Westlaw and Lexis Nexis: Are Your Days Numbered Yet?
williamha.com
williamha.com
Lexis Nexis got started in the 1960s. They came up with their own proprietary format for storing and searching over legal briefs (most of the technology we have now, such as SQL databases, did not exist then). Their format started off as text files over which they could do regex, based on your search parameters, but then they ran into issues of storage and how should they show related items? (Graph databases were a long way in the future.)
They came up with a solution that would seem primitive to us now, but which was cutting edge in the 1960s, and so they became very successful.
Then they focused on hiring sales people to be sure that every law firm in the country was dependent on them. That was surely the right move in the 1960s, but they stopped developing innovative technology. They made no significant changes to their technology till after 2000, when they were clearly in trouble.
Just to repeat that, they went 40 years without making any significant changes to their technology. The lawyers and the salespeople were running the company and their attitude was something like "If it ain't broke, don't fix it." This is a reasonable attitude if you are in a mature, steady, unchanging field, but they weren't.
They ignored the rise of SQL databases, but they could not avoid the Internet. Around 2001 they formed a committee to explore a possible switch to an XML storage format, and they explored RDF as a way of representing the poly-hierarchy that is natural in law. RDF tools were emerging that would allow them to do graph searches.
I am not sure what technology they eventually decided upon. I know they did eventually modernize their technology, but they were dragged to it by the Internet, they did not do it happily.
I have an admiration for the startup advice that Steve Blank gives, but when I think of companies like Lexis Nexis, I find myself doubting the line "A startup is a temporary organization in search of a business model, it must eventually transition to an organization that is focused on executing a proven business model." My problem with that idea is that things change over time, and all business models eventually die, and most businesses die (Lexis Nexis was eventually bought) so all businesses should be thought of as "a temporary organization in search of a business model" -- the moment you stop searching is the moment you start to die.
Back in 2010, they were working hard on a new search engine and front end UI for it. Alas, they had been sold on a .NET stack, so I imagine that was more expensive to make and scale out than a POSIX based tool set. I have no idea what became of that initiative. I remember pushing to use REST based services for product integration, rather than SOAP, but it wasn't until a year or so after I left that company architects finally got the nod from Gartner and the like that REST is OK, which leads me to think that the central tech group (at the time?) might not be the most forward thinking.
They do have other products, such as the one I was working on to track cases and/or claims, as well as (specialized) integrated billing processing, or, the anti-money-laundering package that my next employer was using in one project.
However, last year, they closed down the Sacramento office where I had worked. I suspect they can make it, but they are going to have to take a lower margin and make more products, rather than just feed off of a document search engine gravy train. Those days are gone.
Come to think of it, both Westlaw and Lexis Nexis actually have a suite of enterprise software. Even if WL and LN dies in terms of search, they're pretty deeply rooted in the marketplace elsewhere where a lot of money is coming in. I completely neglected this part of their business.
NLP and search are hard to get right in a nuanced and high-accuracy-requiring field like law. And Westlaw and LexisNexis have done a pretty good job with those. It's not easy (or rather, it's not cheap -- think tens of millions of dollars) to build what they have built. Even Google hasn't with Scholar -- though to be fair, Google hasn't tried very hard to get legal search to that level.
Ultimately, in the future legal search is not going to be a money maker, and Westlaw and LexisNexis will take a big hit when free happens.
As I see it (i.e., from the vantage point of Judicata), search will ultimately be free, just as Google search is free. And just as Google has been able to make boatloads of money on "ancillaries" to the results (ads), the ancillaries will be the big money makers here -- but in the forms of extremely precise analytics and AI. Want to see cases Shepardized on an individual point of law, and other on-point or conflicting cases? Here it is, for a price. Given a set of facts and a procedural context, want to know the best argument to make to a particular judge? Here it is, again for a price. Given a legal brief presenting your opponent’s argument, want to see a line by line teardown? Here it is, and once again, for a price. Want your own legal brief automatically outlined? You’ve got it, and again, it costs money.
Of course, getting there is not easy (it’s a long road that requires going over every single case out there with a fine toothed technological comb), and so while I'd say that Westlaw's and LexisNexis's days are numbered -- that number is well over a thousand.
From a long-term industry perspective, though, I think there are several reasons not to try to milk money out of search (and I think any company that is serious about dislodging Wexis should think hard about these): # In the short term it's a competitive advantage. Free is better than absurdly expensive or even relatively cheap. That competitive advantage may be enough to get very significant traction. Also, Google Scholar is already free, so paid offerings need to be substantially better than that. # Search is a gateway, and its a sticky one at that. For many (most?) people, Google is how they enter the internet. Google has built internet dominance out of search. Having people on your site multiple times a day provides a great opportunity to earn trust and layer on additional services. # Search is ultimately a low yield service. Once finding information gets easy (and everyone will be reasonably good at it in the legal space in 5-10 years), evaluating which is the best bit of information will become the main problem. For example, it's not hard to get a listing of all the restaurants in an area; but figuring out which one I'd like best is far trickier and something I'd pay for. Network effects will help with that, so getting large numbers of users is important. # The future of legal research (5-10 years out) is in analytics and AI, not search. So the race will be won by whoever produces high quality products in those areas first. # Web based services tend to be dominated by a single winner that achieves network effects (e.g., Google, Amazon, Facebook) and I expect legal research will be the same. So second place probably still means that you fail.
> My money is still on Casetext to do some damage given that easy access to annotations from practitioners and academics are important to legal research.
This is a good example of how easy it is to underestimate the importance of momentum when evaluating startups.
Casetext has been around since late 2013. If "the cases are mostly barren, and the ones with annotations aren’t particularly insightful like the earlier ones from when Casetext was first announced" nearly two years later, it calls into question the model.
There are lots of opportunities in the legal market, but trying to take Westlaw and Lexis Nexis on directly is insane.
No, stating that any startup founded in 2013 could be capable of being a competitive product in 2015 - if they only had momentum - is insane.
Building hard things takes a long time. Casetext will only get better but it will take years for them to get it right.
Silicon Valley is obsessed with short-term projects and failure to its detriment.
As long as Casetext gets enough early adopters to stay afloat and improve their model, they could very well catch up one day and offer a far superior product.
Law happens in such slow motion and not exclusively at the computer that you don't really get the feedback as you would in programming (fixing a bug versus arguing a motion) - which is one of many reasons why Stackoverflow is successful (not that this is really a fair comparison anyway - more of an example). If my immediate success on compiling is dependent on trying out one of these suggested solutions, I'll certainly have an incentive to comment, upvote, and potentially contribute later on knowing how much it helped me.
As burritofanatic noted in his comment, the fundamental question for Casetext is "What is the incentive for a user to annotate case law?" If the incentive or incentives were compelling, you would not expect a statement like "The cases are mostly barren, and the ones with annotations aren’t particularly insightful like the earlier ones from when Casetext was first announced" nearly two years in. You'd see evidence of increasing traction.
Casetext is trying to attack a very difficult market. Bloomberg invested over a billion dollars trying to do the same thing and had very limited success. Casetext has raised less than $10 million.
I wanted to note that we will be getting a lot better. Keep checking in over the next few months, and expect to see a lot of major improvements on the issues you noted as well as many other things as well. Until very recently we were a very small operation, and as it turns out, building a competing product to LexisNexis and Westlaw is exceptionally hard. (I don’t want to make excuses – trust me, nobody wants Casetext to be much better more than I do – but the reality is that a perfect product couldn’t be built overnight.) That said, with the backing of amazing investors [1], we just assembled a killer team [2], and now have the people and resources to get there.
Another commenter (dmix) put it well: “Building hard things takes a long time.” Think of how long it took for a lot of the best sites on the web to become what they are today. We’ll get there – I promise.
Finally, we do have the case you were searching for [3]. Why it didn’t show up in search is something we’ll be looking into this weekend.
[1] http://techcrunch.com/2015/02/03/legal-tech-startup-casetext...