reuters America Service, has reportedly been let go. Mr. Bohan had been at Reuters for two decades, most recently as the Midwest bureau chief. Brad Dorfman, Reuters’s U.S. retail and consumer products company news editor, and Lee Aitken, who had been in charge of political coverage since 2012, were also reportedly let go from the company.
While most of the departures occurred at the managerial level, the majority of the Reuters TV team is out as well, after YouTube’s decision not to renew its one-year-old contract with the news service.
It’s not a good time to be an Editor these days, as Lexis has also recently announced the closing of the Matthew Bender’s Albany, New York office.
The Eikon product has already cost one Thomson Reuter’s CEO (Tom Glocer) his job, and hit TRI’s stock considerably since 2011. Plus, the Eikon flop placed Thomson Reuters on a list of 12 Companies that Could Go Bankrupt Very Soon. (Which caused us to write Could Thomson Reuters Be In Trouble? back in October 2011.)
The pain isn’t just being felt in the Financial Sectors of Thomson Reuters either. Anyone at Thomson Reuters with a good salary (this should include our friends at TR Legal) will feel the pain, too.
All Thomson Reuters employees, not just those in editorial, who make more than $100,000 will not receive raises in 2013.
All of these issues are pointing to a company that is struggling to pull all of its different acquired pieces together (think how well BNA/Bloomberg has merged, and then think of all the different platforms TR is still supporting.) It also seems that Thomson Reuters is not taking the market share away from Bloomberg in the financial market. It also seems to point to the need for TR’s Legal group to ramp it up and start bringing in more revenue and profits.
Those of us in the Legal Industry should be on the lookout for more sales pressure on the horizon.
Kevin O’Keefe, wrote about the dueling Lexis and Thomson Reuters blogger summits on Tuesday in his post, Who’s Influencing Who. He seems to be concerned that the big L and TR are trying to curry favorable blog content by lavishing a few bloggers with fancy perks. I happened to stumble across his post as I was lounging on my pillow top King Size bed and perusing my Twitter feed on Tuesday afternoon in the St. Paul Hotel, in St. Paul, Minnesota. I even mentioned it to my dinner companions later that evening at the St. Paul Grill, where I enjoyed a wonderfully buttery cream of mushroom soup, bourbon glazed Pork Chops, and asparagus with hollandaise, washed down with a very drinkable (and free flowing) Cabernet Sauvignon, all of which was kindly paid for by my very good friends at Thomson Reuters. In return for this spectacular treatment, Thomson asked exactly two things of me: 1) venture to the Twin Cities in January! and 2) listen to five hours or so of the marketing pitches, development road maps, and executive presentations that they will be presenting at Legal Tech New York in a couple of weeks. The one thing no one ever overtly asked me to do was to write about the event or the product announcements. Now, I’m not stupid, and they’re certainly not either. If you invite bloggers to a summit, you’re looking to create buzz. If you ply them with good food and wine, you’re hoping it’s really good buzz. I’m sure the Lexis event was much the same.
Some of my colleagues who were in Eagan are, in fact, journalists as well as bloggers. I’ll let them speak for themselves, but speaking only for me, I am not a journalist. I do not have pretensions to be a journalist. My lifelong friendship and goodwill can be openly bought for the price of a couple of rounds of drinks and a few hours of good conversation. And I will gladly say nice things on this blog and elsewhere about anyone who wishes to purchase my friendship in such a manner. (BTW, Toby and Greg: really great guys.) That said, drinks, presents, perks, and “flights to Eagan, Minnesota in January” on their own, don’t buy much from me, it’s much more about the good conversations. Please feel free to take that into account as you read anything I write. Including the following.
Back to Thomson…
I came away from the excursion to Eagan having learned a couple of things.
1) Thomson has a lot of really smart, very interesting, and incredibly nice people working for them.
2) Thomson now sees itself as primarily a software and solutions company, rather than an information and news provider. Interesting.
3) Thomson is moving a number of their new and existing products to the cloud. (I’m pretty sure Mike Suchsland, President of the Legal group at Thomson, paused momentarily after he said this as if expecting a gasp of shocked surprise from the bloggers around the table. And he seemed just a little disappointed at the “yeah, we figured” response he got.)
4) Thomson has a “new class of products, tools, and technologies that [they] think will define the next generation of technology for the evolving legal marketplace” Um… maybe. We (the bloggers) didn’t get to play with any software. We saw a couple of demos and some screen shots. Two new products, Concourse (for corporate, government, and large firms) and Firm Central (for small firms) are matter centric collaboration and communication hubs that nicely incorporate existing and future TR products into a single, simple, intuitive user interface, that can be customized to meet your firm’s needs. My take is that these are pretty early products. They could definitely grow into generation defining products, but I don’t think they’re there yet. And I think Thomson would probably agree. Concourse looks very much like a consumer, rather than enterprise, product. (Which is good thing.) It has larger fonts and plenty of white space. It’s designed to work on a tablet as well as a desktop. I can imagine it would require very little user training and moderately savvy users who are familiar with consumer products like Dropbox and GoogleDocs will probably pick it up very quickly.
My big takeaway from the event is that in their new role as a software and solutions provider, Thomson is focused heavily on design, seamless integration between products, and overall ease of use. They are very much trying to bring the consumer experience to the enterprise, so I think they are moving in the right direction.
As I didn’t get a chance to use any of the software, I can’t say for sure whether the new TR products are any good or not, but I can say that the people working on them are pretty good conversationalists and they bought me a few drinks. So they’re OK in my book. Does that impugn my integrity?
Some of the more journalistic attendees at the Thomson Reuters event took copious notes and I’m sure some of them will post extensive “reviews” of the products we saw. Rather than duplicate their efforts, I will take the easy (lazy blogger) way out and link to other posts below as I find them.