Several years ago, when I was in law school, I was given a free
subscription to both Lexis-Nexis and West Law. The service allowed me to
scan the electronic archives to help me better understand the law.
Although, I’m sure the purpose of the free service was to hook me into
purchasing their service when I left law school (of course, it didn’t work
too well, as I instead became an Internet analyst).
Last year, another similar service had its IPO: Loislaw.com (LOIS)
. The site has 1,800 databases with about 8 million documents (yes,
lawyers like to burn forests). You have access to federal and state
statutes, case law from the states, and Supreme Court decisions dating back
to 1899.
The pages are completely hypertexted, making it easy to navigate. Of
course, it has sophisticated searching technologies. There is even a
personalized alert system that notifies you when relevant documents hit the
databases.
Originally, the company used traditional media, like CD ROMs, to distribute
its content. But in 1996, the company shifted its focus mainly on the Net.
Interestingly enough, because the Net allows for a lower cost structure,
Loislaw.com saw an opportunity to cater to the small law office market
(firms with 20 or fewer lawyers). These firms always need to find ways to
reduce costs.
Loislaw.com generates revenues by selling annual subscriptions. Pricing
ranges from $690 to $1,176. According to the company’s financials (which
were released yesterday), there was $2.3 million in subscription revenues
in the fourth quarter of 1999, which was up from $1.2 million in the same
period a year ago. The sequential growth rate was 25 percent.
However, the biggest threat to the company is the fierce competition. Both
Lexis-Nexis and West Publishing are billion-dollar powerhouses. Lexis-Nexis
has been in business for over 25 years and West Publishing has been around
for over 100 years. As for Loislaw.com, it was founded in 1987.
True, Lexis-Nexis and West Publishing have not focused on the small law
firm market, but they likely will in the future. After all, Lexis-Nexis and
West Publishing are currently translating their content to the Web. They
know the future is the Net and they are expending many resources on this
transition.
Once this is complete, Loislaw.com will lose its advantage. And investors
may, in fact, become hanging judges.
