UK Legal Market Research: Reactions to PLC Acquisition
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By Robin Neidorf

Abstract

Robin Neidorf introduces 2013 FreePint research into UK legal firms' budgeted spending on the three major suppliers: LexisNexis, Practical Law Company (PLC) and Thomson Reuters, and legal information professionals' reactions to Thomson Reuters' planned purchase of PLC. The article outlines likely changes along with key areas of concern as the number of key information suppliers contracts to two. Research into US legal firms' spend on information sources starts later this month and FreePint welcomes contact from any librarians who would like to be part of the project. 

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When Thomson Reuters announced in early January 2013 its intent to acquire Practical Law Company (PLC), industry observers reflected on recent developments - most significantly the linking of Westlaw content within PLC's workflow modules - and decided they weren't surprised. Within the UK legal market, three main publishers have dominated: LexisNexis, PLC and Thomson Reuters. As the disruptor of the three, PLC made for an attractive acquisition target.

Despite past rumours that LexisNexis had made overtures towards acquisition, it was clear that company strategy lay in developing its own workflow product, in Lexis PSL. That left Thomson Reuters as a potential suitor.

Industry players may not be surprised, but they're also not entirely happy about the development, particularly if they manage UK law firm libraries. FreePint's 2011 research on buying patterns and priorities in over 70 of the top 200 law firms found that a staggering share of law firm content budgets were going to the three main suppliers. With a relatively fresh baseline of information to work with, I contacted those interviewed in the 2011 research to find out about their reactions to the announcement, as well as other librarians who had not been able to participate but had expressed interest. 

In February 2013, then, I conducted interviews with 50 law librarians about their current spending patterns across the main suppliers, their perceptions about those suppliers, and their feelings about the acquisition. 

As with the 2011 research, this project focused on some of the largest law firms in the United Kingdom, which has an important impact on the scope of content these firms need in order to do their work. The firms covered in this project have an average of 362.4 fee earners, with an average of 6.9 information professionals supporting them. However, these averages are skewed somewhat by a number of the very largest firms, as the median number of fee earners is only 155 and the median number of law librarians is a mere 1.5 FTEs.

Figure 1 shows a scatter graph of the number of fee earners and information professionals included in this project (one significant outlier with more than 100 information professionals has been removed from this figure).

General Mistrust

Across all the interviews, a tone of general mistrust of the likely outcomes of the acquisition was in evidence. With so much of their budgets beholden to a small number of suppliers for what is deemed to be "need-to-have" content, law librarians feel they have little negotiating room in their dealings with these suppliers. Any significant change, particularly one that reduces the key suppliers by one-third, arouses their concern that they will be stretched beyond their ability to cope.

The biggest concerns expressed focused on:

• Pricing: will vendors be more likely to raise prices indiscriminately? 
• Quality: PLC is a popular product, generally perceived to be of high quality; can quality be sustained through an acquisition? Will the quality of customer service decline?
• Duopoly: regardless of how vendors actually behave in the marketplace, is a duopoly situation healthy for buyers or sellers or legal information?

At the same time, several librarians commented on potential positive outcomes for the future of legal products, their ability to purchase what they need at appropriate prices, and the competitive landscape. However, these comments were far outnumbered by neutral or negative, mistrustful reactions.

What's Really Changing?

But these interviews were conducted in the very earliest days of a potential change, and the acquisition of PLC's UK assets and business has yet to be approved by the Office of Fair Trading (though the US sale has been completed).

Even supposing the deal were to be approved quickly, many interviewees asked the logical question, "How quickly would anything really change?" Thomson Reuters' acquisition style has not traditionally been to purchase and immediately overhaul a company or product. Several interviewees pointed out that Lawtel, acquired by Thomson Reuters in 2002, still operates as an independent offering, though some efforts to draw it more closely into the product portfolio seem to be underway. Librarians often refer to "Sweet & Maxwell" rather than Thomson Reuters when speaking of the parent company - clearly Sweet & Maxwell continues to have brand visibility, despite its acquisition by Thomson back in 1987. This is not an environment in which dramatic and swift changes are likely to happen.

So a strong note of caution also underlined these interviews: librarians noted that they could only speculate until some indications are made as to Thomson Reuters' plans. The most hopeful of the interviewees want to see closer integration of Westlaw UK content within the PLC product, but they are not expecting quick action.

Age of Anxiety

Cautionary tones throughout these interviews were tinged with anxiety: nearly 80% of those interviewed have budget years that start in April or May. Although their contracts with LexisNexis, PLC and Thomson Reuters do not necessarily come up for renewal at that time, they are making decisions and supporting financial commitments with significant holes in the information available to them. 

Will critical sources be changed for the worse or priced beyond reach? How can law librarians manage the value proposition of their content purchases, in a duopoly environment with limited alternatives? These are the open questions that create anxiety.

FreePint Subscribers can log in to access the FreePint Report: UK Legal Market Research: Reactions to PLC Acquisition

"This report will be of great value to me as I meet with the managing partner in the near future to discuss the budget. It is one of the most relevant and timely pieces of research I have ever received." -- Librarian, West End law firm (UK)

Researcher's Note about Scope

Thomson Reuters' acquisition of PLC has a disproportionate impact on the UK legal market, compared with the US market, because of the way three suppliers have dominated the UK market. PLC is a relatively new player in the US market and, while growing, has not yet achieved the same level of disruption that it did in the UK.

For that reason, this research focused on the UK market, building on FreePint's 2011 research. However, starting in March 2013, we are working on a comparative study of the US legal market, taking a slightly broader view to include:

• Market share and brand perceptions of other key suppliers in the US legal market
• Unmet needs for content, features and support.

If you are a US law librarian who would like to be part of this project, please email me directly at robin.neidorf@freepint.com. All participants will receive a copy of the full report upon publication.

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