Controlling the Spiraling Costs of Online Legal Research

Not surprisingly, with the firms absorbing more of their online research costs, librarians are, by necessity, turning into tough negotiators. They say they're developing savvy strategies to keep the vendors ' and their spiraling prices ' under control.

Price Negotiation Tactics

The favored move: pitting LexisNexis and Westlaw against each other. Most firms still use both (though they often use one more than the other), and that, librarians say, can give them a bit of leverage when it's time to hammer out a new contract. 'We've made a strategic decision to have both of our contracts come due at the same time, so we can always tell one we'll go with the other,' says Thompson Coburn LLP's Mary Kay Jung.

But the strategy is largely a bluff. 'We can keep the price down by threatening to [drop one service], but you really have to keep your users in mind,' says Trish Webster, library manager of Honigman Miller Schwartz and Cohn LLP in Detroit. 'These are tools that lawyers need every day to get their job done.' It should come as little shock, then, that 82% of librarians surveyed don't plan to move to a single vendor within the next five years.

Meanwhile, the online vendors often play the same game, pitting one firm against another when negotiating contracts, the librarians say. 'They'll tell us that so-and-so down the street has it; you don't want them to have information you won't, do you?' says Christine Scherzinger, director of library and research services at Duane Morris LLP in Philadelphia.

Another emerging strategy among librarians is to meet the vendor's price, but insist that they throw in another service or two. 'It's becoming known that they have some latitude,' says Wiley Rein's Ahearn. 'The vendors have [business] models where they need to get a certain overall price. But they can bundle products together.'

Additional Price Pressures

Adding to the online headaches are pricing models and new product introductions ' not just by the big two but also by the many smaller vendors targeting the legal market ' that strain the patience, and wallets, of law firm librarians. Some vendors, for example, base licensing fees not on the number of users but on the size of the firm. Under this model, a tax resource will cost a 500-lawyer firm with a five-person tax department far more than it would a 100-lawyer firm with a five-person department. Other vendors insist on a minimum number of licenses, so a firm can find itself paying for 10 slots, but using just six.

Vendors will also introduce new products that integrate and expand parts ' but not all ' of their older services. That, too, increases frustration ' and bills.

'You can't get rid of the old stuff, because the new stuff doesn't do everything,' says Catherine Hardy, firmwide library manager at Heller Ehrman LLP in San Francisco. 'But there is only so much money to go around.'

Internet-friendly marketing strategies are also creating havoc for librarians. Increasingly, they say, vendors are wooing lawyers directly with targeted e-mails, free trials, even frequent-flyer-like programs that award prizes based on how much they use a service (among the swag: Starbucks gift cards). 'It creates a huge interest in products that we may not need,' says Duane Morris' Scherzinger.

With so many new products hitting the market, and so many older ones continually evolving, it has become difficult for the librarians to keep up ' and near impossible for the lawyers. Often, lawyers will use electronic research in unnecessary ways. For example, they may rack up usage charges for one service while the firm has already paid for a similar service.

One librarian ' who declined to be identified ' tells of a lawyer who spent $2300 on Westlaw running one name through public record databases while the firm had already paid for the same search capability through Lexis. Complicating the problem, says this librarian: 'The services will tell you there is an additional cost, but don't say what that cost is. It could be hundreds. It could be thousands.'

Guiding Resource Usage

By steering lawyers to 'preferred' resources, librarians can eliminate many unnecessary charges and boost lawyer efficiency. One way to do this is through training, and many librarians are ramping up their programs. 'We'll show them what resources we already have, what is free and what they can do without going on Lexis and Westlaw,' says Duane Morris' Scherzinger. 'We'll also tell them what they need to know if they do go on, like how to avoid incurring additional fees.'

The other way to get preferred resources in front of lawyers is via technology ' in particular, with knowledge management initiatives. These include Web-based portals that integrate a firm's research tools and work product on one platform.

For most of the last 10 years, knowledge management ('KM') was overhyped and underdeveloped, but projects are finally gaining momentum, and librarians are playing a key role: Eighty-four percent of those surveyed say that they are actively involved in their firm's KM efforts. The work, they say, can't simply be handed over to the IT department. 'It's not enough to understand the[technology]; you have to understand the content,' says Alirio Gomez, director of library and information services at Milbank, Tweed, Hadley & McCloy LLP in New York.

KM portals let lawyers research anytime, from anywhere ' but on the firm's terms. The 'wrong tool' problem is eliminated because there is no wrong tool to choose. 'We provide [lawyers] with a vetted collection of best-of-breed electronic resources,' says Steve Lastres, director of library and knowledge management at New York's Debevoise & Plimpton LLP.

Finally, librarians are also training lawyers on when to hit the books. Incorporating book research with electronic tools can be cost effective, because books have no usage fees. While many firms have eliminated their print reporters ' at least in some offices ' paper is hardly an endangered species. The survey found that 76% of librarians reported spending more on print products in 2006 than they did in 2005.

This article has been adapted for A&FP from an overview of findings from The American Lawyer's 2007 research survey of law librarians at AmLaw 200 firms. To access the Web link for obtaining the full survey report, go to http://preview.tinyurl.com/yuhmck.

Alan Cohen writes for Law Firm Inc., an affiliate of A&FP.

There was a time when electronic services were supposed to replace books and lower costs. They've done neither. Instead, fees continue to rise each year ' well beyond the rate of inflation, say law firm librarians (licensing fees are typically covered by confidentiality agreements). Surveyed librarians expressed dissatisfaction on pricing issues especially with the big-two online providers, Reed Elsevier Plc's LexisNexis and Thomson Corp.'s Westlaw.

The mounting costs of online research would be bad enough without a further complication: Firms are having a harder time passing the buck, literally, to their clients. Today, most firms are struggling ' and failing ' to break even in this area. 'The [in-house] counsel know that [historically] books were an overhead expense, and they want to know why Westlaw and Lexis are different,' says Wiley Rein LLP's Carolyn Ahearn. 'So the costs are moving from client expense to firm overhead.'

Recouping online charges can be tricky. Even within a single firm, 'some clients will pay for it, and some won't,' says a librarian who requested anonymity. 'But more and more won't. Of course, the firm has to recover it in some way, so per-hour charges could be higher.' That may help explain another finding in this year's survey; while the number of billable hours decreased, the library's billable-hour charge increased, from an average of $134 in 2005 to $144 in 2006.

Not surprisingly, with the firms absorbing more of their online research costs, librarians are, by necessity, turning into tough negotiators. They say they're developing savvy strategies to keep the vendors ' and their spiraling prices ' under control.

Price Negotiation Tactics

The favored move: pitting LexisNexis and Westlaw against each other. Most firms still use both (though they often use one more than the other), and that, librarians say, can give them a bit of leverage when it's time to hammer out a new contract. 'We've made a strategic decision to have both of our contracts come due at the same time, so we can always tell one we'll go with the other,' says Thompson Coburn LLP's Mary Kay Jung.

But the strategy is largely a bluff. 'We can keep the price down by threatening to [drop one service], but you really have to keep your users in mind,' says Trish Webster, library manager of Honigman Miller Schwartz and Cohn LLP in Detroit. 'These are tools that lawyers need every day to get their job done.' It should come as little shock, then, that 82% of librarians surveyed don't plan to move to a single vendor within the next five years.

Meanwhile, the online vendors often play the same game, pitting one firm against another when negotiating contracts, the librarians say. 'They'll tell us that so-and-so down the street has it; you don't want them to have information you won't, do you?' says Christine Scherzinger, director of library and research services at Duane Morris LLP in Philadelphia.

Another emerging strategy among librarians is to meet the vendor's price, but insist that they throw in another service or two. 'It's becoming known that they have some latitude,' says Wiley Rein's Ahearn. 'The vendors have [business] models where they need to get a certain overall price. But they can bundle products together.'

Additional Price Pressures

Adding to the online headaches are pricing models and new product introductions ' not just by the big two but also by the many smaller vendors targeting the legal market ' that strain the patience, and wallets, of law firm librarians. Some vendors, for example, base licensing fees not on the number of users but on the size of the firm. Under this model, a tax resource will cost a 500-lawyer firm with a five-person tax department far more than it would a 100-lawyer firm with a five-person department. Other vendors insist on a minimum number of licenses, so a firm can find itself paying for 10 slots, but using just six.

Vendors will also introduce new products that integrate and expand parts ' but not all ' of their older services. That, too, increases frustration ' and bills.

'You can't get rid of the old stuff, because the new stuff doesn't do everything,' says Catherine Hardy, firmwide library manager at Heller Ehrman LLP in San Francisco. 'But there is only so much money to go around.'

Internet-friendly marketing strategies are also creating havoc for librarians. Increasingly, they say, vendors are wooing lawyers directly with targeted e-mails, free trials, even frequent-flyer-like programs that award prizes based on how much they use a service (among the swag: Starbucks gift cards). 'It creates a huge interest in products that we may not need,' says Duane Morris' Scherzinger.

With so many new products hitting the market, and so many older ones continually evolving, it has become difficult for the librarians to keep up ' and near impossible for the lawyers. Often, lawyers will use electronic research in unnecessary ways. For example, they may rack up usage charges for one service while the firm has already paid for a similar service.

One librarian ' who declined to be identified ' tells of a lawyer who spent $2300 on Westlaw running one name through public record databases while the firm had already paid for the same search capability through Lexis. Complicating the problem, says this librarian: 'The services will tell you there is an additional cost, but don't say what that cost is. It could be hundreds. It could be thousands.'

Guiding Resource Usage

By steering lawyers to 'preferred' resources, librarians can eliminate many unnecessary charges and boost lawyer efficiency. One way to do this is through training, and many librarians are ramping up their programs. 'We'll show them what resources we already have, what is free and what they can do without going on Lexis and Westlaw,' says Duane Morris' Scherzinger. 'We'll also tell them what they need to know if they do go on, like how to avoid incurring additional fees.'

The other way to get preferred resources in front of lawyers is via technology ' in particular, with knowledge management initiatives. These include Web-based portals that integrate a firm's research tools and work product on one platform.

For most of the last 10 years, knowledge management ('KM') was overhyped and underdeveloped, but projects are finally gaining momentum, and librarians are playing a key role: Eighty-four percent of those surveyed say that they are actively involved in their firm's KM efforts. The work, they say, can't simply be handed over to the IT department. 'It's not enough to understand the[technology]; you have to understand the content,' says Alirio Gomez, director of library and information services at Milbank, Tweed, Hadley & McCloy LLP in New York.

KM portals let lawyers research anytime, from anywhere ' but on the firm's terms. The 'wrong tool' problem is eliminated because there is no wrong tool to choose. 'We provide [lawyers] with a vetted collection of best-of-breed electronic resources,' says Steve Lastres, director of library and knowledge management at New York's Debevoise & Plimpton LLP.

Finally, librarians are also training lawyers on when to hit the books. Incorporating book research with electronic tools can be cost effective, because books have no usage fees. While many firms have eliminated their print reporters ' at least in some offices ' paper is hardly an endangered species. The survey found that 76% of librarians reported spending more on print products in 2006 than they did in 2005.

This article has been adapted for A&FP from an overview of findings from The American Lawyer's 2007 research survey of law librarians at AmLaw 200 firms. To access the Web link for obtaining the full survey report, go to http://preview.tinyurl.com/yuhmck.

Alan Cohen writes for Law Firm Inc., an affiliate of A&FP.