Category Archives for "Pricing"

Nov 13

Lexis’s Legal Pricing Strategy Has Haters, But Might Be a Risk Worth Taking

By Michael Feit | Feit Consulting , Pricing , Vendors

This article appeared in Legaltech News on 6/25/18.

By Michael Feit
mike@feitconsulting.com

Sometimes, there’s not much that can help the medicine go down, and when there’s not, it becomes clear the rather repugnant taste of it (the medicine). This is a metaphor for the now center-stage discussion taking place regarding the pricing practices of LexisNexis and the cease and desist letter prepared by AALL which argues that Lexis’s recent tactics breach anti-competitive covenants rendering the new sales practices illegal or at least render the tactics at odds with the AALL Guide to Fair Business Practices for Legal Publishers.

LexisNexis and Westlaw dominate the lion’s share of online research and print platforms for all law firms of all sizes; in fact, most large firms historically adopted a practice of providing both services to its attorneys. Today, less than half of larger firms retain both. Prior to the recession law firms were able to pass-through and recover >80% of their Lexis and Westlaw costs. However, since the recession, both vendors have been in defense mode. Online cost recovery has dropped to <35% and firms have been increasingly realizing retaining both vendors is unnecessary. The evaluation of the sole provider option is not just a viable option for most firms—it is a necessity.

Having discontinued the ideal world of standardized pay-as-you-go retail pricing by 2010, both have been operating in secretive pricing practices and leveraging terms that vary greatly from firm to firm—not the least of which is pricing Am Law and NYC firms disproportionately higher than the rest of the market, albeit ad hoc.

Therefore, LexisNexis recently leveraged the power of a certain suite of its products–including Lex Machina, Law 360, Wall Street Journal and American Lawyer subscriptions–to the sale of Lexis Advance; an unpopular move within the information services community, the move is a tactical effort to win sales over Westlaw abut which subsequently triggered the outcry from the information services community.

What Lexis is doing is really not that unusual in this market. In an ideal world, yes, the industry’s two dominant players–Lexis and Westlaw–would publish retail pricing, and firms could pick and choose buffet-style which products they wanted based on their practice needs and budget. Unfortunately, that ideal world does not exist, and has not existed for some time. Both Lexis and Westlaw are mature products in a saturated market trying to hold on to a revenue stream that has nowhere to go but down.

Ever since the release of WestlawNext, Westlaw has been the more popular platform. Lexis, for some time, had an inferior interface that made Westlaw the go-to vendor at many firms that continued to have both vendors. Lexis, as a result, was then easier to cut because of low usage. Even when Lexis was retained, it typically was in the context of a large price concession.

On top of this, and symptomatic of a mature market, there are now many new tools and efficiencies that are cannibalizing usage–and new tools will continue to emerge and continue to cannibalize. Lexis has invested in several analytical tools, but artificial intelligence products, savvy analytical tools are all going to erode the use of Lexis and Westlaw, unless, of course these vendors continue to purchase all the new products entering the market.

For all these reasons and more, firms are vigorously debating the viability of operating with just one platform—and for the first time since the early 90’s, retaining just one of these vendors has become the norm. Our data shows 54% of large law firms have now, in fact, opted to retain only one vendor, with about 60% choosing Westlaw.

In a tangible way, there are winners and losers. Lexis would not be able to recover 7+ years of usage lost to WestlawNext without this tie-in tactic. Tying Lexis Advance to core products, such as Lex Machina, Law360 and print has made Lexis competitive once again versus Westlaw. While doing so is not building good will, customer service and satisfaction are not the primary aim of a mature vendor—the products just need to be indispensable and, for at least some firms, it appears that some are.

Elimination of Lexis is no longer easy. Firms that have recently eliminated Lexis have found it uncomfortable to live without the peripheral products. Some have come back into the Lexis fold and others are contemplating coming back. Firms who would have eliminated Lexis are now thinking twice about that outcome.

Does this make Lexis the winner? In the short run, potentially yes—meaning, this strategy is working for Lexis to preserve its client base and revenue stream for now. However, Lexis runs a huge risk that firms who are forced to live without their other products might find that life-style relatively easy and may never return. Currently, Lexis is banking on that not being the case but only time will tell.

Nov 09

Market Angst! Vendors are trying to get more money out of a mature market

By Michael Feit | Feit Consulting , Pricing , Vendors

This article appeared in Legaltech News.

By Michael Feit
mike@feitconsulting.com

Sometimes, there’s not much that can help the medicine go down, and when there’s not, it becomes clear the rather repugnant taste of it (the medicine). This is a metaphor for the now center-stage discussion taking place regarding the pricing practices of LexisNexis and the cease and desist letter prepared by AALL which argues that Lexis’s recent tactics breach anti-competitive covenants rendering the new sales practices illegal or at least render the tactics at odds with the AALL Guide to Fair Business Practices for Legal Publishers.

LexisNexis and Westlaw dominate the lion’s share of online research and print platforms for all law firms of all sizes; in fact, most large firms historically adopted a practice of providing both services to its attorneys. Today, less than half of larger firms retain both. Prior to the recession law firms were able to pass-through and recover >80% of their Lexis and Westlaw costs. However, since the recession, both vendors have been in defense mode. Online cost recovery has dropped to <35% and firms have been increasingly realizing retaining both vendors is unnecessary. The evaluation of the sole provider option is not just a viable option for most firms—it is a necessity.

Having discontinued the ideal world of standardized pay-as-you-go retail pricing by 2010, both have been operating in secretive pricing practices and leveraging terms that vary greatly from firm to firm—not the least of which is pricing Am Law and NYC firms disproportionately higher than the rest of the market, albeit ad hoc.

Therefore, LexisNexis recently leveraged the power of a certain suite of its products–including Lex Machina, Law 360, Wall Street Journal and American Lawyer subscriptions–to the sale of Lexis Advance; an unpopular move within the information services community, the move is a tactical effort to win sales over Westlaw abut which subsequently triggered the outcry from the information services community.

What Lexis is doing is really not that unusual in this market. In an ideal world, yes, the industry’s two dominant players–Lexis and Westlaw–would publish retail pricing, and firms could pick and choose buffet-style which products they wanted based on their practice needs and budget. Unfortunately, that ideal world does not exist, and has not existed for some time. Both Lexis and Westlaw are mature products in a saturated market trying to hold on to a revenue stream that has nowhere to go but down.

Ever since the release of WestlawNext, Westlaw has been the more popular platform. Lexis, for some time, had an inferior interface that made Westlaw the go-to vendor at many firms that continued to have both vendors. Lexis, as a result, was then easier to cut because of low usage. Even when Lexis was retained, it typically was in the context of a large price concession.

On top of this, and symptomatic of a mature market, there are now many new tools and efficiencies that are cannibalizing usage–and new tools will continue to emerge and continue to cannibalize. Lexis has invested in several analytical tools, but artificial intelligence products, savvy analytical tools are all going to erode the use of Lexis and Westlaw, unless, of course these vendors continue to purchase all the new products entering the market.

For all these reasons and more, firms are vigorously debating the viability of operating with just one platform—and for the first time since the early 90’s, retaining just one of these vendors has become the norm. Our data shows 54% of large law firms have now, in fact, opted to retain only one vendor, with about 60% choosing Westlaw.

In a tangible way, there are winners and losers. Lexis would not be able to recover 7+ years of usage lost to WestlawNext without this tie-in tactic. Tying Lexis Advance to core products, such as Lex Machina, Law360 and print has made Lexis competitive once again versus Westlaw. While doing so is not building good will, customer service and satisfaction are not the primary aim of a mature vendor—the products just need to be indispensable and, for at least some firms, it appears that some are.

Elimination of Lexis is no longer easy. Firms that have recently eliminated Lexis have found it uncomfortable to live without the peripheral products. Some have come back into the Lexis fold and others are contemplating coming back. Firms who would have eliminated Lexis are now thinking twice about that outcome.

Does this make Lexis the winner? In the short run, potentially yes—meaning, this strategy is working for Lexis to preserve its client base and revenue stream for now. However, Lexis runs a huge risk that firms who are forced to live without their other products might find that life-style relatively easy and may never return. Currently, Lexis is banking on that not being the case but only time will tell.

Nov 09

Optimal Contracts are Core to Delivering Value

By Michael Feit | Pricing

Do you truly know whether your contract has the best terms and pricing compared to the market?  How prepared is your firm for your next contract negotiation?

The number 1 priority of legal procurement is to better analyze and reduce legal spend according to the 2018 Buying Legal Council Survey.  What this means for law firms is increasing price competition and a resultant downward pressure on price.  Internally, this means every department within a law firm is under intense scrutiny to demonstrate value in terms of any business metric that measures how well the firm delivers client service at the most cost-effective price.

For legal information professionals, core to demonstrating departmental value is optimizing provider services and contracts.  One of the biggest mistakes we see are contract renewals without application of the right leverage and industry knowledge.  The value of firms’ online research platforms does not automatically increase 3-5% annually just “because”.  To pay increases annually, it would be expected that the firm is receiving more value, content or features than the year before. Complacency or lack of diligence in managing information resources can have long-lasting unfavorable implications on both processes and costs, thereby hampering overall efficiency.

Simply consider the recent and rapid changes in the market for online research providers.  It is unlikely that firms’ contract pricing and content are aligned with current products, strategy, and shifts in the market.  Resources purchased in the past may no longer provide the necessary tools to remain competitive and cutting edge today. Legal information needs are continually in flux and should be reviewed periodically.

An optimized budget delivers the financial resources necessary to take advantage of new and exciting offerings currently emerging in the market, such as new AI and analytics tools.  Having access to these products could be significant in creating new efficiencies and enhancing productivity at your firm. Asserting yourself in confidence, understanding your choices and making them clear at the negotiation table will ensure you reach the best outcome for your firm.

However, pricing knowledge alone is not enough to optimize pricing. Strategy and negotiation tactics are critical for success. Law firm administrators must understand their leverage and be able to utilize it a meaningful and timely manner. Gaining a clearer picture of your purchasing power is essential to achieving an optimized outcome.

Feit Consulting has developed detailed strategies and the industry’s most comprehensive benchmarking, that helps information professionals achieve the leverage required for successful vendor negotiations. You can see a preview of our comprehensive Optimizing Legal Information Pricing white paper here.  Want to discuss your firm’s specific needs or have your contracts benchmarked? Contact us at info@feitconsulting.com.

 

Mar 19

Are you ready for your next Contract Negotiation?

By Michael Feit | Feit Consulting , Pricing

Many firms give themselves just three months or so to work on their next round of legal-information contracts. Whenever possible, however, it is best to allocate more time for planning and evaluating the real value of legal-information resources. The vendors will have their own timeline. However, your timeline should be much longer to account for resource evaluation prior to the start of vendor negotiations.

Planning ahead with the right tools and knowledge is not only critical but absolutely necessary for success. Key leveraging points may include change in size of firm, ample time to make certain contracts co-terminus, firm-wide interest in the sole-provider option, usage and value of each legal information resource, to name a few. A multi-year plan allows one to know ahead of time what the firm’s goals are going into contract negotiations.

With 3+ year contracts, the deadlines can seem to immediately appear without realizing the time left to prepare. Firms that obtain market knowledge to compare their contract pricing, coupled with key metrics to assess contract resources’ value, will gain significant leverage in legal information contract negotiations. Get the tools you need now in order to successfully negotiate and optimize your firm’s legal-information resources and pricing. Working with a consultant can help your firm navigate the complexities of these important vendor negotiations. Feit Consulting partners with firms to strategize and obtain optimal contract pricing and terms. Learn more about our consulting services here.

Mar 19

When do contracts longer than 3 years make sense?

By Michael Feit | Pricing , White Papers

Both Lexis and Westlaw are currently pitching long-term deals. This is symptomatic of a saturated market. Online usage and recovery rates have been declining since 2008 and as a result pricing has declined. Why lock your firm into a long-term price commitment in this rapidly evolving market?

Negotiating with the vendors can be a frustrating, drawn-out and often unsatisfying process. For many of our clients, negotiating ranks with tax-time on everyone’s list of fun things to do making the idea of fewer renewals sound enticing.

However, with rare exceptions, a long-term contract is among the worst paths a firm can choose for several reasons. One important reason seems obvious: change. Technology and pricing are continuously changing. You wouldn’t buy a plan that kept you from upgrading your phone for 5 years, would you? The legal information landscape is rapidly evolving with exciting acquisitions and new companies/products emerging. These products will continue to pull away use and interest in Lexis and Westlaw. It is always possible that one change in the market could make another product irrelevant. And as Artificial Intelligence rapidly gains momentum, there is much to be seen. What will the legal information landscape look like in 5 years?

Generally, a longer contract benefits the vendor. For legal information contracts, we always advise keeping the term to within your near- and long-term forecasts, generally 3 years or fewer unless you are receiving a truly exceptional deal.

How exceptional is the new proposal? What are the year over year increases? What additional benefits are you receiving for a longer-term contract? Perhaps your firm/organization deleted the vendor in the past and is seeking to reinstate, leading to pricing and terms that are best in market. Make sure they are, and not just because the vendor has told you so. Another option to consider is bundling. Bundling products together can be an advantageous for some. However, for many, a new contract bundle may be hiding unnecessary products or content that the firm or organization doesn’t need. Take a good look at the bundle being offered. It could be a great deal, or it might not, but in either case, it is worth investigating.
Your current contract pricing and terms serve as the basis for upcoming contract negotiations. Learn whether your current contracts or vendor proposals are on par with Feit Consulting’s Market Benchmarks. We can shed light on spend per attorney, discount, and usage. Contact a Feit Advisor to have your contracts and proposals benchmarked. Alternatively, utilize Feit Consulting’s Optimizing Legal Information Pricing report which shares Feit’s market knowledge on these metrics along with concrete strategies to maximize results in your legal information contract negotiations.
Mar 10

Strategy, Planning, and ROI Tracking for 2018

By Michael Feit | Best Practices , Contract Negotiations , Feit Consulting , Librarians , Modern Law Library , Pricing , Sole Provider , Vendors

Spring brings about the opportunity to do things differently. Technology and the buzz word – modernization, are on the mind we enter into this new year. There are tactical things you as an Administrator or Librarian can do to stay ahead of the game this coming year, and make technology and modernization optimized within your Library.

Budget – Two key words come to mind with regards to budget: collaboration and reporting. Work with Finance to more efficiently monitor budget and expenses. Establish a new schedule for collecting data, and the date of each month or quarter you will turn around that data. For example, receiving data on the 3rd of the month and providing a report to management on the 10th of each month.

Reporting – What metrics are you using to measure ROI and showcase value? Are you collecting feedback from library users? Are you using an Electronic Resource Management (ERM) tool? If so, are you utilizing its full capacity?

Contract Management Planning – Implement new deadlines for legal information management planning. Most of us mark contract expirations on a calendar or in a tracking program. Go a step further.

  • Month 1: Determine which tools you have in place that can provide data on usage, costs, and value. Such tools may include: Invoices, ERM, developing a survey for users, and scheduling one-on-one conversations with attorneys and staff to assess value and usage of products.
  • Month 2: Collect data. Based on the tools determined in month 1, begin collecting data. Work with finance to dive into invoices.
  • Month 3: Analyze the data. Understand what is your ROI for the expiring product(s). Look at as many metrics as you can: Spend per Attorney, usage, discount, etc.
  • Month 4-6: Begin the negotiation process by requesting a proposal from vendor. Remember, it is more beneficial for vendors to wait to the last minute for pressure to sign the new contract. It won’t be easy but start early.

For firms and organizations considering eliminating Lexis or Westlaw, start this process 9 months to 12 months in advance of your contract expiration of either vendor. Assessing vendor preference and combating concerns is a lengthier process than one might think. While it has been done in a month, having more time on your side is always an advantage.

Feit Consulting’s Optimizing Legal Information Pricing is an excellent resource. It shares detailed processes and steps for contract negotiation planning, knowing which metrics to use, and how best to strategize the negotiation process.

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