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HuffPo Article About Legal Research Gets it Wrong: Everything Old is New Again

I eat, breathe and sleep legal research and writing. Although it’s a big part of my life, I realize that the general public doesn’t share my passion for the subject. That’s why I was more than a little surprised to learn that today’s Huffington Post—which, according to Wikipedia, is the most linked-to blog on the web and had 8.9 million unique visitors in February, 2009—features an article entitled The Reinvention of Legal Research: The Future is Now.

The article’s premise is that the application of technology to information has led to “the radical transformation of the legal publishing marketplace.”

According to the author, Peter Schwartz,

Data trumps documents. Legal, regulatory, and court documents – once intrinsically valuable – increasingly serve as mere information containers. New methods for tagging, extracting, organizing, and presenting information in documents create new possibilities for how quickly we can assemble, analyze, interpret, and disseminate this information.

Information is liquid. We now live in an ocean of information, and are swept along by its riptides and currents. The challenge is to manage our relationship to this information so it serves us our higher purposes. We need ways to filter real-time story-telling and reporting so we can identify narratives that have substance and reject those that are ephemeral, partial, distorted, or trivial.

So far, so good. I have no quarrel with these philosophical musings about the nature of information in the internet age.

But Schwartz’s conclusions are dead wrong.

According to Schwartz,

[c]ustomers will not pay for research. When online legal research platforms were proprietary, online publishers imposed per-minute and per-use pricing structures. This pricing model facilitated client cost-recovery and allowed publishers to use law firms as information wholesalers. Because information is now a commodity, law firm clients will no longer pay for online legal research. New flat-rate pricing models for online research products reflect this reality.

The large legal publishers are in trouble. If law firms can no longer pass through online research costs to clients, multi-billion dollar legal publishers such as West and Lexis can no longer support pricing models premised on law firm cost recovery. Because West and Lexis cost structures depend on this pricing model, they are beginning to experience painful margin squeezes, compounded by the entry into the legal research marketplace of both nimble, low-cost competitors and new rivals with deep pockets such as Bloomberg.

Let’s analyze this, shall we?

Customers will not pay for research. Who are the “customers”? The lawyers who conduct legal research so that they may advise (and frequently advocate for) their clients? Or the clients who hire the lawyers who conduct the research?

If it’s the former, then Schwartz’s company, Knowledge Mosaic, Inc., should find a new business model, pronto: they make their money by selling subscriptions to their Securities Mosaic Website and News Service for $1,250 per year.

If it’s the latter, I agree: as I’ve previously written, the ABA’s view notwithstanding, the cost of a firm’s online legal research subscription is a part of overhead that shouldn’t be passed on to clients.

Because information is now a commodity, law firm clients will no longer pay for online legal research. New flat-rate pricing models for online research products reflect this reality. The information itself has always been a commodity: it was just limited to hard-copy form in the past. Back then, lawyers understood that the cost of maintaining a library was no different from the cost of keeping the lights on: it was overhead, and the expense was considered when the lawyer set a fee for services provided. Conversely, as the ABA materials demonstrate, today, many lawyers (with the encouragement of West), are divvying up the cost of their legal research subscription plan amongst their clients.

The large legal publishers are in trouble. If law firms can no longer pass through online research costs to clients, multi-billion dollar legal publishers such as West and Lexis can no longer support pricing models premised on law firm cost recovery. This is refuted above. And, while I don’t keep up with the financial health of the two 800-lb legal research gorillas, I don’t see them going out of business any time soon.

Like it or not, Mr. Schwartz, Knowledge Mosaic isn’t the disruptive entrant into the legal research market that you try to paint it as. Following in the footsteps of West (and, to a lesser extent, Lexis), the company does many of the same things that these traditional legal publishers do:

  • stored search capability (Westlaw’s Alert Center, anyone?)
  • on-call customer support and research assistance “during regular business hours (typicially with no wait)” (Hello, 1-800-REF-ATTY, 24/7)
  • search pages that allow you to target data buried in filings, including risk factors, exhibits, etc. (searching by field)

Based on the information on the Securities Mosaic website, the company has done a great job fulfilling the information needs of a niche market within the legal community. If it can do that better than Lexis and Westlaw, fantastic. But, despite its location in the trendy “industrial underbelly of Seattle—in modern facilities amidst train yards and commercial fishing docks,” it’s really not all that, just as Axiom is a dandified contract lawyer staffing firm, and not the “entirely new kind of firm” it bills itself as. But that’s another rant for another day.

Comments (6)

  1. Reply Jimmy Crack Corn

    Did you have something constructive to say or is going after Mr. Schwartz supposed to prove a point?

    Your opinions aside, you are correct in at least one area, this is in fact a rant.

    Briefly reviewing a web site for points to support your argument is not research. Have you used Mr. Schwartz’s product before? Surely there are more than just four features, or are those just the ones that would supported your claims?

    Let us know when you have something constructive to contribute.

  2. Reply Jimmy Crack Corn

    I apologize. You noted three features, not four. My bad.

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