Visa and MasterCard, Boeing and Airbus, LexisNexis and Westlaw. All three are MBA textbook examples of the power of market duopolies.
In the case of Lexis and Westlaw, the duopoly for electronic access to legal documents goes back to the 1970s as they became the first and second options in the new and emerging technology known as Computer-Assisted Legal Research (CALR).
For decades the two companies solidified and sustained their duopolistic status, but lately, newer technologies and new competitors are changing the market dynamic. This article will take a pandemic-driven look at LexisNexis (now part of RELX) and Westlaw (Thomson Reuters), along with increased competition from players like Bloomberg, Wolters Kluwer, Fastcase, Casetext and others.
This post brought to you by COVID-19
You may be getting tired of the jargon and language coming out of this pandemic, but these new circumstances truly have shaken the foundations of law firms and other businesses.
Legal subscriptions and databases are a Big Expense in Big Law, and now that many firms have reduced their workforce and were forced to move current staff and lawyers to home offices, clients have been requesting our guidance to help them delay payments and review existing contracts.
You may be experiencing the same frustrations they have like:
- Bundles that can’t be unbundled.
- Print resources that nobody can get to while working from home.
- Changing service requirements.
What we’re finding are 2020 renewals being extended at the same price, providing some discounts for firms willing to commit to longer contracts as well as vendors (especially the big two) adding other products at no additional cost. Rather than price reductions, they prefer tactics like credits, which enable them to keep their baseline.
What’s important to remember is that every organization is facing the same economic uncertainty and unknowns. Requests that vendors would have flatly refused in 2019 may be considered in 2020, since everything (reasonable) seems up for grabs. Now more than ever, firms need to identify and protect whatever leverage they have in order to gain maximum benefits from any of their key vendors.
New competitive landscape thanks to legal analytics and AI
The last few years have seen new options for AI-enabled and analytics-driven legal research that have had a big impact on the duopoly, eating into their market share.
- 2009: Lex Machina was brought to market and then acquired by LexisNexis in 2015.
- 2013: Casetext was founded as a new legal research option with both conventional search and its “CARA” AI contextual search.
- 2015: The same year Lexis acquired Lex Machina, ROSS Intelligence was founded, armed with an understanding of machine learning.
- 2018: Thomson Reuters announced their AI solution, Westlaw Edge.
- 2020: Contract review platforms dominant and secure funding.
Regarding Westlaw Edge, many of our clients didn’t jump immediately on that bandwagon, but now with renewals, we will see what decisions are made. The above list of new offerings is far from complete, but it brings us to our next topic of product redundancy.
The case for multiple vendors and information resources
Most of the largest firms—with over 1000 attorneys and global offices—have both Lexis and Westlaw for core research, along with a few outliers. Attorney preferences play a part, especially when firms are anxious to keep their top talent satisfied and happy. Many firms also have niche needs across different locations and practice areas that are better served by different vendors like Bloomberg, Wolters Kluwer and many others. Finally, deploying multiple products is a way to manage risk and stay competitive—paying more for duplication and redundancy is worth it for some of the prestigious large firms, if it keeps opposing counsel from having an information advantage.
Price obscurity in a time of increasing transparency
One area in which Lexis and Westlaw have not conceded to their new competitors is pricing. Upstarts like Fastcase, Casetext, and ROSS all have published pricing that has helped them gain a foothold with single lawyers and small law offices, especially with per-seat pricing well under $100 per month, and discounts for annual contracts. They also offer enterprise level options that are not publicly disclosed, but with their baseline set and published on their websites, these vendors have added much greater transparency into legal research pricing, with much less variance than we find with the big players. It remains to be seen if the post-pandemic economy brings greater transparency to Lexis and Westlaw pricing—we’re not holding our breath.
Vulnerability due to uncertainty and innovation
Economic uncertainty and innovation are two forces that can wreak havoc on market share, as they become the catalyst and reason for customers to switch. Otherwise the switching costs and hassles—vendor selection process, implementation and rollout, user training—work in favor of incumbent suppliers.
The uncertainty caused by the COVID pandemic, along with further technology advances, are certain to make both Lexis and Westlaw more vulnerable. As confirmed by Jean O’Grady and her 2019 Hits and Misses Survey:
No major vendor will be spared of cancellation scrutiny in 2020. Even before the pandemic readers were using phrases such as” constant scrutiny” and referred to “high cost/ low usage,” “pricing not competitive” as well as mentioning products which were both redundant and expensive.
The legal research market has become crowded in the last decade, and 2020 started with a rapid contraction in the legal industry. Our clients, and any customers of services like Lexis and Westlaw, cannot afford to lose access to information that will keep them competitive.
Cost-cutting and cash flow optimization may be your top priority now, but we advise you to trim wisely.
- Report: In the beginning, there were two
(A look at the abundance of new information subscription services)
- Three Legaltech Companies, All in Contracts, Have Financing Rounds
(Bob Ambrogi, LawSites)
- Lexis, Westlaw, Bloomberg Spending Under Scrutiny
(Jean O’Grady’s 2019 Hits and Misses Survey)