Category Archives for "Feit Consulting"

Edge: Failure or Masterstroke?

By Michael Feit | Feit Consulting

Our recent mini survey about Westlaw Edge and Lexis Context results are in, and it is interesting to compare the data to our forecast for Edge pricing. In our latest book, Optimizing Legal Information Pricing, we forecasted that roughly 20% of the market would purchase Edge within a year, at nearly 10% increases.

With almost a year under its belt, it appears that Edge adoption will be very close to our forecast. With 15% of Westlaw firms having already adopted, we think it is reasonable to expect that in the next 5 months Westlaw Edge will penetrate another 5% of the market.

The average Edge percentage price increase is slightly lower than the double-digit year-one increases we expected, coming in at 9%. Firms that have purchased the product are happy with it, but for the most part, they do not feel that Edge is a game-changer in the way that WestlawNext was.

So, has Edge been a failure or a masterstroke?

To understand the impact Edge sales have had on Westlaw revenue, we looked at the large law firm market segment (defined as firms with over 100 attorneys). We made some general assumptions about that population and for illustrative purposes, using a hypothetical average spend per attorney to come up with potential revenue impact for this segment. Please note this hypothetical does not match our actual price guidance for Westlaw. (You can find that guidance in our Optimizing Legal Information Pricing book here). Below are our assumptions:

• 400 firms in the over 100 attorney segment
  • 80% of those firms have Westlaw
  • 320 firms have Westlaw
• Average firm size is 250 attorneys
  • 80,000 attorneys total large law population with Westlaw
• Hypothetical average spend per attorney for Westlaw in the market $175 per attorney per month
• Hypothetical revenue to Westlaw for over 100 attorney law firm segment: $168 million

Our survey indicated that roughly 15% of the market has purchased Edge, which translates to 12,000 attorneys with the product. If their cost increased 9%, Westlaw’s annual revenue grew roughly $2.2 million annually, or roughly only a 1.4% increase. If this 1.4% increase was the entire story, you’d probably call Edge a failure.

However, to really understand how well Westlaw has actually performed with Edge you need to consider who the real purchasers likely are. In our Optimizing book, we note that roughly 15% of the market is over-paying for Westlaw, by 150% or more. Although we have no way to correlate who each of those firms are, it is very likely that they are most of the early adopters of Edge. These firms tend to be early-adopters of all products and have less price resistance than the market in general.

If you assume that most of the early adopters of Edge have a spend per attorney that is vastly (>150%) above the market, Westlaw’s incremental revenue grows to $6.8 million per year. This represents a 4% increase alone, just from Edge. If that is the case, Edge would be deemed a moderate success.

Beyond this, and likely the greatest impact to Westlaw is the ability to leverage Edge to lock-in and extend a majority of their highest-paying customers. Every Westlaw Edge discussion that is not a renewal (about 2/3rds) is a reason to drop into the firm and extend the agreement for another 3-5-year period, securing a very significant and otherwise vulnerable revenue stream.

In conclusion, although Westlaw Edge may seem to have had an unspectacular first year, the dollar value increase combined with the ability to extend existing contracts has bought valuable time for Westlaw to hold off potential threats from Lexis or Bloomberg – making Edge a masterstroke.

Is the Tide Turning in Summer Associate Vendor Preference? Our Survey Results Are In!

By Michael Feit | Feit Consulting

One of the key indicators for predicting vendor success year after year has been the preference of incoming summer associates for Westlaw or Lexis.  For the last 5+ years, Westlaw has overwhelmingly been preferred by incoming Summer Associates.

Feit’s 2019 Summer Associate Vendor Preference Mini-Survey results show that the tide may be turning. 

We asked U.S. law firm research departments to participate in a survey of their perception of Summer Associate legal information provider  preference/awareness. 

Our survey results show that, although Westlaw has maintained its dominance in regards to the awareness and preferences of incoming associates, Lexis is moving the needle.  According to the survey, Summer Associate preference for Lexis doubled – from 15% last year to 30% this year.

Check out a sneak peek of some of the data collected: 

Lexis’ strategic push to concentrate on law schools is critical for them to successfully compete with Westlaw.  While 30% is an improvement, their academic program has a long way to go before Westlaw is dethroned.

Get the full details from Summer Associate Vendor Preference Mini-Survey – you can purchase here.

Mini-Survey: Westlaw Edge and Lexis Context

By Michael Feit | Feit Consulting

There’s a lot of buzz around Analytics/AI products like Westlaw Edge and Lexis Context—but to what degree are firms actually purchasing these products and, more importantly, are they happy with their purchase?  

We decided to find out! 

Last week, Feit Consulting launched a mini-survey to capture the reality behind the buzz—and the results are very telling already.  In a very short period of time, over 60 law firms (25% in the AmLaw 200) have participated in our survey.  This indicates to us that firms have a high degree of interest in understanding from their peers the value of these new tools.

An early result we can share is the percentage of firms that have Westlaw who have purchased Edge is roughly the same as the number of firms that have Lexis and have purchased Context: trending at 15%.

Context seems to be getting much more consideration, however, because of its much lower cost.  At this point 40% of firms with Lexis are actively considering Context. 

The proof in the pudding will be firms’ satisfaction with these products—we will continue to compile this data and will share the results with our survey participants.

If you and your firm want in on the complete data, participate!  All survey participants will receive a complimentary copy of the results —and participation takes less than 3 minutes.  The survey is open now and will close June 16th. 

Why Optimize Pricing? Here’s What Your Firm Could Gain

By Michael Feit | Feit Consulting

Feit Consulting’s Optimizing Legal Information Pricing book helps firms optimize their legal information vendor spend.  What surprises firms, however, is what this really means in hard dollar savings.  In just the first year, a typical 200 attorney firm could achieve over a million dollars in savings.   Watch the video below to learn how it works! 

Customer Sentiment vs. Pricing: Why are these not aligned?

By Michael Feit | Feit Consulting

One would think that customer sentiment and pricing would be like a dot-to-dot exercise with a straight line easily drawn from high levels of satisfaction to steady, if not incremental, year-over-year price increases. Instead, other factors like hitting the price ceiling and reaching critical mass with ancillary products also influences forecasted pricing.

This disconnect is what we found as a result of our analysis central to Feit Consulting’s 2019 Legal Information Pricing book.  When juxtaposing customer sentiment with the pricing forecast analysis, there are some striking discontinuities which at first glance, may seem even contradictory. 

The market, for instance, has a very favorable opinion of Westlaw; in fact, the most favorable opinion of any provider.

However, our pricing forecast went on to show Westlaw as the only product covered in 2019 Legal Information Pricing whose price will decline over the next five years.  How could this be?

Ironically, Westlaw’s consistent strong performance in comparison to Lexis, makes it extremely vulnerable.  Currently at nearly double Lexis pricing, the report fleshes out the unsustainability of this price gap.  In short, Westlaw–and the market–may have found its pricing ceiling.

Flipping the sentiment, on the other end of the scale, 32% of respondents were extremely or moderately dissatisfied with Lexis. However, this did not correspond with linear drop in price as Lexis now offers an array of products that most firms consider indispensable.  Lexis may have reached a ‘critical mass’ with well-used ancillary products that are creating different outcomes than expected. 

In terms of sentiment, Bloomberg is by far the biggest loser with 64% dissatisfaction.  However, our guidance indicates price growth for Bloomberg as they have important content.  In addition, the market now expects aggressive price increases.  As Bloomberg improves, we expect its pricing to stay competitive with Lexis and move toward Westlaw over the next five years. If you believe Bloomberg’s hype, its product will improve each year substantially and unlike with Westlaw and Lexis, and firms will not have to purchase add-ons as the product improves.

A comprehensive discussion is outlined in 2019 Legal Information Pricing.

Rethink Recovery?

By Michael Feit | Feit Consulting

Recovery rates continue to decline.

However, when we drilled down into our 2019 Legal Information Market Survey results we noticed a trend, with recovery rates holding steady at firms that continue to try.  This made us ask the question; should the trend to move online legal research costs to overhead be reconsidered?

Clearly the heyday of recovery is over.  Prior to the 2008 Recession a law firm could expect to ‘recover’ (bill clients for) 85% or more of their online research costs for Westlaw and Lexis. For a large firm, recovery at those rates meant hundreds of thousands (often millions) of dollars in cost reduction.  Often wiping out the vast majority of the cost of online legal research.  A firm with good recovery could effectively purchase and use Westlaw and Lexis as if it were free.  Clients were footing the bill, and there was little pressure on the firm side to analyze ROI or make strategic and optimal choices between offerings available on competing platforms.

After the Great Recession, everything changed.  Recovery rates nosedived as client’s began to scrutinize their billing and often removed Wexis charges as a matter of course.

Our survey results indicate that nationally all firm recovery is averaging 28%.  However, for Firms that actively try to recover (backing out the firms that have already moved to overhead) the true recovery rate has been holding at 38%.  Firms have discovered that there is a ‘bottom’ on the deterioration of pass-through costs and it looks like recovery has somewhat stabilized.

The overhead trend is clearly entrenched now, but it makes you wonder if it makes economic sense for anyone to move recovery to overhead.   You can learn more about the overhead trend, and see specific data and charts in our book Optimizing Legal Information Pricing.  This is particularly true in a market where vendors are aggressively increasing their prices and firms are looking for ways to reduce costs.

Obviously, there are cultural and qualitative reasons to move away from recovery.  Attorneys don’t like to pass through one-off research costs to clients or risk irritating them.  Many lawyers and firms believe there is a hidden marketing benefit to clients when the firm does not charge for online research costs.  We hear this often, but the true benefits are difficult to quantify.

On the other hand, if you are recovering our market average of 38 cents on the dollar, and your firm’s spend with Wexis is $1 million a year, your return on your recovery efforts is $380,000.  Obviously, there is a diminishing return the smaller the firm size (and the research cost).  In most cases, however, successful recovery provides some wiggle room in your budget to offset costs.

This made us re-think the idea that recovery should be a dying trend.  We now see an important upside in maintaining and enhancing recovery.