Kendall F. Svengalis, Legal Information Buyer’s Guide and Reference Manual 8-15 (2005)
The Rise of West Publishing and Lawyers Cooperative
The 19th century's most significant development in the field of legal publishing … was the emergence of the West Publishing Company and its comprehensive system of case reporting and digesting. John and Horatio West took advantage of the pressing need among lawyers and judges for the timely and accurate reporting of court decisions. Between 1876 and 1896, West's National Reporter System of case reporting and key number system providing subject access to case law were almost universally embraced by the legal community. West's strong position in the marketplace as a publisher of primary law continued throughout the 20th century as it released a number of annotated statutory codes, including the United States Code Annotated in 1927. It also became an important source of legal treatises and law school textbooks, a major legal encyclopedia (Corpus Juris and, later, Corpus Juris Secundum), state and federal practice books, and legal forms.
West's major competitor, the Lawyers Cooperative Publishing Company, adopted a different philosophy of legal publishing which emphasized the more selective publication of court decisions and the creation of an integrated library of practical legal reference works for the practicing attorney, called the Total Client-Service Library (TCSL). It also went head-to-head with West with its American Jurisprudence legal encyclopedia, U.S. Supreme Court Reports Lawyers' Edition, and United States Supreme Court Digest, Lawyers' Edition.
Other major legal publishers which emerged in the latter half of the 19th century included the Michie Company (1897), a leading publisher of state statutory codes, the Shepard's Company (1873), the premier case citation service, Matthew Bender and Company (1887), an important publisher of practitioner-oriented legal treatises and Callaghan and Company (1863), a major source of national practitioner treatises and primary law for several Midwestern states. The Anderson Publishing Company, founded in 1887, and serving the needs of Ohio lawyers and those of neighboring states with a line of both state specific and national titles, was acquired by LexisNexis in October, 2002. Twentieth century companies have included Commerce Clearing House (1913), Clark Boardman (1916), Bureau of National Affairs (1933), the Practising Law Institute (1933), Research Institute of America (1935), Warren, Gorham & Lamont (1961), Prentice Hall Law & Business (1973) and John Wiley Law Publications (1983). Emerging initially as used lawbook dealers, the William S. Hein, Fred B. Rothman (acquired by Hein in 1998), and William W. Gaunt companies now also serve the law library market as publishers of books, microfiche, and CD-ROM, and as subscription agents and legal reprinters.
20th Century Developments
Significant 20th century developments have included the publication of the first looseleaf service by Commerce Clearing House in 1913, and the introduction of the pocket part to update McKinney's Consolidated Laws of New York (West) in 1916. In the 1960's, microforms were introduced to address the problems presented by burgeoning hardcopy collections. Then, in 1973, Mead Data Central introduced LexisNexis, the first computer-assisted legal research system, a development whose influence on the law and the process of legal research has rivaled the appearance of the National Reporter System, and even printing itself. Mead's achievement was matched two years later when the West Publishing Company introduced Westlaw. In the late 1980's, the introduction of legal titles on CD-ROM further transformed the nature of legal publishing and the process of legal research. As of this writing, the vast computer network known as the Internet promises to further re-shape the process of legal information delivery, although its potential has only begun to be realized.
Late 20th Century Mergers and Acquisitions
In the last twenty years of the 20th century, the world of legal publishing has been dramatically altered as a consequence of corporate acquisitions and mergers. While small legal publishers continue to enter the fray, many leading legal publishing houses have been acquired by major international conglomerates. Over the course of about twenty-five years, the Thomson Corporation, of Canada, acquired Callaghan and Company, Clark Boardman, Warren, Gorham & Lamont, Lawyers Cooperative, Bancroft-Whitney, Research Institute of America, Practitioners Publishing, Counterpoint Publishing, Gale Research, Information Access, Barclays Law Publishers, Carswell (of Canada), the West Publishing Company, Federal Publications, Inc., Findlaw, one the Internet's leading legal index and information sites, and the Harrison Company. West itself had already acquired Banks-Baldwin to go with its earlier purchases of Foundation Press, the American Law Book Company, the Edward Thompson Company, and Boston Law Book, among others.
On June 11, 2002, the Thomson Corp, was listed on the New York Stock Exchange (NYSE), one of the largest companies added to that market that year. The lead underwriters were Merrill Lynch & Co. and Morgan Stanley. In making the decision, Thomson originally intended to raise $1.5 billion, with shares listed on the Toronto Stock Exchange (TSE). The company anticipated raising $500 million from issuing new shares and an additional $1 billion from selling shares held by Woodbridge, Inc., the Thomson family's holding company. Also, in July, 2002, the West Group and Factiva announced an expanded alliance to provided access to global news and business information from Factiva for customers of Westlaw. And with nary a peep from the Justice Department or Federal Trade Commission, West also announced its acquisition of the assets of The Harrison Company, a 94-year-old regional legal publisher for the southeastern United States. Integrating Harrison's product line into that of the West Group will eliminate one of the few remaining regional competitors to West's industry dominance.
Reed Elsevier, an English-Dutch conglomerate which had previously acquired Congressional Information Service (1979), R.R. Bowker (1985), University Publications of America (1988), and Martindale-Hubbell (1990), became a major player with the acquisition of LexisNexis, Michie, and Butterworths in 1994. It later added Matthew Bender and Shepard's in 1998, CD Law, a minority interest in Web-based rival VersusLaw, and Anderson Publishing in 2002. Times Mirror, a major publisher of newspapers, magazines, and professional publications, had acquired Matthew Bender & Company in 1963, but sold both Matthew Bender and its one-half interest in Shepard's to Reed Elsevier for the sum of $1.65 billion.
Wolters Kluwer, a Dutch company, acquired Aspen Law & Business in 1994, Commerce Clearing House in 1995, the Little Brown legal treatise line in 1996, Wiley Law Publications in 1997, and Loislaw.com in December, 2000. In March 2002, it acquired Casenotes, Publishing Company, a leading publisher of study aids for law students. In May, 2002, Wolters Kluwer North America acquired Charles D. Spencer & Associates, a leading provider of print and online pension, benefits, and compensation information. Aspen Publisher's, Inc. acquired Accounting Research Manager (ARM) from Arthur Anderson in September, 2002, and Bowne & Company's securities publishing division in October, 2002.
West Publishing Company Sold to the Thomson Corporation
It was in 1995 that the West Publishing, the crown jewel of legal publishing, shocked the legal world by announcing that it was putting itself on the auction block. The Thomson Organisation which, in 1994, had lost out to Reed Elsevier in its attempt to purchase LexisNexis, was poised to acquire a company which could provide it with the online database to complement its strong position in the publication of secondary legal materials. With its massive WESTLAW database and major presence in the publication of both primary and secondary legal materials, West was exactly what the Thomson Organisation needed to pursue its strategic objectives. On February 26, 1996, Thomson announced its plan to purchase West for the sum of $3.425 billion, pending antitrust clearance by the Department of Justice. Industry analysts contended at the time that Thomson paid an excessive price for West, probably $1 billion more than its true worth based on historic sales. The purchase price of $3.425 billion was four times historic sales of $800 million and 16 times its operating profits of slightly more than $215 million. For a business increasing revenue at only 10% per year, such multiples are very steep, it was argued. They pointed out that Reed not only paid a lower multiple for LexisNexis, but it was able to cut its effective purchase price by $300 million by exploiting tax advantages not available to Thomson. And while Reed was able to increase LexisNexis' profit margins from 11 to 16%, Thomson may be unable to improve significantly upon West's healthy 25% profit margins.
Despite some initial indications that it was going to force some major concessions from the merging parties, the Department of Justice, on June 19, ultimately accepted a watered-down consent decree which provided almost no relief to consumers troubled by the size and market power of this legal publishing behemoth. Law librarians, in particular, were troubled by the price escalation which followed in the wake of previous acquired Thomson publications, a price escalation which has virtually killed the standing order for secondary materials as a central operating principle in many law libraries. Protests from law librarians, large and small legal publishers, and others were summarily dismissed by attorneys at the Department of Justice's Antitrust Division who solidified their reputation as pusillanimous apologists for pro-monopoly antitrust policy. The person most responsible for this charade was undoubtedly Anne Bingaman, President Clinton's former head of the Antitrust Division at the Department of Justice, who set the tone for the Division's feeble enforcement of the antitrust laws. Yet, on June 26, 1996 she had the effrontery to issue what can only be characterized as one of the most absurd and self-serving press releases in Justice Department history. "This settlement is a victory for all of us," she said. "We are all consumers of legal advice from time to time and as citizens we rely on access to information about our nation's laws." A more apt description of the agreement was made by HyperLaw's President Alan Sugarman whose view of the merger is prominently displayed on HyperLaw's Web Site: "The Department of Justice and the State Attorneys General have served up a glass that is 90% empty, and the 10% in the glass is watered down."
The consent decree specified that Thomson-West divest itself of 51 print titles and Auto-Cite, Lawyers Cooperative's electronic citation verification service. Included among the print titles were United States Reports, Lawyers' Edition, United States Supreme Court Digest, Lawyers' Edition, United States Code Service, Corbin on Contracts, Appleman's Insurance Law and Practice, Deering's Annotated California Code, Illinois Jurisprudence, the Annotated Laws of Massachusetts, Callaghan's Michigan Digest, Michigan Statutes Annotated, and the New York Consolidated Laws Service. Also included were thirty state-specific titles of no real consequence whose presence on the list only served to highlight the weakness of the consent decree. Only six national treatises were included, the greatest indication that the consent decree was a hollow instrument. These six titles, in the subject areas of bankruptcy, contracts, criminal law, federal practice, and insurance law, represent only 1.1% of the 533 treatises selected for inclusion in the first edition of this book. In each of these five subject areas, the West-Thomson percentage of market control ranged between 63% and 73%. Strangely, the Justice Department provided no relief in at least thirteen additional subject areas where Thomson/West had an equal or greater market concentration, including: administrative law (66.66%); admiralty and maritime law (85.71%); arts, entertainment & sports law (71.42%); civil rights (66.66%); constitutional law (83.33%); education law (66.66%); municipal corporations (80%); products liability (66.66%); social security (66.66%); taxation (63.63%); tort law (63.63%); and trusts and estates (66.66%). Prior to the merger, Thomson's overall control of the treatise market amounted to 187, or 35.08%, of the 533 treatises selected for inclusion in the first edition of this book. The purchase of West added another 96 titles, or 18.01% of the market, bringing the total to 283 titles, or 53.09%.
The Antitrust Division's second major error was in permitting Thomson-West to gain control of both systems of legal research: West's Key Number System, and Lawyers Cooperative's Total Client-Service Library System, a system which has now been fully integrated into the West Group product line. The West-Thomson attorneys were able to persuade the ill-prepared Justice Department lawyers that comparing the two systems of legal information was like comparing apples and oranges. In doing so, they not only distorted the fact that both are valid and useful methods of conducting legal research, but succeeded in distancing themselves from years of Lawyers Cooperative's marketing and promotional literature which described the TCSL system as " a comprehensive legal research system" covering "everything from on point cases in both state and federal jurisdictions, to principles of law, statutes, procedure, model forms, trial techniques ... in short, everything you need to handle almost any legal matter."
What can explain the Antitrust Division's inept performance in accepting such a feeble consent decree? As John Morris explains in his excellent overview of the entire matter in the September, 1996 issue of the American Lawyer (see "How West Was Won"), the stalemate was broken three days after the Thomson-West lawyers offered to openly license West's star pagination, the page breaks in the West case reporters, to other publishers (albeit at hefty rates certain to deter all but the largest publishers). At that point, the government's lawyers, believing they had forced a major concession from the merging parties, were ready to sign on the dotted line. Only later, after public criticism erupted, did they realize that they had purchased "a pig in a poke." With the very legitimacy of West's claim to copyright in star pagination under heavy fire in the aftermath of the U.S. Supreme Court's Feist decision, which dismissed the "sweat of the brow" theory of copyright protection, the Justice Department's lawyers were thoroughly outmaneuvered in accepting an ultimately worthless concession. Revealingly, West's claims to copyright in its page breaks were simultaneously being challenged in the U.S. District Court for the Southern District of New York in an action brought, and ultimately won, by Matthew Bender and HyperLaw, Inc.
Once the consent decree was fashioned, the merger was allowed to proceed. The only step remaining was for the final imprimatur of the U.S. District Court for the District of Columbia. Judge Paul Friedman, who was assigned to hear the case after the withdrawal of Judge Robert Richey (who, it was pointed out, was a Thomson author), held several hearings prior to issuing a 51-page opinion on December 26, 1996. While Judge Friedman was severely constrained in his role by the earlier Microsoft decision which criticized another District court judge for exceeding his authority in rejecting a Justice Department consent decree, he indicated that "Like Judge Martin [Southern District of New York], this court has serious doubts about the validity of the Eighth Circuit's 1986 opinion in Mead Data in view of the subsequent decision of the Supreme Court in Feist ... and it finds unpersuasive the reasoning in Oasis Publishing." He also indicated that "the court is concerned that including the star pagination license provision in the Final Judgment might be construed as an endorsement of West's dubious copyright claim." He further opined that "the weakness of West's claim and the limited market power of many of those who must pay the license fee, particularly now that the most economically powerful critic of West's position, Thomson, has lost its incentive to contest the claim and joins West in advancing it."
In addressing Judge Friedman's concerns on the pagination issue, Thomson-West proposed free star pagination licenses for small publishers until the legal issue is settled, or until the year 2001. The major publishers, however, defined as those with annual sales of over $25 million, would get no price break on the pagination licenses. Those publishers were identified as LexisNexis, Commerce Clearing House, Matthew Bender, and the Bureau of National Affairs. Hyperlaw, Inc. was granted intervener status for purposes of appeal by Judge Friedman once it was apparent that LexisNexis, having acquired the divested products, was withdrawing its challenge to the merger. …
The sale of West was not the only significant industry development in 1996. Wolters Kluwer, the Dutch-owned parent of Commerce Clearing House, Aspen Law & Business, and Panel Publishers, acquired the professional publishing business of Little, Brown and Company. The legal, tax and educational divisions of Little, Brown will be fully integrated into Aspen Law & Business. In other developments, Times Mirror, the parent of Matthew Bender & Company, entered into a partnership with Reed Elsevier to own and operate Shepard's, the nation's premier legal citation service. The arrangement was initiated with the sale of its Higher Education Group to the McGraw-Hill Companies in exchange for Shepard's and additional undisclosed considerations. Following the completion of this transaction, Times Mirror would contribute 50% of Shepard's to a joint venture with Reed Elsevier, an arrangement which was consummated on November 27, 1996. This partnership is part of a broader strategic alliance between Matthew Bender, Times Mirror's legal publisher, and LexisNexis, a subsidiary of Reed Elsevier. A cross-licensing arrangement between the two companies provides the basis for the availability of Matthew Bender publications online through LexisNexis and the use of the LexisNexis caselaw database on Matthew Bender's print and CD-ROM treatise products. All these transactions represented deliberate strategic positioning in the wake of the competitive challenges posed by the Thomson-West merger.
HyperLaw Carries on the Cause for Consumers
When the merger between West Publishing and the Thomson Corporation was completed, the final resolution of several issues relative to that merger were still the subject an appeal filed by HyperLaw, Inc., which was granted intervenor status for purposes of appeal by Judge Paul Friedman of the U.S. District Court for the District of Columbia once it was clear that LexisNexis, having acquired the products divested by Thomson-West, was withdrawing its opposition to the merger.
In its brief, filed on January 29, 1998, HyperLaw contended that (1) the District Court erred in approving the consent decree presented by the appellees by failing to require that the Department of Justice provide proper notice and disclosure of critical documents as required under the Tunney Act; and (2) that the District Court erred in interpreting its role in the Tunney Act process as being little more than a rubber stamp of the Justice Department's actions fashioning the consent decree.
On the first issue, HyperLaw argued that the Tunney Act required that the 1988 "secret agreements" made between West Publishing and LexisNexis be made public. According to the HyperLaw brief, "the 1988 secret agreements are mentioned prominently in the papers filed in the court below by the Appellees and by Amicus Curiae LexisNexis, and were also mentioned in out-of-court statements made a part of the record. Appellant HyperLaw believed that these references and statements established that the government relied on these documents in its investigation and in framing the proposed relief."
According to HyperLaw:
“In 1988, prior to the merger between Appellee West and Appellee Thomson at issue here, West and the next largest legal publisher, LexisNexis, entered into secret cross-licensing agreements-agreements which created the copyright equivalent of a clandestine "patent pool". These agreements apparently gave LexisNexis access to the West citations and text of both case law and statutes, and (it appears) gave West similar access to the LexisNexis database... West and LEXISNEXIS are the only real competitors in the online legal research market, and they apparently have an entire series of secret deals. Together they control almost 100% of that market, a market in which the prices charged for legal research are more than quadruple the cost of other, similar proprietary data-bases. The merger between West and Thomson has the undeniable result of expanding this copyright cartel to include the other large legal publisher, Thomson, an entity which had previously been critical of West's arrangements. The result is that, in the post-merger period, West, Thomson and LEXISNEXIS are able to use the intellectual property pool to the virtual exclusion of all other legal publishers. The cost of this to the public is significant. Yet, during the proceedings in the District Court, the Tunney Act requirements of notice and disclosure that are essential to the public's understanding of the relationships among these entities, were abandoned."
On the second point, HyperLaw contended that the decision of the Court of Appeals for the District of Columbia Circuit in United States v. Microsoft, 56 F. 3d 1448 (D.C. Cir. 1995), "has turned the district courts into a powerless rubber stamp." It argued that without adequate disclosure, the public cannot begin to understand the far-reaching ramifications of this merger. According to HyperLaw, "If this Court intended to create a complete carte blanche for the Justice Department, one in which in can repeatedly refer to central, critical, and finally determinative documents in virtually every pleading filed, state that it is making its decisions completely or principally on those specific documents, and then certify that there are no such documents, then this Court miscomprehended the congressional intent in the Tunney Act."
In light of these errors, HyperLaw urged the Court of Appeals to remand the matter to the District Court for further proceedings in conformance with the Tunney Act. Oral arguments in this case were scheduled for May 19, 1998. The full text of the HyperLaw brief may still be found on the HyperLaw Web site located at: http://www.hyperlaw.com/dcbrhll.htm
HyperLaw was also involved in two other lawsuits of potentially far-reaching significance to consumers of legal information and smaller legal publishers. The first of these was the so-called "Citation Appeal" which seeks the explicit overruling of the 1986 West v. Mead decision in the Eighth Circuit which granted West an intellectual property right in the pagination of the opinions published in its National Reporter System. On November 22, 1996, Judge John S. Martin of the U.S. District Court for the Southern District of New York ruled from the bench that "where and on what particular pages the text for a court opinion appears does not embody any original creation and it is not, in my opinion, entitled to protection." On November 3, 1998, West's attempt to overturn Judge Martin's decision was rejected by the U.S. Court of Appeals for the Second Circuit. In its opinion, the court declared that use of star pagination does not infringe on West's copyright because page breaks are not protected by its copyright and the insertion of star pagination does not amount to infringement of West's arrangement of cases.
Merger Frenzy Continues
The continued consolidation of the legal publishing industry through October, 2002 was symptomatic of the rise of the global markets generally. Responding to the end of the cold war and a new era of political stability and expanding capitalism, American and foreign corporations are feeling pressures to create new entities which can effectively compete on a global scale. The record $1 trillion in mergers which took place in 1997 was 50% higher than the value of those achieved in 1996. Moreover, 156 of those mergers involved deals of $1 billion or more, up from 97 in 1996. The number of $1 billion+ mergers rose even more dramatically to 288 in 2000. Not since the turn of the century has the United States witnessed such a wave of mergers involving American corporations, a phenomenon which has affected every segment of the economy, from banking and telecommunications to aerospace and legal publishing.
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In the current legal publishing environment, three major international corporations have dominated the merger wave – the Thomson Corporation, Reed Elsevier, and Wolters Kluwer. The activities of these three corporations, each of which possess the financial resources to acquire smaller companies and expand their critical mass, have convinced a number of smaller legal publishers to throw in the towel. In most cases, these smaller companies have been publishers of print legal treatises without the electronic databases of primary law which would allow them to transform their properties into cutting edge products for the practitioner market.
Wiley Law Publications Sold to Wolters Kluwer
On September 3, 1997, Charles Ellis, President and CEO of John Wiley & Sons, Inc., announced that his company had signed a letter of intent to sell its Wiley Law Publications division to Wolters Kluwer, the Dutch publishing giant. Ellis' comments at the time of this announcement are reflective of the pressures faced by small legal publishers generally. "Given recent developments in the U.S. law publishing field," he said, "we came to the conclusion that Wiley could not be a leading contender without substantial further investments." And, in remarks that closely paralleled those of Shepard's McGraw-Hill executives in 1995, he further indicated that "the sale will allow us to concentrate more strongly on our core businesses." Wiley Law Publications, based in Colorado Springs, CO, published approximately 300 legal treatises in the areas of construction law, intellectual property, employment law, medical malpractice, trial practice, and bankruptcy. The Wiley acquisition reflected Wolters Kluwer's strategy of acquiring legal and tax publications in specialized and local markets. Under this new ownership, the titles formerly published by Wiley Law Publications will be merged with those of Aspen Publishers, a Wolters Kluwer company headquartered in New York City.
LexisNexis Publishing Created
Following its acquisition of the 52 products divested by the Thomson Corporation, Reed Elsevier created a new entity called Lexis Law Publishing which combined the books and CD-ROMs published under the Michie imprint with the United States Code Service, United States Supreme Court Reporter, Lawyers' Edition, and the other acquired titles. Currently headquartered in New York City, the new LexisNexis Group now provides a premier online legal research service (LexisNexis), annotated code services for 35 states and territories, CD-ROM products for a number of jurisdictions, more than 800 national and state practice publications, and the Shepard's line of citators products. It maintains offices in a number of U.S. cities for separate divisions of its operations, including Dayton Ohio (LexisNexis), Conklin, NY (LexisNexis Matthew Bender), Charlottesville, VA (LexisNexis Matthew Bender), Colorado Springs (LexisNexis/Shepard's), Bethesda, MD (LexisNexis Academic Library Solutions, and New Providence, NJ (Martindale-Hubbell). While a number of product brand names will continue to exist, a consolidation of marketing and customer service operations has already taken place.
Reed Elsevier - Wolters Kluwer Merger Proposed, and Abandoned
On October 13, 1997, the Anglo-Dutch publisher Reed Elsevier announced a merger with its Dutch competitor, Wolters Kluwer. In 1996, the combined sales of these two international publishing giants were estimated to be in the neighborhood of $6.6 billion. The new entity would have become the world's largest publishing enterprise, with particular strengths in the scientific and professional markets. Under the terms of the merger, Reed shareholders would have commanded a 38.3% share in the new entity, while Elsevier and Wolters Kluwer shareholders would have controlled 34.2% and 27.5% respectively. In terms of the American legal publishing market, Reed Elsevier and Wolters Kluwer each command annual sales of $600-$700 million. While the merger would have created the world's largest publishing enterprise, it would have accounted for slightly less than the Thomson Corporation's roughly $1.5 billion in sales in the American legal market. Although the merger required scrutiny by authorities at both the Justice Department and the European Union, both of these bodies would have been hard pressed to oppose a merger whose size did not quite approach that of the Thomson-West merger to which the Justice Department has already given its blessing.
Then, on March 9, 1998, industry observers were stunned by the sudden decision by the respective boards of directors of Reed International P.L.C., Elsevier NV and Wolters Kluwer nv to abandon the proposed merger. According to a joint press release, "within the last few days, Wolters Kluwer has made it known to Reed Elsevier that it needed to renegotiate a number of terms of the proposed merger ... as announced on 13 October 1997. This was in the main based on expectations about the conditions which were likely to attach to any clearance by the Regulatory Authorities and the consequent adverse implications for the benefits of the merger for the respective shareholders of all three companies. " Reed International and Elsevier concluded "that to make the significant changes to the merger terms that Wolters Kluwer felt necessary to protect the interests of its shareholders would make the merger unattractive from the standpoint of the Reed International and Elsevier shareholders." The press release concluded that "Reed Elsevier and Wolters Kluwer will continue to pursue their respective core strategies of growth as leading international professional publishers and information providers, through both organic developments and acquisitions."
Times Mirror Sells Matthew Bender to Reed Elsevier
Responding to the rising pressures of operating in global markets, Times Mirror announced on November 24, 1997 that it was commencing a comprehensive review of the strategic position and alternatives of its legal publisher, Matthew Bender & Company, and its medical publisher, Mosby, Inc. Matthew Bender, the nation's premier publisher of secondary legal publications, including such notable legal treatises as Moore's Federal Practice and Collier on Bankruptcy, was reacting, at least in part, to the October 13, 1997 announcement of the proposed merger between Reed Elsevier and Wolters Kluwer. According to Mark Willes, Times Mirror chairman, president and chief executive officer, "the quickening pace of consolidations in these industries and our normal strategic review process led to this broader scale review." Times Mirror said it would evaluate a variety of alternatives including a sale to a third party, a spin-off to shareholders and swaps for other strategic assets. It retained Goldman, Sachs & Company to assist in this review.
After months of speculation, Times Mirror announced on Monday, April 27 that it had struck a deal to sell its legal publishing holdings to Reed Elsevier Plc. in a deal valued at $1.65 billion. The announcement was not unexpected to those familiar with the world of legal publishing. With annual sales in the $650-$700 million range, Matthew Bender had to have been a tempting target for Reed Elsevier with whom it was already engaged in a number of strategic alliances. Moreover, Reed Elsevier was in a position to take maximum advantage of Bender's rich product line of analytical treatises to bolster its product line and allow it to compete effectively with the product offerings of the Thomson Corporation. Moreover, the breakdown of Reed Elsevier's proposed merger with Wolters Kluwer made its acquisition of Matthew Bender, and its 50% share of Shepard's, even more inevitable. Matching the Matthew Bender product line with the massive LexisNexis database provided Reed Elsevier with the key ingredients fundamental to success in the increasingly global online environment. In 1998, Reed Elsevier acquired CD Law, a Washington state-based CDROM and Internet legal information provider, a minority interest in VersusLaw in 1999, and Anderson Publishing in 2002.
Federal Publications Acquired by Thomson Corporation
The Thomson Corporation continued to acquire strategically positioned legal publishers with its 1998 acquisition of Federal Publications, a Washington, D.C.-based firm engaged in the publication of materials in the fields of immigration and construction law and the provision of seminars in the fields of immigration and government contracts law. Federal Publications is the publisher of Interpreter Releases, a leading periodical containing news and analysis of immigration law matters, and IRIS/PRO, a leading immigration law CD-ROM product. On the international front, Thomson also announced the acquisition of an equity interest in Swisslex, Switzerland's leading online service for legal professionals.
Future Appears Uncertain for Consumers of Legal Information
While these mega-mergers appear to make considerable sense from a global business perspective, its impact on consumers of legal information is already being felt, and not always in positive ways. Having already approved the merger of the Thomson Corporation and West Publishing Company, the Justice Department and Federal Trade Commission would be hard pressed to prevent the additional mergers in the industry. They believe, perhaps correctly, that there are no significant barriers to the entry of new competitors into the marketplace. However, from the consumer's perspective, it must be acknowledged that the likelihood of such competitors emerging is extremely remote, particularly in the short term. In the course of acquiring most legal publishers of any significance and name recognition, Thomson and Reed Elsevier have acquired the product names most likely to attract the interest of prospective authors. Law professors and practitioners are not fully unaware of the transformation which has engulfed the industry; and it is highly unlikely that the authors among them will seek out smaller publishers for the purpose of promoting greater competition in the marketplace. It is more likely that they will be attracted by the prospect of higher royalty payments offered by publishers who can charge $200.00 for a single-volume treatise and $150.00 for an annual pocket part. And should a viable new competitor emerge once the dust has settled on the current wave of acquisitions, what is to prevent one of the big three from devouring that entity as well?
From the perspective of the legal information consumer, the future, at least on the cost front, appears relatively bleak. While the Internet offers new opportunities for the exchange of legal information, it is still too limited and diffuse to have much impact upon the world of value-added legal information which will remain under the control of the big three for the foreseeable future.
Capturing the Small Law Office Market
With the saturation of the large law firm market by the two leading providers of online legal research, the focus of marketing efforts has now shifted to law firms of ten lawyers or less where most lawyers practice. While both Westlaw and LexisNexis now provide more economical access to defined bodies of state and federal materials …, other online providers have mounted challenges to their hegemony in this market. VersusLaw is offering unlimited access to a complete library of state and federal primary law at a cost of only $119.40 per year per password, as well as other attractively priced premium packages of primary law. Loislaw, which once held promise as a less costly alternative, has increasingly distanced itself from this market by raising its per password cost to $3,000.00 possibly driven by profit targets experienced by its European owners. Casemaker, which also showed initial promise by developing databases for a number of individual state bar associations, appears to be stymied in its efforts to secure participation by other bar associations which would allow it to offer a complete national library of state and federal primary law and cross-file searching capability. Fastcase, a new entrant to this market, represents another low-cost and technologically sophisticated alternative.
Dramatic Developments at LexisNexis
The consolidation in the legal publishing industry has precipitated a number of positive developments for users of legal information. Among the most significant of these is the enhanced quality of citator services in the wake of the West Group's challenge to Shepard's former monopoly in the field. West's introduction of KeyCite in 1997 added a dramatic new wrinkle in the time-honored practice of updating the law. This challenge, and the merging of LexisNexis and Shepard's, have provided the ingredients for impressive product enhancements from Shepard's which is now offering consumers the ability to purchase access to either local jurisdictional or full Shepard's at extremely attractive rates. On another, but related, front, LexisNexis has invested considerable editorial effort in overcoming its long-standing research disadvantage vis-a-vis Westlaw by introducing both the LexisNexis Search Advisor classification system and by adding core terms to all the case law in its database. These core terms provide online researchers with the ability to retrieve cases whether or not the judges authoring the opinions have used them. It provides the added editorial advantages which were formerly the exclusive domain of Westlaw, which could marshal the editorial content of the headnotes and synopses which accompany its print versions of cases. These enhancements are probably the most significant developments since the introduction of computer-assisted legal research in 1973.
Wolters Kluwer Acquires Loislaw.com
In the most significant industry development of 2000, legal publishing giant Wolters Kluwer acquired Loislaw.com for the sum of $95 million. In acquiring this comprehensive online database of primary law, Wolters Kluwer placed itself in a position to strategically develop and position its other analytical and practice-oriented offerings. While this acquisition gave Wolters Kluwer the online legal database without which it would have remained at a strategic disadvantage to Thomson and Reed-Elsevier, its current pricing structure in the face of mounting challenges from VersusLaw, Casemaker, and Fastcase, may handicap its ability to tap the small law office market. However, this development reinforced my previous predictions about new and promising legal publishers being bought up by one of the big three.
West Group Acquires Findlaw
No sooner had we truly entered the third millennium than we learned that the West Group had acquired FindLaw, one of the most popular portals for accessing free legal information on the Internet. In a press release issued January 26, 2001, West Group president Michael Wilens indicated that FindLaw will continue to operate as an independent subsidiary of the West Group and "everything that exists on FindLaw today - from caselaw to career services and Continuing Legal Education will remain." This acquisition highlighted the degree to which the major legal publishers are poised to exploit all possible avenues for business development and marketing, even to extent of positioning themselves along the highways to free legal content on the Internet. It remains to be seen how West Group will treat rival proprietary online legal information providers, which are currently listed alphabetically on the site, or will handle advertising from those same rivals.
The Shape of the Legal Publishing Industry in the New Millennium
The result of this twenty-one year drive toward consolidation is that the legal publisher industry is currently under the control of three major corporations: (1) the Thomson Financial & Professional Publishing Group (of which the West Group and the RIA Group are the largest divisions); (2) Reed Elsevier; and (3) Wolters Kluwer. These three corporations and the history of their major acquisitions are as follows:
Thomson Financial & Professional Publishing Group 
Callaghan & Company (1979) Clark Boardman (1980) Warren, Gorham & Lamont (1980) Lawyers Cooperative (1989) Research Institute of America (1989) Maxwell Macmillan (1991) Counterpoint Publishing (1994) Information Access (1994) Information America, Inc. (1994) Barclays (1995) Shepard's (treatises only) (1995) West Publishing Company (1996) Banks Baldwin (1996) Foundation Press (1996) Federal Publications (1998) Dialog (Info Services Division) (2000) Findlaw (2001) Harrison Company (2002) Andrews Publications (2003) Elite Information Systems (2003)
Reed Elsevier Professional Publishing 
Congressional Information Service (1979) R. R. Bower (1985) University Publications of America (1988) Martindale Hubbell (1990) Butterworths (1994) Michie (1994) LexisNexis (1994) Shepard's (1998) Matthew Bender & Company (1998) Mealey's Publications (2000) Book Publishing Company (2001) Courtlink (2001) Anderson Publishing (2002) Gould Publishing (2004) Weil Publishing (2005)
Wolters Kluwer
Aspen Law & Business (1994) Commerce Clearing House (1995) Little, Brown treatises (1996) Wiley Law Publications (1997) Loislaw.com (2000) Bowne Publishing (2002) Casenotes Publishing Company (2002)
As of 2003, the Thomson Corporation, Reed Elsevier, and Wolters Kluwer accounted for 82% of U.S. sales of legal information. Thomson was firmly positioned in first place with
Other 18%

Reed Elsevier
26%
a 39% market share, while Reed Elsevier and Wolters Kluwer accounted for 26% and 17% respectively.
2003 U.S. Sales (in billions)
Thomson	$2.639	
Reed Elsevier	$1.764	
Wolters Kluwer	$1.158	
Other	$1.250	
Total	$6.811	
Other players of significance outside the control of these major corporations include the Bureau of National Affairs, Oceana, and Practising Law Institute. There was a time in the history of the legal publishing industry when its executives could be expected to enjoy a life-long tenure with one company. While that may be true in some instances, the market has seen a rise in the number management personnel who jump from one company to another, often to a chief competitor. Tracing the movements of managers between Lawyers Cooperative, Shepard's/McGraw-Hill, Matthew Bender & Company, and other companies is an interesting story in its own right.
While these movements of personnel have stimulated a cross-fertilization of ideas and marketing strategies, they have also helped ensure a steady rise in both basic and supplementation costs, as well as the further refinement of practices designed to siphon an ever-increasing flow of dollars from the wallets of lawyers and other consumers of legal information to the publishers' bank accounts. …