It’s not quite as simple as saying “you get what you pay for” – but it’s close. Establishing the brand of your law firm is hard – and it is every bit as hard for the software developers who want your business. The boxes all look the same, the people all have the right patter, there are horror stories and reference sites in equal measure. In UK legal practice, case and matter management software development there is a full range: some suppliers cater for early adopters, some avoid the bleeding edge, some integrate, some claim integration, some stay with best of breed. Some do hardware, some do clouds, some do document management; for some, document management is collaborative versioning across borders and jurisdictions, for others it is the size of your shredder. Some cover firms of all sizes, some only big firms, some only small and some only in-house teams. There is a bewildering choice of suppliers and competencies in legal software development – and these days that is actually a very “good thing”.
Ponder for a moment the alternative – a take it or leave it, one-size fits all, low service world? Yes it would be cheaper, but would it put your firm where you need to be when faced with top 100 US law firm competition, more GC fixed price packages, or Co-op Legal Services?
Comparisons with Accountancy Software:
Parallels are often drawn with the neighbouring profession of accountancy. They wear similar suits, send their kids to the same schools, and allegedly take to computerisation quicker and easier than lawyers. Maybe; but the shape of the accountancy professions’ software support market is radically different. The theory goes that if you can serve one profession well you know how to do others too. So what shape is the accountancy profession software support sector and why?
It is a bit of a caricature, but large accountancy firms basically have two choices: do it yourself or go see CCH; the mid-market firms largely have to either take it or leave it from IRIS’ old Transaction Technology platform, while smaller firms are at the mercy of assorted spreadsheet jockeys – always ingenious, but sometimes fragile.
The accountancy software market has played hard ball with suppliers for decades – it has been very prepared to run its own software development teams and squeeze price and external development investment accordingly. It has also had the luxury that many of its core processes are eminently automatable. The balance of power between buyers and suppliers is heavily weighted towards the buyers – so much so that the size of this market is around a third of the comparable legal one.
IRIS’ market leadership in mid-market accountancy solutions is well known and while the product has its detractors, it does what it says on the tin. They are good at what they do, and they know how to hold and defend a market leadership position.
There are a number of good entrepreneurial teams mounting rival challenges. To Thomson Reuter’s credit, they have both Digita and Abacus in harness now to build a credible alternative – arguably the Waitrose to IRIS’ Tesco style ubiquity. Smaller firms like Practice Engine, TCSL, APS and innovators like Liquid Accounts will change things in time and typically offer solutions and service that IRIS cannot match. This is a tricky market, however. Sage, for example, built a whole division here over a decade ago, and was unable to achieve many synergies given their brand. Lexis has given the accountancy and tax sector a wide birth, which is odd, considering that the Butterworth’s brand is as strong if not stronger than the CCH brand in tax.
The reasons for the apparent lack of choice in the tax and accountancy software sector are cultural as much as anything. Just as the accountancy professional information market is less than a quarter of the size of the legal one, their attitude towards software is fundamentally different. Having some experience of looking under the bonnet in enterprise systems used by their clients, accountants know that it is rarely rocket science, but they also assume the five most dangerous words in strategy: “how hard can it be?” It is a defining characteristic of the tax and accountancy software market that the larger firms have repeatedly developed solutions themselves, sold them and started them up again in a long term strategic display of major buyer power. Both of the major corporation tax specialists in the market, TSCL and Abacus started life inside KPMG and Andersen respectively. Thomson Reuters recently acquired the Abacus branded solutions from Deloitte and the cycle will no doubt go full circle again in due course.
What the accountancy market loses, precisely because of the power of its buyers, is a strong enough gene pool among independent software development firms willing to commit to excellent long term solutions. The end result is that only a few stalwarts are willing to play, and who can blame them? You can spend decades building intricate solutions for large firms with complex integration protocols and global competence only for the client to offer your core developers twice the salary and better kit to jump ship. You can get as cost effective as possible only for the client to move supplier after a long standing relationship or take the business inside capriciously, purely “because it is time”. Ironically the “we need to avoid complacency” or “we can’t afford to rely on one supplier” arguments end up delivering precisely that.
Economics in the UK Legal Software Market
So the theory goes that the legal software market will go the same way – it’s just a matter of time. It has even had some big players trying to force the pace in recent years such as multi-billion pound VCs who see the consolidation of the UK Legal IT market as a no brainer. In the noughties an impressive lady by the name of Vin Murriah did a sterling job rounding up MSS Alphalaw, AIM/Teamflow, Laserform, Opsis, Meridian Law, Mountain Group and Videss for CS Group. After the £500m take over by Hellman & Friedman, IRIS carried on picking up smaller targets in barrister’s chambers and other niches; so if that agglomeration be for you – who can be against you?
Well, Thomson Reuters – a £30bn global conglomerate – with their Elite brand for one. Lexis, a paltry £10bn global conglomerate by comparison brings VisualFiles and Axxia to the party. The home grown smaller listed team of Tikit are well known and while IT managed services is their core, the old TfB/Avenue brand came out of the recession quite well. Wolters Kluwer UK sold their legal operations to Thomson some years ago and have stayed out so far while a US VC-backed Aderant is largely doing what they would have done. Wilmington have been pre-occupied with core issues in CLT and training through the recession, while Bloomberg are looking hard for ways into the UK legal scene. EMAP and Euromoney remain more focused on the know-who than the know-how markets in legal services for now, while neighbours such as Civica (3i backed since 2008), Achilles (backed by Hg, IRIS’ former backers) and Landmark (Daily Mail General Trust backed – a £2bn group) are taking targets of opportunity in niche legal services areas already. In short, at a headline level there are 3-4 other major and global groups active, at least 3-4 others are prowling, and 3-4 other major players nibbling actively. The same cannot be said of the tax and accountancy market.
So is this a good thing? Well what the above picture doesn’t tell you is the strength of entrepreneurial and innovative talent elsewhere in the market. IRIS, Lexis and Tikit did not buy everyone and many of the remaining independents are actively showing up their big group rivals. A raft of exciting and innovative firms are offering genuine alternatives to the “big blues”. Eclipse, Flosuite, IKEN, Practicce, Pilgrim, Linetime, FWBS and Quill to name but a few are doing some really quite exciting things, as are Bar Squared for the chambers market.
The Recession’s Impact
The CS Group (as was) merged with IRIS in mid-2007, and a little matter of the legal profession heading into a recession first instead of last interfered with their plans somewhat. In economics terms the recession for Legal IT was bigger than in ’02; different in both size and shape. A £12m reverse in 2001-2 equates to a £20m one in 2008-10, a sharper and more condensed hit than the last recession.
So where was the list of casualties from the smaller developers? Thankfully it is missing. There were no comparable casualties in accountancy either, but that’s what you expect from a consolidated market run by “big boys” – the point is, the diverse market in legal IT fared just as well if not better, consolidated or not.
Bear in mind also that pre-07 many of the development teams had already invested significantly in repositioning their platforms, in some cases rewriting whole swathes of core code from scratch on new platforms aiming to launch in 2009-10. All were stretched; many were caught by the double whammy of recession and investment cash flow exodus simultaneously. That they emerged in rude health is a very heartening sign, not just for them, but for the profession.
Consolidation versus Choice
Managing partners and their CIO’s can expect this range of choice to continue. For the very largest global players, there remains Elite, Aderant, FWBS, Flosuite, Norwel, internal teams and a few more attempts to squeeze SAP or Oracle into the box. For the public sector, GCs and in-house teams players like Eclipse, Flosuite, and IKEN offer good alternatives to established services from Civica (as well as reliable top firm pitches too). Private practice has a strong choice from Pilgrim, FWBS, Norwel, Linetime and SOS in addition to the usual suspects from Lexis, IRIS and Tikit. Smaller practices have some great solution from experienced teams like Pracctice, Peapod, DPS and Meridian Legal and even LPO options, from firms like Quill/Pinpoint. Niche specialists such as ICSA Software, Business Integrity, Class Legal and Bar Squared offer variety as well as depth.
81 brands have become 64 firms over the past decade - to see the market map in full go to http://bit.ly/hgXokh for RBP's pictorial version. The respective sizes of the boxes are good approximations of the turnover of each firm. All of these firms pictured have achieved critical mass and survived a tough recession so there will remain a healthy scramble to find the elusive nirvana of matter management and practice efficiency. Yes, the profession is paying more for its software pro rata than the accountants are, but it has a healthier talent pool to call on and more choice and creativity at all levels. The suppliers survived the hardest test of 07-09 well and there are even new entrants emerging such as Peppermint – well worth a look.
Good Enough versus Critical
If anything the economic lesson from the market data is to certainly ignore any nonsense about lawyers tailgating accountants. More importantly it is probably also to stop comparing “one stop” and “best of breed”. In a sense everyone wants best of breed – it’s just that for some (usually smaller firms) the best of breed is a time and fees based single box. The real vibrancy in the market seems to come from in-house counsel needing industrial strength matter management, whereas for them time and fees needs to be very project specific rather than department generic. For private practice, time and fees remains essential, whereas case management does not need industrial strength, but bespoke tailoring. The neighbouring market of CRM systems probably still suffers too much from GIGO – garbage in, garbage out – but at least for lawyers there are more and better brains tackling the issue than in other markets.
Monday, March 28, 2011
Wednesday, February 16, 2011
Peninsula and Particle Physics
A strangely dressed chap turned up recently outside the Hadron collider claiming he'd come back from the future to stop us making the mistake of firing the thing up. I think they treated him as just "a very naughty boy". The Hadron collider is aiming to see if the Higgs Boson theoretical mechanism can be observed in reality - not that I really know much about quarks and high energy particle physics. The problem is - "they" don't really know what else it might reveal either. My personal favourite hunch is that when it does work, a large neon sign will automatically materialise in the skies over Switzerland in letters one mile high saying "LEVEL 2" - but who knows...
Recent results from Peninsula Business Services, Northgate's First Business Support, Citation, Ellis Whittam and Drury PSM suggest something is up. Or to put it another way - not up. There will be a lot of shadenfreude among Peninsula's many detractors at sales dropping in their latest accounts - all well and good - but at group level they grew slightly and achieved something really quite special in the tax fee business. Northgate's results for First Business Support are unusually flat, as are Citation's, and even Drury is not it's usual ebullient self.
So what is going on? Well sadly, its quite simple. Maths. Not everyone's favourite at school, and downright baffling when you get to the particle physics level of it. But essentially the regulatory consulting market is finally reaching "LEVEL2". Peninsula's sales drop in the employment and safety business has more to do with their size, than the market. The maths is simple. Increasing the size of a sales force continually eventually reaches a point of diminishing returns. In Level One you can play the game by simply adding more and more sales staff - "piling it high". Even with an addressable market of 800k businesses, however, 100 teleappointers ringing 100 firms a day will cycle through that 3 times a year or more. Small firm clients annoyingly also go bust and cancel, so the gap to fill each year before achieving growth simply gets bigger.
So IF - and its a big "if" - clients renew at, say an annualised 86%, and new sales staff generate, say £75k each pa, it takes 122 front line sales staff at full tilt for a £65m business just to break even. A 1% increase in cancellations means a £5-600k drop in turnover even with the team at full tilt. It's maths - not five year contracts, recessions or quality of service that is the main driver here. The market is now over half a billion in sales pa, it reached Level 2 in the late noughties and the rules are changing.
Peninsula have dabbled with the new rules, and growth in Ireland and Taxwise have kept them growing at the top group level. Ellis Whittam are growing and we expect other mid-market differentiated players to continue their growth too. But what worked in Level 1 simply is not enough in Level 2. Throwing sales staff at growth will only get you so far. Taking cancellations on the chin will no longer be an option. Price dumping hurts no-one more than the main dumper. Throwing ever more qualified management bodies at problems is also usually a fast track to complexity instead of growth - a bad thing. Growth is important - it is one of the key determinants of enterprise value, so only a very brave few will give up on it. To sustain it in the Level 2 environment, however requires new thinking.
New significant service lines are required - and if there is any criticism of this market that really hurts, it is that an insurance mentality doesn't go far enough. More bells and whistles for the sales team is fine as far as it goes - what's needed are complementary service lines with real grunt.
For a profile of Peninsula based on the latest accounts for the group, see www.rbponline.co.uk
Recent results from Peninsula Business Services, Northgate's First Business Support, Citation, Ellis Whittam and Drury PSM suggest something is up. Or to put it another way - not up. There will be a lot of shadenfreude among Peninsula's many detractors at sales dropping in their latest accounts - all well and good - but at group level they grew slightly and achieved something really quite special in the tax fee business. Northgate's results for First Business Support are unusually flat, as are Citation's, and even Drury is not it's usual ebullient self.
So what is going on? Well sadly, its quite simple. Maths. Not everyone's favourite at school, and downright baffling when you get to the particle physics level of it. But essentially the regulatory consulting market is finally reaching "LEVEL2". Peninsula's sales drop in the employment and safety business has more to do with their size, than the market. The maths is simple. Increasing the size of a sales force continually eventually reaches a point of diminishing returns. In Level One you can play the game by simply adding more and more sales staff - "piling it high". Even with an addressable market of 800k businesses, however, 100 teleappointers ringing 100 firms a day will cycle through that 3 times a year or more. Small firm clients annoyingly also go bust and cancel, so the gap to fill each year before achieving growth simply gets bigger.
So IF - and its a big "if" - clients renew at, say an annualised 86%, and new sales staff generate, say £75k each pa, it takes 122 front line sales staff at full tilt for a £65m business just to break even. A 1% increase in cancellations means a £5-600k drop in turnover even with the team at full tilt. It's maths - not five year contracts, recessions or quality of service that is the main driver here. The market is now over half a billion in sales pa, it reached Level 2 in the late noughties and the rules are changing.
Peninsula have dabbled with the new rules, and growth in Ireland and Taxwise have kept them growing at the top group level. Ellis Whittam are growing and we expect other mid-market differentiated players to continue their growth too. But what worked in Level 1 simply is not enough in Level 2. Throwing sales staff at growth will only get you so far. Taking cancellations on the chin will no longer be an option. Price dumping hurts no-one more than the main dumper. Throwing ever more qualified management bodies at problems is also usually a fast track to complexity instead of growth - a bad thing. Growth is important - it is one of the key determinants of enterprise value, so only a very brave few will give up on it. To sustain it in the Level 2 environment, however requires new thinking.
New significant service lines are required - and if there is any criticism of this market that really hurts, it is that an insurance mentality doesn't go far enough. More bells and whistles for the sales team is fine as far as it goes - what's needed are complementary service lines with real grunt.
For a profile of Peninsula based on the latest accounts for the group, see www.rbponline.co.uk
Thursday, February 10, 2011
Was that a pie eating contest where the 1st prize was more pie?
We are often asked what the shape of the UK legal technology market really is now. Surely CSGroup/IRIS' series of deals, Tikit buying TfB, Lexis snapping up Visualfiles and Axxia, not to mention some smaller teams merging as well means it is over and out? Well, actually no. None of the big brands have a market share head to head here of over 20% and most are firmly still in single figures, despite their deep pockets and best efforts so far.
The RBP Market Fundamentals Report for UK Legal Technology Suppliers 2011 Q1 - the definitive guide to practice, case and matter management software solutions suppliers - spells it out in detail. Over 80 firms are tracked, and while the core attractiveness of the market explains why big firms would try to muscle in - no one really has dominance yet.
In fact, while some of the consolidations probably still have a recurring case of indigestion, the market is being changed by a range of reinvigorated independents.
To see the full picture, the extensive analysis of the market from 1995 to 2015 is now available in an accessible powerpoint version at:
http://www.rbponline.co.uk/rbpsectors.asp?sector=LTS
The RBP Market Fundamentals Report for UK Legal Technology Suppliers 2011 Q1 - the definitive guide to practice, case and matter management software solutions suppliers - spells it out in detail. Over 80 firms are tracked, and while the core attractiveness of the market explains why big firms would try to muscle in - no one really has dominance yet.
In fact, while some of the consolidations probably still have a recurring case of indigestion, the market is being changed by a range of reinvigorated independents.
To see the full picture, the extensive analysis of the market from 1995 to 2015 is now available in an accessible powerpoint version at:
http://www.rbponline.co.uk/rbpsectors.asp?sector=LTS
Thursday, February 3, 2011
Rule Britannia
It is a travesty frankly that the old National Britannia brand in safety compliance services has become so knocked about that it had to undergo the indignity of an unplanned sale. The buyers of the core contracts are BECAP, the private equity investment vehicle of Better Capital Limited. And as phoenix players go - Mr Moulton is one of the best, so it is perhaps fitting that they are back in the hands of a world class player at last; although "phoenix" would be overstating this - Moulton has a gem in his hands. NatBrit was rebranded Santia last December, such was the Windscale effect of the Connaught collapse on Connaught Compliance.
NatBrit has had to endure relegation and insult after a period of inept group management - thankfully mostly endured under the Connaught Compliance banner. Anthony Record, NatBrit's founder was one of the best entrepreneurs I've ever had the pleasure of working with. He had the vision for a safety compliance specialist team with an IT core and interlocking specialisms decades ahead of its time. What everyone takes forgranted in the safety industry now, Anthony had nailed on years ago; and he kept doing it - SafeContractor was another one of his babies. Yes he did have some good lieutenants, but most were just that compared to Ant's Admiralty level thinking. He was lucky enough to retire before the Connaught debacle and did see a good return on his efforts - but he would be distraught to see his baby so shabbily treated. Perhaps now the safety business will also see that segmentation by blue collar and white collar safety is nonsense - there is just compliance done well.
If Moulton plays true to form NatBrit will be back on its feet within months and back in the fray punching above its weight again within a year or so. This should be a £60m+ sales business with 25% profitability routinely achieved and consistent double digit growth. In a people intensive business such as this, a full turnaround will take a little while, however. Both former senior management and close competitors will have been trawling around the back rooms and kitchens in depressing detail over the recent months. It doesn't help. But as slides go, a period in the doldrums of around 2-3 years could be short, and in retrospect look like a mere blip eventually. Others in neighbouring sectors have been stubbornly flogging dead horses for two or three times that with inept strategies. The transition from record growth to a more digestable platform was never going to be easy - no-one would have chosen this route, but it may be the best thing in the end. The core in NatBrit is solid and we hope the flag will fly again.
I may be only one with an allergy to obviously white board derived brands - but why they didn't do the RBS/NatWest trick and just resurrect the largely untainted old brand is beyond me? "Santia" feels more like a women's health product advertised by youngsters in white jeans - or maybe a hispanic reindeer-botherer in December - a cure for sneezing perhaps? Any other suggestions on a postcard please...
NatBrit has had to endure relegation and insult after a period of inept group management - thankfully mostly endured under the Connaught Compliance banner. Anthony Record, NatBrit's founder was one of the best entrepreneurs I've ever had the pleasure of working with. He had the vision for a safety compliance specialist team with an IT core and interlocking specialisms decades ahead of its time. What everyone takes forgranted in the safety industry now, Anthony had nailed on years ago; and he kept doing it - SafeContractor was another one of his babies. Yes he did have some good lieutenants, but most were just that compared to Ant's Admiralty level thinking. He was lucky enough to retire before the Connaught debacle and did see a good return on his efforts - but he would be distraught to see his baby so shabbily treated. Perhaps now the safety business will also see that segmentation by blue collar and white collar safety is nonsense - there is just compliance done well.
If Moulton plays true to form NatBrit will be back on its feet within months and back in the fray punching above its weight again within a year or so. This should be a £60m+ sales business with 25% profitability routinely achieved and consistent double digit growth. In a people intensive business such as this, a full turnaround will take a little while, however. Both former senior management and close competitors will have been trawling around the back rooms and kitchens in depressing detail over the recent months. It doesn't help. But as slides go, a period in the doldrums of around 2-3 years could be short, and in retrospect look like a mere blip eventually. Others in neighbouring sectors have been stubbornly flogging dead horses for two or three times that with inept strategies. The transition from record growth to a more digestable platform was never going to be easy - no-one would have chosen this route, but it may be the best thing in the end. The core in NatBrit is solid and we hope the flag will fly again.
I may be only one with an allergy to obviously white board derived brands - but why they didn't do the RBS/NatWest trick and just resurrect the largely untainted old brand is beyond me? "Santia" feels more like a women's health product advertised by youngsters in white jeans - or maybe a hispanic reindeer-botherer in December - a cure for sneezing perhaps? Any other suggestions on a postcard please...
Monday, January 31, 2011
Hardinge Stanley Giffard - You are a Habitual Offender
"I will divide even if I am alone" - so said Lord Halsbury (aka Hardinge Giffard) in a serious spat over the 1911 Parliament Act - the one which established the primacy of the Commons over the Lords. Halsbury was a Tory rebel, son of a Spectator editor - not quite the Glen Beck of his day, but, well...
Perhaps the descendant of the great Halsbury - Lexis - is now spread too thin or trying to cover too many bases? Until very recently Butterworths, Tolley, IRS Eclipse, Halsbury, EFnP, All England etc were seemingly unassailable brands. Certainly with headline sales of c£200m - you'd think so. Part of a 2.5bn legal empire to boot. But the devil as always is in the detail. Thomson Reuters is now a 32bn empire - dwarfing Reed Elsevier's 6.7bn. At a divisional level as well, all is not so secure. For Lexis UK there's some 9% overseas revenue - mostly US, and in the international UK law sources business, Lexis UK is no stronger than CCH, West or the other international brands. Then there's the tax sector, where they are head to head with CCH again in publishing, and not even in the game against CCH and IRIS in accountancy firm software. This is a big chunk of the overall UK revenues. The Axxia and VisualFiles deals bought a strategic stake in the top of the private practice software market, but this is another slice of the business where they are not market leaders compared to Tikit, IRIS and Elite, etc. In training they are small players behind the likes of Wilmington/CLT and BPP. Thankfully they leave the advertising based B2B businesses to another division, as well as the directory businesses and education publishing.
You are left with less than 2/3rds of the headline UK sales in core legal information services, and even this is increasingly subject to challenge. Specialists like Jordans and Practical Law lead in family law, and large practice company/commercial services respectively - not to mention the age old head to head competition from Sweet's (Thomson Reuters) across the board.
So who'd be Lexis UK? First half results for 2010 showed declines of -4% in international legal divisional sales; actually a very creditable performance given the continuing declines in demand for the old legacy publishing. Second half results should come soon. Fundamentally they are seeing -14/15% core declines against electronic lifts of only 6-7%. So they are expected to make up the difference without compromising the profit or subscription nature of the core business and with only sporadic acquisitions. A tall order - very tall.
Halsbury was undoubtedly a veritable tome, but latterly it resembled the "furniture publishing" of all large encyclopedias. It is time for a long view - all the way back to the first Earl of Halsbury perhaps and the heresy even he espoused when pushed. For decades the easy profits from the furniture publishing bolstered group imperial ambitions. Now that the old sofa at the heart of the empire is having its stuffing knocked about, group heads need to look beyond -4% here, or even -14% there. Its time for one of those fixes which only really happen every generation or so in Chancery Lane; and it needs wise heads in The Strand, Dayton, Ohio and New York. Group HQ in the UK had a nasty habit of always coming for more from Butterworths just when they needed even a little bit more for themselves. Group pressures and temptations must be higher now than ever before, but the radical Tory tradition must reassert itself if they are ever to get to the bottom of this strategic conundrum.
For a profile of Lexis UK see http://www.rbponline.co.uk
Perhaps the descendant of the great Halsbury - Lexis - is now spread too thin or trying to cover too many bases? Until very recently Butterworths, Tolley, IRS Eclipse, Halsbury, EFnP, All England etc were seemingly unassailable brands. Certainly with headline sales of c£200m - you'd think so. Part of a 2.5bn legal empire to boot. But the devil as always is in the detail. Thomson Reuters is now a 32bn empire - dwarfing Reed Elsevier's 6.7bn. At a divisional level as well, all is not so secure. For Lexis UK there's some 9% overseas revenue - mostly US, and in the international UK law sources business, Lexis UK is no stronger than CCH, West or the other international brands. Then there's the tax sector, where they are head to head with CCH again in publishing, and not even in the game against CCH and IRIS in accountancy firm software. This is a big chunk of the overall UK revenues. The Axxia and VisualFiles deals bought a strategic stake in the top of the private practice software market, but this is another slice of the business where they are not market leaders compared to Tikit, IRIS and Elite, etc. In training they are small players behind the likes of Wilmington/CLT and BPP. Thankfully they leave the advertising based B2B businesses to another division, as well as the directory businesses and education publishing.
You are left with less than 2/3rds of the headline UK sales in core legal information services, and even this is increasingly subject to challenge. Specialists like Jordans and Practical Law lead in family law, and large practice company/commercial services respectively - not to mention the age old head to head competition from Sweet's (Thomson Reuters) across the board.
So who'd be Lexis UK? First half results for 2010 showed declines of -4% in international legal divisional sales; actually a very creditable performance given the continuing declines in demand for the old legacy publishing. Second half results should come soon. Fundamentally they are seeing -14/15% core declines against electronic lifts of only 6-7%. So they are expected to make up the difference without compromising the profit or subscription nature of the core business and with only sporadic acquisitions. A tall order - very tall.
Halsbury was undoubtedly a veritable tome, but latterly it resembled the "furniture publishing" of all large encyclopedias. It is time for a long view - all the way back to the first Earl of Halsbury perhaps and the heresy even he espoused when pushed. For decades the easy profits from the furniture publishing bolstered group imperial ambitions. Now that the old sofa at the heart of the empire is having its stuffing knocked about, group heads need to look beyond -4% here, or even -14% there. Its time for one of those fixes which only really happen every generation or so in Chancery Lane; and it needs wise heads in The Strand, Dayton, Ohio and New York. Group HQ in the UK had a nasty habit of always coming for more from Butterworths just when they needed even a little bit more for themselves. Group pressures and temptations must be higher now than ever before, but the radical Tory tradition must reassert itself if they are ever to get to the bottom of this strategic conundrum.
For a profile of Lexis UK see http://www.rbponline.co.uk
Friday, January 14, 2011
If I Am Only an Option For You - You Are Not A Priority for Me
The High Street private practice solicitor market is a sector which is growing numerically - there are more defectors from the big firms perhaps; certainly more boutiques emerging. However, where the High Street is evolving from the old general practice model, it is facing horrendous economic challenges in legal aid budgets, the property market being down and staying down, and a host of competitors coming out of the wood work in PI, wills and stealing the few staples left.
So is this good news or bad from those firms who stake their livelihoods on developing software for them? Well, a very mixed picture is emerging. First, there is an enormous amount of noise with acquisitions, principally IRIS/CSG but also Tikit/TfB Lexis/Axxia and even DPS/Access; this makes a clear view of the numbers hard. Secondly, the unexpected results within IRIS from Opsis and Laserform are off-set by declines in the Mountain and Alphalaw brands. IRIS' initial entry to the small firms market has generally been difficult. Tikit would struggle to say they have done much better and only DPS seem to have come out of the M&A process well, albeit modestly.
Deal flows underpin general practice and LMS (formerly Legal Marketing Services) was usually a good barometer. Even without seeing how HIPs will hurt them towards the end of last year (and hurt many it has) trading volumes in LMS fell over 10% and the cost impact was such that this resulted in a 31.4% drop in core revenues in 09.
Against this background, growth by High Street practice and case management developers at all is quite staggering and frankly even those claiming less than 30% drops could, in a comparative sense, claim to be doing ok. But the simple fact is that - focus delivers. And (surprisingly to some) so does software – comparatively it is a spend that this pressurised sector is willing to spend more on.
So - if all you have is a “strategic position” in the High Street as an option for you - you will find times tough. If you eat, sleep and breathe it - you will have done comparatively well. Some have done really quite well, considering. Quill, Pracctice, DPS and others would not have wanted to roll out SaaS and new platforms to a market under siege, but that's the hand they were dealt. In the main they are doing well with it. Recent accounts from the team at Pracctice and the newly merged DPS/Access illustrate the point well.
So is this good news or bad from those firms who stake their livelihoods on developing software for them? Well, a very mixed picture is emerging. First, there is an enormous amount of noise with acquisitions, principally IRIS/CSG but also Tikit/TfB Lexis/Axxia and even DPS/Access; this makes a clear view of the numbers hard. Secondly, the unexpected results within IRIS from Opsis and Laserform are off-set by declines in the Mountain and Alphalaw brands. IRIS' initial entry to the small firms market has generally been difficult. Tikit would struggle to say they have done much better and only DPS seem to have come out of the M&A process well, albeit modestly.
Deal flows underpin general practice and LMS (formerly Legal Marketing Services) was usually a good barometer. Even without seeing how HIPs will hurt them towards the end of last year (and hurt many it has) trading volumes in LMS fell over 10% and the cost impact was such that this resulted in a 31.4% drop in core revenues in 09.
Against this background, growth by High Street practice and case management developers at all is quite staggering and frankly even those claiming less than 30% drops could, in a comparative sense, claim to be doing ok. But the simple fact is that - focus delivers. And (surprisingly to some) so does software – comparatively it is a spend that this pressurised sector is willing to spend more on.
So - if all you have is a “strategic position” in the High Street as an option for you - you will find times tough. If you eat, sleep and breathe it - you will have done comparatively well. Some have done really quite well, considering. Quill, Pracctice, DPS and others would not have wanted to roll out SaaS and new platforms to a market under siege, but that's the hand they were dealt. In the main they are doing well with it. Recent accounts from the team at Pracctice and the newly merged DPS/Access illustrate the point well.
Monday, December 13, 2010
It Ain't Junk - its Jordans...
One of the tests of intelligent search and professional taxonomies etc was always whether a search for "Jordans" got you loads of guff on the cereal health bar firm, or whether it found the jewel in the West of England Trust's crown. Despite Jordans being in legal services since the 1860's, it was usually the whole food bars and their annoying slogan that came up with the most "relevant" hits, time and again - but that's artificial intelligence for you.
Jordans have always played a key role in legal services, however, and earlier in the year they unloaded a significant minority shareholding from 3i for £9m. It is irrelevant whether it was pushing or falling, but with the 2010 accounts now showing what the price was based on (on a current year basis) the arms length minority stake valuation speaks volumes. Benchmarks here are a long way away from the multiples for CPA and Complinet recently, although it is important to be careful that this was not a full free market pricing exercise. They are what they are, but clearly the market view of legacy know-how brands is not what it was.
Everywhere they look Jordans face challenges. While searching out healthy options - they are everywhere assailed by high carb, pumped alternatives which are increasingly better looking, more appetising and tastier. It needs saying - but a brand as strong as Jordans needed to be doing more than tinkering with international allocations since 06 to have viable alternatives coming through now. Not easy - as all the firms launching .Net and cloud solutions in the middle of a recession currently will tell you. The ICSA Software team have now stolen their breakfast - they are second by some way to the Blueprint range, and this is compounded by the world and his wife thinking they can do company secretarial software nowadays - there are 34 firms in the UK alone. Specialist innovative software teams like Class Legal are stealing their lunch and even Jordans would be hard pushed to compete amongst the innovators for High St legal software. The Practical Law Company has long since had their dinner in company law for large commercial firms, pinning Jordan Publishing firmly into the increasingly oppressed legal High St. Publishing is now the stronger sibling in the group and the home of their company secretarial services is having to fight hard in the high calorie market where DnB, Hoovers, Experian, and even BvD, ICC and RM are all playing hard ball.
It's a crying shame, as Jordans is a cracking brand and its divisional leaders have not been asleep or below par in any way. This is a brand that should long ago have staked a claim among in-company legal services and corporate counsel. It should also have bitten the bullet of becoming a full on software developer rather than dabbling - Bristol is after all one of our centres of excellence in just that (software - not dabbling, that is). Avoiding the clashing rocks of commoditisation and disintermediation in the company formations and information core business by taking refuge in the legal high street looked smart 10 years ago. Moving away from steel wholesaling in the early noughties (yep - really) and into legal publishing was a no brainer - now it is looking not quite like frying pan and fire - but it's getting there.
Jordans are a strong brand in legal services and a full RBP profile will be available shortly on the new website.
Jordans have always played a key role in legal services, however, and earlier in the year they unloaded a significant minority shareholding from 3i for £9m. It is irrelevant whether it was pushing or falling, but with the 2010 accounts now showing what the price was based on (on a current year basis) the arms length minority stake valuation speaks volumes. Benchmarks here are a long way away from the multiples for CPA and Complinet recently, although it is important to be careful that this was not a full free market pricing exercise. They are what they are, but clearly the market view of legacy know-how brands is not what it was.
Everywhere they look Jordans face challenges. While searching out healthy options - they are everywhere assailed by high carb, pumped alternatives which are increasingly better looking, more appetising and tastier. It needs saying - but a brand as strong as Jordans needed to be doing more than tinkering with international allocations since 06 to have viable alternatives coming through now. Not easy - as all the firms launching .Net and cloud solutions in the middle of a recession currently will tell you. The ICSA Software team have now stolen their breakfast - they are second by some way to the Blueprint range, and this is compounded by the world and his wife thinking they can do company secretarial software nowadays - there are 34 firms in the UK alone. Specialist innovative software teams like Class Legal are stealing their lunch and even Jordans would be hard pushed to compete amongst the innovators for High St legal software. The Practical Law Company has long since had their dinner in company law for large commercial firms, pinning Jordan Publishing firmly into the increasingly oppressed legal High St. Publishing is now the stronger sibling in the group and the home of their company secretarial services is having to fight hard in the high calorie market where DnB, Hoovers, Experian, and even BvD, ICC and RM are all playing hard ball.
It's a crying shame, as Jordans is a cracking brand and its divisional leaders have not been asleep or below par in any way. This is a brand that should long ago have staked a claim among in-company legal services and corporate counsel. It should also have bitten the bullet of becoming a full on software developer rather than dabbling - Bristol is after all one of our centres of excellence in just that (software - not dabbling, that is). Avoiding the clashing rocks of commoditisation and disintermediation in the company formations and information core business by taking refuge in the legal high street looked smart 10 years ago. Moving away from steel wholesaling in the early noughties (yep - really) and into legal publishing was a no brainer - now it is looking not quite like frying pan and fire - but it's getting there.
Jordans are a strong brand in legal services and a full RBP profile will be available shortly on the new website.
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