LexisNexis and West Are Still Battling for Dominance
Posted May 1, 2004 4:14 PM CDT
By Jason Krause
Like well-prepared boxers entering the ring for a donnybrook, they have comparable statistics. They are giants who have built themselves up over decades to dominate their field.
They are counter-punching and challenging, neither willing to let the other step too far ahead. They are the heavyweights of legal research, West and LexisNexis, providers of the digital services known as Westlaw and Lexis.
West, which has operated during three centuries, came first. It’s been 126 years since John B. West & Co. published its first North Western Reporter, a collection of decisions from Minnesota and Wisconsin. Eventually it expanded to become the authoritative source of case law, legislation and most things jurisprudential.
But it was LexisNexis that changed the debate. Thirty years ago, the Mead Corp. first published Lexis, offering electronic copies of Ohio and New York legal codes and cases. That action pushed legal research from the well-settled turf of leather-bound books to clumsy computer terminals, then to CD-ROMs and now to the Net.
And the two powerhouses have added to their musculature of late. As with most technology companies, LexisNexis and West found the late 1990s to be a boom time. Both introduced new services and spent millions of dollars to acquire smaller companies. Both companies have been playing a game of one-upmanship, trying to create new sources of revenue and attract and keep customers in what has become a mature market.
Now, the only thing that’s clear is that LexisNexis and West are no longer just legal research companies. They are pushing deeper into legal services—from time and billing to litigation support. And what that means to their core law firm customers is far from clear.
Lexis and Westlaw clearly dominate the field of legal research. The ABA 2002 Legal Technology Report found 50 percent of respondents used Westlaw, and 37 percent Lexis. For the rest, 7 percent used Loislaw, 2 percent VersusLaw, and 3 percent reported using other services.
The glaring differences between LexisNexis and West have been slowly disappearing over the years. West was perhaps slow to transition itself to electronic publishing, but, though it still publishes books, it has long been focused on delivering information online. And while LexisNexis sometimes pooh-poohed some of West’s features as archaic leftovers from the world of books, LexisNexis has gradually built a service that largely mirrors West’s, down to the outline-style formatting of cases.
Even the ownership of the two companies is similar. Canadian publishing conglomerate Thomson owns West, and Dutch publishing firm Reed Elsevier now owns LexisNexis. Both are Midwestern companies—LexisNexis’ home is a sprawling campus outside Dayton, Ohio, while West inhabits a massive building in Eagan, Minn., outside Minneapolis. And a high percentage of LexisNexis and West executives have worked for the other company.
Competition between LexisNexis and West is fierce; if one company gains an advantage, the other will either build its own competing product or spend millions to acquire one. A good example is LexisNexis’ drive to match West’s Headnotes—the case law summaries at the top of each case—that used to be one of the major differences between the two.
When Lou Andreozzi was promoted to LexisNexis president and CEO in 2000, he made catching up to West in this department a top priority. “When I started they told me it would take 13 years, but I realized the average lifespan of a LexisNexis CEO is a lot less than 13 years,” he says. “I immediately scared the people in charge.”
LexisNexis hired lawyer-editors to work from home and write case summaries, starting with the most commonly searched cases. Andreozzi ordered that the number of editors be doubled from 200 to 400, and he eventually hired more than 800. The company is now more than two-thirds of the way through roughly 3 million cases.
Westlaw still has far more case law summaries than Lexis, and West says its summaries are more authoritative, but it is no longer the only company with this feature.
Through efforts like this, Lexis and Westlaw have managed to reach some semblance of parity. There are still differences in coverage that might influence specialized law practices to choose one service over the other. But it is difficult to find large gaps in coverage that one has filled and the other has not.
West touts its personalization features that help lawyers find information for their practices and argues its editorial enhancements, built up over 100 years, make it more authoritative. “Lexis is certainly in the game, but there’s really been a shift in their strategy since the ’70s,” says Dan Dabney, West’s senior director of research and development. “Lexis came out of the theory that the computer could do everything. They thought you could get by with free text and a good search. They’ve obviously realized that it takes more than that.”
LexisNexis argues that its services are not only nearly as complete as West’s, but also that it is better at tailoring its products to the needs of practicing lawyers. “In a lot of areas, West has gone out first with something but found it hasn’t been what the customer wanted,” says Andreozzi. “I like to think we take the time to develop a product to what lawyers need.”
As the two behemoths work toward competitive balance, lawyers, paralegals and librarians have perhaps lost some allegiances that might have existed for one service or the other. In fact, large law firms now often maintain both, and many smaller firms use whichever one offers the lowest price. In response, both companies now offer a variety of pricing plans, including a feature that lets people who do not subscribe to the service pay for searches by credit card.
“The main difference for me is that we have a contract with Lexis,” says Steven Cohen, a law librarian with Rivkin Radler in Uniondale, N.Y. “There are a few things that are not available in Lexis, which is why we keep both available, but if you’re asking why pick one over the other, the answer is usually money.” In fact, the companies have been chasing each other so aggressively that some lawyers and researchers may be surprised to find that one may have leapfrogged ahead in an area that used to be the other’s strength.
“For a long time, and until recent years, Lexis had the obvious edge in news coverage,” says Genie Tyburski, a legal researcher and publisher of a Web site, The Virtual Chase, for the firm of Ballard Spahr Andrews & Ingersoll. “But now Westlaw is not just competitive in news search but may have an edge.”
Tyburski points out that West partners with news content provider Factiva, which she says offers more international coverage and covers some industries such as banking better than LexisNexis’ services. However, Lexis has perhaps moved ahead of Westlaw in providing other types of legal content. “When it come to public records, Lexis is clearly ahead of the game,” Tyburski says.
The two companies’ strategies parallel each other in many respects. For example, both are working on something loosely called a global platform. The platform will make it possible for customers using any service owned by the company to log on to any other service owned by the company, including databases of other countries’ legal systems. This isn’t so much because customers have been clamoring for it but because both companies have acquired so many properties around the world that they need to simplify their infrastructure.
Both companies are trying to redefine their businesses since the market for legal research is mature. The number of customers is relatively finite, and it’s very hard to poach big customers away from the other. To find new sources of revenue, the two leaders have begun offering new legal services well outside the realm of research.
BUILD OR BUY?
West has tended toward building applications itself, while LexisNexis has been more prone to acquire technology companies.
West misfired with Westworks, a practice-management program unveiled in 2000 that never took off. To make up for that misstep, it purchased ProLaw, an Albuquerque, N.M.-based company that made software that handles time and billing, document management, e-mail and calendaring so that lawyers can access back- and front-office applications from one place on their desktops. For its part, LexisNexis had a long-standing relationship with Time Matters, a ProLaw competitor, finally buying that company outright in March.
Both companies have introduced knowledge-management project software designed to tie together all the documents, information and intellectual assets of a law firm. With knowledge management, a firm can search through information and documents stored on its systems and find related materials and case law.
Both systems allow a firm to access its own documents through the same interface used to search for case law. Both companies see knowledge management not just as a new source of revenue but also as a way to make clients more dependent on and used to using their software.
The ProLaw acquisition is probably the furthest thing from legal research West has done, while LexisNexis has been moving a bit from the core business. LexisNexis’ CourtLink allows lawyers to file documents with courts electronically, but it is not part of the online research business. Last July, LexisNexis acquired Applied Discovery, a Seattle-based provider of Web-based electronic discovery. The company offers services to help download, store and perform forensic work on electronic records.
LexisNexis and West are betting the future of their companies on faith that lawyers will trust the same companies they use for legal research to do their billing, e-discovery, court filing and other law-related functions. “Normally, innovative software is only available at the high end of the food chain,” says Mike Wilens, president and CEO of West. “This one I think is the reverse. If you don’t have the money to have an IT person sitting around, we make it possible to still have a sophisticated software package.”
But as LexisNexis and West move into businesses not related to research, there is a danger that lower-priced services will steal some of their core business. A few years ago, many legal technology pundits were gleefully predicting that upstart dot-coms would eventually eat the two giants’ lunch. After all, most lawyers primarily need case law, and case law is in the public domain. If Internet companies can put it on the Web with a powerful search engine, they ought to be able to offer a low-cost alternative to high-end services.
That never happened; most such startups died when the dot-bomb hit. However, a few Internet services have not only survived but are also offering case law databases that are deep, though not nearly as authoritative as those of the two leaders. Loislaw.com publishes case law, statutory law, constitutions, administrative law, court rules and other authority for all 50 states and the District of Columbia, plus the 18 federal law libraries. VersusLaw has a complete archive of federal court decisions and is building its database of all 50 states.
LexisNexis and West argue that their myriad services add value that online case law cannot. In particular, they say that with services like KeyCite and Shepard’s citation services, lawyers get better quality information than is possible from the upstart Internet services.
“I never really worried about the so-called bottom feeders. Attorneys need reliable information, and the only place to get that is from us,” says Andreozzi. “I was an attorney, and I know that your reputation is on the line; your client’s future is on the line. There’s nothing more embarrassing than to go into court with an outdated case.”
The upstarts argue they are in the same position Lexis was in a few decades ago when it began offering select cases in digital formats. Less-expensive Internet services still hope that, given enough time, they can steal away budget-conscious customers.
“People forget that not every lawyer in the country pulls in six figures,” says Jim Corbett, vice president of business development at VersusLaw. “Small firms and solos need competent research as much as big firms. Using a service like ours to take a first pass at something can eliminate a lot of expensive searches.”
However, Lexis, Westlaw and the lower-priced services are facing a new competitor—the courts themselves. More and more courts are putting decisions and other records online for free, so a lawyer or researcher might be able to get all the needed documents in a jurisdiction without charge. According to the ABA 2002 Legal Technology Report, 71 percent of legal professionals reported using a free online service.
The for-pay services counter that court Web sites can be hard to navigate and have poor service. “Courts or bar associations may put cases online, but that’s not their primary business,” Corbett says. “The service is often not searchable, so unless you know where it is, you can’t find it. Keeping a search engine running well is not easy.”
FIGHTING THE FREEBIES
Lexis and Westlaw are fending off the challenge from cheap and free services—but with slightly different philosophies. During the boom, West bought FindLaw, a free Web site. Though Westlaw is the most popular legal site on the Web, West sees FindLaw as a referral service and hopes it will help the company compete with LexisNexis’ Martindale-Hubbell lawyer database.
That may surprise people who think of FindLaw as an online legal resource and Martindale-Hubbell as a collection of lawyers’ information. West believes individuals looking up legal information on the site will also use it to find lawyers to help with legal troubles. “Martindale-Hubbell has done a fabulous job with lawyer to lawyer referrals, but we’re here for the people who’ve never heard of Martindale-Hubbell,” says Debbie Monroe, general manager of FindLaw.
Though LexisNexis’ LexisOne free Internet service doesn’t get as much traffic as FindLaw, the company hopes it can become a feeder for its for-pay services. Visitors to the site can find a healthy dose of free information, but if they want more detailed data that LexisNexis keeps behind its paid service, they will have to pay extra or sign up for Lexis.
West believes it will create growth by catering to specific markets within the legal community. Wilens considers Westlaw Litigator, a newly designed site that offers information and research tools specifically for litigators, to be the biggest product launch in years. Litigator essentially repackages content already available on the service but makes it easier to find. Wilens envisions specialized packages for each practice area, even tailoring the software to the specific needs of practicing in different states.
Lexis continues to add new search features to help lawyers prepare for a case, making the service much more than just a way to find case law and legal information. For example, its CourtLink product now features a search that helps lawyers write better pleadings by helping a researcher find information such as the litigation history of a particular company, how a judge has ruled on specific types of pleadings in the past, and how many times a litigant may have opted for a settlement rather than go to trial.
But the big idea behind both companies’ current strategies is to use their brand name to sell nonresearch-related services to the legal community. Wilens says his vision is to build a service that offers a single place a lawyer looks to for law-related tasks such as research, billing and calendaring. He says he believes a company like West can become a one-stop shop for a law firm’s needs. “We’ll make it possible, particularly at the low end of the market, for people without a technical background to have a sophisticated back-end software system,” Wilens says.
LexisNexis’ moves into electronic filing and electronic discovery are farther afield from research than West’s moves to date. The services are not going to be integrated into Lexis research products but run as part of a family of products. “It would be a shame to run them as totally separate entities, but it would be a shame to totally integrate them with the Lexis mother ship, too,” says Andreozzi.
Both companies have had relatively flat earnings for the past few years, so new services make business sense to help jump-start profits. Lexis and Westlaw have spent decades cementing themselves as the leaders in legal research. The big question is whether law firms are ready to trust them with the nonresearch parts of their practices.
So far, a few large law firms have begun rolling out knowledge management systems, though it’s still too early to tell whether the concept will take off. And LexisNexis and West both boast that the acquisitions and new products are adding to their bottom line. But it’s also too early to tell whether the legal community wants LexisNexis and West to be their one-stop technology shop.
As Andreozzi puts it, “If we were just about case law, we’d be in deep trouble.”
Jason Krause is a legal affairs writer for the ABA Journal.