Tuesday, December 14, 2004 1:23 PM
I read with interest another sign of the continuing consolidation within the legal vertical's vendor community,
Lexis acquiring Interface Software.
Interface is the company behind one of the dominate Customer Relationship Management software applications, InterAction, in use at the largest law and professional firms across the world.
So, what's next? Lexis and Thomson-West appear to have the size and money to acquire all but the largest software companies serving the legal vertical. Both companies long ago started to expand their businesses beyond legal research and it would be hard to imagine that their long-term strategic plans don't include a stronger position on the law firm desktop. And, given the challenges of trying to build and sell core law firm applications from scratch, it certainly seems the acquisition mode make sense as a means to get stronger (not to mention growing revenue and marketshare).
Lexis' acquisition of Interface returns me to a past comment I continue to believe will play out: both of the companies which dominate the Document Management System (DMS) space at law firms, Hummingbird and Interwoven, are likely acquisition targets.
Law firms' lifeblood continues to flow from their DMS. Integrating other desktop and web-based applications into this DMS, can position a company serving the legal vertical for long-term revenue strength, especially noting how long law firms typically stick with a particular product, for better or worse. It is one thing to build your third-party software to work with another company's DMS; it is another altogether to "own the code" of the DMS and build a full platform around it. Law firms want software that works well together, and there is something about a single, well-known company (see Microsoft's domination of the law firm desktop) offering "one-stop shopping" that rings true with technology decisionmakers. The old addage about choosing large, well-known companies and products, "no one ever got fired for picking Microsoft," will continue to be a truism in the years to come.
All of the above being said, it will be interesting to see how Lexis approaches integrating InterAction into its own product line. Software integration is no simple matter, and it usually takes some time before users actually see the benefits of integration. So, as always with mergers and acquisitiions, we will stay tuned for further developments...