There are ways of telling if you are a market leader. CS Group wanted to be a market leader. IRIS thought they had bought the leader in the legal tech sector – a nice fit alongside their dominance in accountancy practice management. So they looked at the legal market with their market leader specs on, and found it all rather fuzzy…worryingly so.
Then there was a hefty impairment review, increasingly triumphalist scalps claimed by assorted competitors, aggressive new entrants, tortuous upgrade paths, vintage car parks and double brandings; not to mention a succession of inhabitants of the marzipan layer just below Martin Leuw.
So can we now see how IRIS is really progressing as they publish some divisional reports? Videss and Aim are the core of their Law Enterprise brand and combined results into 2010 show a drop in combined sales to £6.4m. Combined profitability for these two legal entities is also down to 5%. This was a pair doing over £10m and 21% only 2 years ago. But this is also the brand designed to make life hard for Lexis (Axxia/Visualfiles), not to mention compete for territory with Tikit/TfB, Thomson’s Elite, a rejuvenated Aderant and creative youngsters like Flosuite.
So can IRIS Law Enterprise claim market leadership here? It seems unlikely. There are all sorts of economic tests for market leadership from complex algorithms about investment capacity to market share charts – but perhaps the simplest is this: if you can put your price up And attract more clients And improve renewals (by volume And value) from existing clients, repeatedly – you are a market leader. (That’s actually the easy bit; knowing what to do with it is the hard bit.)
Even allowing for IRIS accepting some losses of unprofitable clients and fixing what they saw as a £5m reinvestment hole, the results for AIM/Evolution and Videss make hard reading. Senior management in Windsor could well be squinting with arms at full stretch to try to make sense of these in the light of hits or misses on the market leadership tests above. The vagaries of group reporting being what they are, it is entirely possible that they are simply decanting revenues into another group vehicle, so we’ll have to wait and see what the legal division accounts for 2010 come up with. Hopefully the Mountain based Legal Business division within IRIS may be faring better. Alphalaw and Opsis may also be able to bolster divisional performance from their High Street client bases. It is also important to bear in mind that a step back to leap forward is not unknown or uncommon in these trying times. However, we expect highly spun headlines from a group who’s core skill is the simple and usually effective bolting of telesales onto formerly under marketed tech specialists.
Evidence is growing that the attempt to establish a clear market leader in legal technology has required more than CS Group offered, and more than IRIS has been able to fix to date. A market leading position appears as elusive as ever and it is very much still game on for the old brands of TfB, Axxia and Videss, not to mention Aderant, Eclipse and Flosuite – whatever the new covers on the books say.
Wednesday, November 24, 2010
Friday, November 19, 2010
Pangea and Quill: Pinpointing Angels
It turns out Manchester and Mumbai have more in common than I thought. Legal outsourcing is hot news again. Thomson Reuters (TRI) may seem a million miles away from the humble Quill Group in the UK, but they are both on the same track. Thomson have just bought Pangea3 in Mumbai, and from their 2010 accounts the modest Quill Group are now as much driven by legal accounts outsourcing as practice management software development. Quill was one of the few independent groups in the UK to see good growth through late 2009 and early 2010, just when TR was weathering its dip. And recession or no recession when CPA Global went for a £440m deal in early 2010 all the M&A fraternity rediscovered juices they thought had been banned.
No numbers are disclosed yet by TRI, but hopefully they have not repeated the lunacy of the CPA price. It remains to be seen whether Pangea3 fits better with the Derwent patent businesses or their legal ones (CPA stood originally for Patent Annuities after all). But there is a touch of insanity around global outsourcing in legal circles currently and it is timely to revisit what Quill have done well. Quill’s Pinpoint outsourcing business is not a flash in the pan; it has taken over a decade to build. Quill’s USP is more than tech delivering ROI for their clients, it is a genuine “in it together” sink or swim empathy. It is born of a technology competence, but not a bleeding edge one; tech is a means to an end.
So in the UK will Pangea3 transform Thomson’s Sweets? No doubt global M&A strategy wonks are delighting in the modern equivalent of the counting of medieval angels on pin heads. Sweet & Maxwell’s client empathy is much closer to the High Street than the global elite so perhaps they’d be better emulating the Mancunian leap from elegant quill to pinpoint accuracy.
And before anyone says why are you comparing a £1m outfit in Manchester with £440m global deals: (1) the outfit in Manchester hide their light under a bushel and are a focused group of c £4-5m now; (2) CPA global were not much bigger than Quill only 5 years ago; (3) it is important in a bubble to ignore the £440m headline and remember that globally Pangea3 is estimated to have sales of c £20-25m, smaller than Tikit; CPA International reported ‘09 sales of only £23m. (4) We’re in one of those “all bulls have horns, therefore everything with horns is a bull” arguments; sometimes its just bull, but my money is on the £440m being a mistake that no-one can own up to for a few years yet.
There’s a lovely web site called “The Straight Dope” with the tag line: “fighting ignorance since 1973 (its taking longer than we thought)”.
No numbers are disclosed yet by TRI, but hopefully they have not repeated the lunacy of the CPA price. It remains to be seen whether Pangea3 fits better with the Derwent patent businesses or their legal ones (CPA stood originally for Patent Annuities after all). But there is a touch of insanity around global outsourcing in legal circles currently and it is timely to revisit what Quill have done well. Quill’s Pinpoint outsourcing business is not a flash in the pan; it has taken over a decade to build. Quill’s USP is more than tech delivering ROI for their clients, it is a genuine “in it together” sink or swim empathy. It is born of a technology competence, but not a bleeding edge one; tech is a means to an end.
So in the UK will Pangea3 transform Thomson’s Sweets? No doubt global M&A strategy wonks are delighting in the modern equivalent of the counting of medieval angels on pin heads. Sweet & Maxwell’s client empathy is much closer to the High Street than the global elite so perhaps they’d be better emulating the Mancunian leap from elegant quill to pinpoint accuracy.
And before anyone says why are you comparing a £1m outfit in Manchester with £440m global deals: (1) the outfit in Manchester hide their light under a bushel and are a focused group of c £4-5m now; (2) CPA global were not much bigger than Quill only 5 years ago; (3) it is important in a bubble to ignore the £440m headline and remember that globally Pangea3 is estimated to have sales of c £20-25m, smaller than Tikit; CPA International reported ‘09 sales of only £23m. (4) We’re in one of those “all bulls have horns, therefore everything with horns is a bull” arguments; sometimes its just bull, but my money is on the £440m being a mistake that no-one can own up to for a few years yet.
There’s a lovely web site called “The Straight Dope” with the tag line: “fighting ignorance since 1973 (its taking longer than we thought)”.
Thursday, November 18, 2010
Let’s Be Avenue - That's the Tikit
Some lessons in M&A have to be learned the hard way; but once learned, can pay real dividends. Back in June 2001 the Orange rag quoted: “TfB today announced it had become the UK’s largest legal IT solutions provider with its purchase of Avenue Legal Systems…a combined turnover of over £12m…”. Somehow £5.4m + £6.3m in 2001 actually ended up making £4.6m in total in 2005. There was a mini recession in between, don’t forget. But all too often in M&A, 1+1=0.8; this was not the first time, nor was it the last.
A cursory glance at Tikit’s 2008/9 performance would have suggested they were in a similar pickle as adding £4.5m of acquired revenue to £28m overall failed to mask a decline in group sales of £3m+. But in fact TfB has been a gem for them, and a timely one. Profitability for TfB is now over £1.25m and this deal multiple of x6 is notable primarily for the fact that the deferred income ratio of TfB is 49% and rising. This means the TfB business is one of the most advanced in terms of subscription style revenues – as close to an SaaS business model as you can get. Visibility on future business, renewals and cash should be very high, and frankly Tikit got a business which would normally expect to command x9-12 profit multiples.
So well done Mr Hill and the Tikit team – the hard lessons of previous recessions have been nailed and the leadership position they craved 10 years ago is still within their grasp. When the smoke of battle has cleared 10 years on, it is worth noting that some one had the wit to focus not on compounding project revenues, but the quality of the recurring business and the driver that should be to profits; sadly it always takes longer than the 3 year plan requires.
Oh and by the way – Tikit just bought around £2m worth of additional time management revenues which will hopefully not be swallowed up by other revenue ups and downs by the end of 2011.
A cursory glance at Tikit’s 2008/9 performance would have suggested they were in a similar pickle as adding £4.5m of acquired revenue to £28m overall failed to mask a decline in group sales of £3m+. But in fact TfB has been a gem for them, and a timely one. Profitability for TfB is now over £1.25m and this deal multiple of x6 is notable primarily for the fact that the deferred income ratio of TfB is 49% and rising. This means the TfB business is one of the most advanced in terms of subscription style revenues – as close to an SaaS business model as you can get. Visibility on future business, renewals and cash should be very high, and frankly Tikit got a business which would normally expect to command x9-12 profit multiples.
So well done Mr Hill and the Tikit team – the hard lessons of previous recessions have been nailed and the leadership position they craved 10 years ago is still within their grasp. When the smoke of battle has cleared 10 years on, it is worth noting that some one had the wit to focus not on compounding project revenues, but the quality of the recurring business and the driver that should be to profits; sadly it always takes longer than the 3 year plan requires.
Oh and by the way – Tikit just bought around £2m worth of additional time management revenues which will hopefully not be swallowed up by other revenue ups and downs by the end of 2011.
Friday, November 12, 2010
UK Legal Technology Suppliers
The following is s small selection of news highlights from the UK legal technology market. RBP has mapped the market for legal practice, case and matter management software developers and will shortly be launching a new web site with full market maps and supplier profiles. Our service is designed for the managers in the market - not research wonks - see if you like it so far...
12-11-10 Eclipse Legal Shine a Light on Succession
Am I the only one who thinks the pages in the various appointments sections for senior management roles in companies are a ruse for the gullible and needy? (Answer usually “yep”.) No manager worth their salt ever got a job worth having from an advert. At best someone pointed it out and said you/he/she should apply. Adverts are not about finding management talent – they may be for routine entry level roles - but at £100k+ forget it. Why on earth would you want to work for a firm you don’t know, run by people who clearly don’t have enough friends or contacts to enable them to fill key jobs, and demonstrably can’t bring on the talent in their own business? Worse – is the job real, or are they just going through some HR protocol; the real catch 22 is – if they have defined a role they can’t fulfil can they define roles at all?
A business succeeds by good people wanting to work for it. It excels by the people in that business taking responsibility for the careers and development of those people. It has been best described by someone as “being a relentless architect of human potential” – that’s all any manager/director is. The number of directors who take this developmental approach are sadly few and far between. And yes – it gets harder at some key growth points; but it also pays back in spades in others. Eclipse Legal has proudly shown that they know what they’re about and promoted a raft of staff from manager to director. It says that they know how to design jobs for how they do business. It says they know how to bring on staff. It says they don’t allow familiarity to breed contempt. It says that they have confidence in staying one of the fastest growing independents in the legal tech sector currently. So well done Delores, Mick and Tracy – and even better done to Steve and Russell.
http://www.eclipselegal.co.uk/frames/news/eclipse-news/news-reader.php?newsStoryID=358
11-11-10 FWBS and Thomson Reuters are Both Growing
When big groups like Thomson Reuters say Q3-10 was the first positive growth quarter since Q2-09 it is an accumulation of results and averages across a wide 31bn+ empire which may mean many things. According to the IMF, TR’s market capitalisation is bigger than many African countries’ GDP; Kenya, Yemen, Jordan, Bahrain for example – twice the size of Uganda, so we should pay attention.
But frankly – it’s a bit like hearing on the news that the wheat crop in the Ukraine has failed, while watching your neighbour plant several new roses lovingly chosen for their garden. To a futures trader, one matters; for us, smelling the roses is more relevant.
So for FWBS to have begun to reap the rewards of painstakingly tending their garden at last is important. Reseller arrangements with Legato’s Indigo are now simplified, Matter Centre is marching on and their international sales through Aderant appear to now justify regular trips to Oz too.
An RBP profile of FWBS will shortly be availble on-line.
5-11-10 ICSA Software – Secretaries Shouldn’t Look this Good
Mad men? Just what are they doing – don’t they know there’s a recession on? A sound business level indicator should come from those firms which reflect core commercial activity levels, such as company secretarial services. ICSA Software are bucking the trend, however, and results for 09 showed growth – just when everyone else was seeing growth drop from +2% in Q3 to -2% or worse. The small amount of growth did come from US services more than the UK, but there is much more going on with the ICSA than this.
IRIS and others have piled into UK company secretarial services in recent years – and it appears to have not made an iota of difference to their Blueprint brand. ICSA Software have in fact been busy expanding their range of services significantly – and it’s paying off. Indeed ICSA are now closer to the registry services and burgeoning outsourcing markets for plan management and shareholder communication services, and they are increasingly less dependent on their Institute parent. As an indication of how robust a niche position in case and matter management, they demonstrate it well. Institutes are typically poor parents to commercial enterprises and ICSA Software is almost the exception that proves the rule. This year they should also become more reliant on overseas revenues than the UK for the first time – a sea change - but a welcome one for a team happy to be exceptional.
An RBP profile of ICSA Software will shortly be available on-line. Profiles are in powerpoint and summarise performance since 1995 to date with independent projections of potential performance to 2015.
2-11-10 Flo's Machine is Doing Well
Is it better to go "best of breed" or one stop shop? Is it better to have "tweaked generic" (bespoke) or off the shelf? Flosuite are a Scottish development team, doing rather well in the rarefied atmosphere of practice and matter management tools for global and large practices where hitherto only Elite and Aderant have feared to tread.
They have followed the developer route of deploying a quick and effective use of .Net and SOA tools and techniques on bespoke projects and then rolling out generic tools based on them.
That the big teams are unable to keep up with the latest tricks emanating from Microsoft is no surprise. Big company internal teams excel at some things - usually procurement dragons dens, and office politics - but while they are spectators on the cutting edge development insights Gold, etc partnership allows, seeing it is one thing - having your mortgage depend on it is quite another.
Flosuite's recent success suggests that development teams within the magic circle are stretched. And who can blame them when keeping up with 3G, 4G, iPads, Blackberry Torch/Curve..., etc.
In common with many, 2009 was lumpy for Flosuite, but they appear to have sustained an overall position which would be the envy of most new entrants to the market. No-one would have bet that a pitch to the magic circle and their friends on a pure play software based practice management would fly - but then not many Wood...
12-11-10 Eclipse Legal Shine a Light on Succession
Am I the only one who thinks the pages in the various appointments sections for senior management roles in companies are a ruse for the gullible and needy? (Answer usually “yep”.) No manager worth their salt ever got a job worth having from an advert. At best someone pointed it out and said you/he/she should apply. Adverts are not about finding management talent – they may be for routine entry level roles - but at £100k+ forget it. Why on earth would you want to work for a firm you don’t know, run by people who clearly don’t have enough friends or contacts to enable them to fill key jobs, and demonstrably can’t bring on the talent in their own business? Worse – is the job real, or are they just going through some HR protocol; the real catch 22 is – if they have defined a role they can’t fulfil can they define roles at all?
A business succeeds by good people wanting to work for it. It excels by the people in that business taking responsibility for the careers and development of those people. It has been best described by someone as “being a relentless architect of human potential” – that’s all any manager/director is. The number of directors who take this developmental approach are sadly few and far between. And yes – it gets harder at some key growth points; but it also pays back in spades in others. Eclipse Legal has proudly shown that they know what they’re about and promoted a raft of staff from manager to director. It says that they know how to design jobs for how they do business. It says they know how to bring on staff. It says they don’t allow familiarity to breed contempt. It says that they have confidence in staying one of the fastest growing independents in the legal tech sector currently. So well done Delores, Mick and Tracy – and even better done to Steve and Russell.
http://www.eclipselegal.co.uk/frames/news/eclipse-news/news-reader.php?newsStoryID=358
11-11-10 FWBS and Thomson Reuters are Both Growing
When big groups like Thomson Reuters say Q3-10 was the first positive growth quarter since Q2-09 it is an accumulation of results and averages across a wide 31bn+ empire which may mean many things. According to the IMF, TR’s market capitalisation is bigger than many African countries’ GDP; Kenya, Yemen, Jordan, Bahrain for example – twice the size of Uganda, so we should pay attention.
But frankly – it’s a bit like hearing on the news that the wheat crop in the Ukraine has failed, while watching your neighbour plant several new roses lovingly chosen for their garden. To a futures trader, one matters; for us, smelling the roses is more relevant.
So for FWBS to have begun to reap the rewards of painstakingly tending their garden at last is important. Reseller arrangements with Legato’s Indigo are now simplified, Matter Centre is marching on and their international sales through Aderant appear to now justify regular trips to Oz too.
An RBP profile of FWBS will shortly be availble on-line.
5-11-10 ICSA Software – Secretaries Shouldn’t Look this Good
Mad men? Just what are they doing – don’t they know there’s a recession on? A sound business level indicator should come from those firms which reflect core commercial activity levels, such as company secretarial services. ICSA Software are bucking the trend, however, and results for 09 showed growth – just when everyone else was seeing growth drop from +2% in Q3 to -2% or worse. The small amount of growth did come from US services more than the UK, but there is much more going on with the ICSA than this.
IRIS and others have piled into UK company secretarial services in recent years – and it appears to have not made an iota of difference to their Blueprint brand. ICSA Software have in fact been busy expanding their range of services significantly – and it’s paying off. Indeed ICSA are now closer to the registry services and burgeoning outsourcing markets for plan management and shareholder communication services, and they are increasingly less dependent on their Institute parent. As an indication of how robust a niche position in case and matter management, they demonstrate it well. Institutes are typically poor parents to commercial enterprises and ICSA Software is almost the exception that proves the rule. This year they should also become more reliant on overseas revenues than the UK for the first time – a sea change - but a welcome one for a team happy to be exceptional.
An RBP profile of ICSA Software will shortly be available on-line. Profiles are in powerpoint and summarise performance since 1995 to date with independent projections of potential performance to 2015.
2-11-10 Flo's Machine is Doing Well
Is it better to go "best of breed" or one stop shop? Is it better to have "tweaked generic" (bespoke) or off the shelf? Flosuite are a Scottish development team, doing rather well in the rarefied atmosphere of practice and matter management tools for global and large practices where hitherto only Elite and Aderant have feared to tread.
They have followed the developer route of deploying a quick and effective use of .Net and SOA tools and techniques on bespoke projects and then rolling out generic tools based on them.
That the big teams are unable to keep up with the latest tricks emanating from Microsoft is no surprise. Big company internal teams excel at some things - usually procurement dragons dens, and office politics - but while they are spectators on the cutting edge development insights Gold, etc partnership allows, seeing it is one thing - having your mortgage depend on it is quite another.
Flosuite's recent success suggests that development teams within the magic circle are stretched. And who can blame them when keeping up with 3G, 4G, iPads, Blackberry Torch/Curve..., etc.
In common with many, 2009 was lumpy for Flosuite, but they appear to have sustained an overall position which would be the envy of most new entrants to the market. No-one would have bet that a pitch to the magic circle and their friends on a pure play software based practice management would fly - but then not many Wood...
A profile for Flosuite will shortly be avvailable from RBP online.
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