Thursday, July 29, 2004 1:37 PM
In reaction to recent acquisitions by both Thompson-West and Lexis, Dennis Kennedy
asks the question of whether law firms will soon face the choice of being a "Lexis Shop" or "West Shop." It is a good question and one which may very well become reality soon.
My own sense is that the main roadblock to this reality is that neither Lexis or West has the Document Management System (DMS) piece of the puzzle. However, this roadblock could quickly come down (and probably will) through continued merger and acquisition activity.
The importance of the DMS for large law firms cannot be understated. It is the lifeblood of the firm. And, it is one of the few software applications that almost all of a firm's lawyers actually know how to use. Owning the DMS means an immediate seat at the table and involvement in a firm's long-term technology planning. It also puts a company in a leadership role in terms of developing (and selling) new solutions that can better tap into and leverage the millions of documents stored in law firm databases. Finally, the DMS can itself be a powerful roadblock for new competitors (as an example, I firmly believe Microsoft's biggest miscalculation in trying to sell its Sharepoint portal system to law firms has been its failure to recognize the mission critical importance of law firms' legacy DMSs).
What if Lexis acquired Hummingbird? What if Thomson-West acquired Interwoven (which itself recently acquired iManage)? Finally, where does Microsoft's dominance of the law firm desktop fit into the bigger picture? There certainly is no written rule stating that another company couldn't decide to move into a leadership role in the legal vertical (not too mention financials services and other related industries) by acquiring some combination of Lexis, West, Hummingbird and/or Interwoven.
In the end, and after you peel back all of the layers, at the heart of a law firm lies a document database. For technology companies that want to become dominant, long-term success stories in the legal vertical, ignoring this truth may be hazardous. But here's one man's opinion that the big technology companies haven't missed this point. As Dennis Kennedy suggested, the "Lexis Shop" or "West Shop" choice may indeed be coming down the pike.