Last week I had a chance to catch up with Jeroen Plink, the CEO for the US operations of Practical Law Company. Jeroen has been with PLC for over 6 years and, in a previous life, worked as an attorney for Clifford Chance and Latham & Watkins.
Unfamiliar with Practical Law Company?
In the UK, PLC has been around for nearly 20 years, and they’re just about to launch in the US (more about that anon). Perhaps the best way to think of them is as "knowledge management to the profession," or, a bit more precisely in economic terms, "content experts taking advantages of economies of scale to provide knowledge and efficiency to the profession." That’s a mouthful, so I’ll let them say it in their own words:
"PLC is the UK’s pre-eminent provider of legal know-how, transactional analysis and market intelligence for business lawyers."
What do they cover? Practice areas in the UK include:
Competition, Construction, Corporate, Cross-border, Dispute Resolution, Employment, Environment, Finance, Financial Services, IPIT & Communications, Pensions, Private Client, Property, Restructuring & Insolvency, Share Schemes & Incentives, and Tax.
In the US, they’ll be starting with Corporate & Securities (M&A, securities and capital markets, private equity, venture capital, JV’s and cross-border transactions) and with Finance (general lending, acquisition and project finance, bankruptcy and restructuring).
And in each area? They provide:
- Practice notes, which are explanatory how-to guides covering deal structure, process, and documentation;
- Standard documents and clauses: Model agreements and clauses each with drafting notes that provide detailed guidance on negotiating and other issues;
- Flowcharts and timetables;
- "What’s market", a database analyzing and summarizing current deals, securities filings, and market practice for various aspects of transactions;
- Legal updates (regular updates on developments in the law and the market, with practical implications);
- Cross-border analysis of particular areas of law; and
- “In Dispute”: Analysis of deals that are being disputed (currently focusing on deals affected by the financial crisis such as Clear Channel and United Rentals)
And how do they do this? With real live lawyers, formerly at name-brand law firms and in-house legal departments (for their US offering, including Davis Polk, Debevoise, Dewey LeBoeuf, Latham, Paul Weiss, Pfizer, Shearman & Sterling, and Skadden, among others) who develop and maintain the materials (meaning keeping constantly up to date with current law and market practice).
This invites some questions about the business model. First and foremost, there’s a "chicken and egg" challenge, in that you can’t expect serious law firms or in-house departments to subscribe to PLC services until they have substantial content prepared, and PLC has to commit to substantial investments in costly professional staff before they can claim to have that content. In the US, they’ve been investing in preparing US-specific content for about a year and a half, and currently have over 20 full-time lawyers drafting material.
But the second aspect of the business model follows on the heels of the first. While their fixed costs are high, their marginal costs (of signing up an additional law firm or in-house department as a subscriber) are virtually zero. This should enable them to scale up quickly once they gain critical mass here. And since 70% of AmLaw 100 firms that have UK offices and over 1, 700 law departments (many of which are in global companies with US parents or subsidiaries) are already subscribers to PLC in the UK, their marketing efforts here should find a relatively friendly reception.
PLC will launch its US services in December.
I asked Jeroen what PLC’s competition was. "Well, in the UK, one could say it’s law firms’ own professional support lawyers and internal staff who build and maintain firm resources, but we actually find they’re clients more than they’re competitors. We’re able to help them get their jobs done more efficiently, and they find us a valuable resource."
What about West or Lexis/Nexis, I ask? "They’re very good at informing people about primary and secondary sources, but we think our niche is helping business lawyers actually get the deal done more efficiently.”
What do you view as barriers to entry to competitors?
"Obviously, setting up a service like PLC’s requires significant initial and ongoing (to keep the materials up to date) investment. In the UK, we have an advantage in that we have been around for a long time."
How is your market entry into the US going?
"Well, we’ve certainly been encouraged by US clients in the UK, who say it would be ‘fantastic’ if we had this in the US. Obviously we are concerned about the current economic climate but then again many of our resources are geared towards cost savings and with all of the new regulations expected to come into force I would say there is a place for a player who can make sense of it all from a practical perspective. When we launched our services in the UK, it was during an economic downturn as well and we think we helped our clients weather it then as we hope to do now.”
Is your entry to the US different than your experience in the UK?
“It’s a challenge because there are 50 jurisdictions. Indeed, the main reason for starting in corporate, securities and finance is because most transactions in those areas are governed by New York, Delaware and federal law which makes it a bit more manageable from the outset. We are planning to cover California from early 2009. We are fine-tuning our offering in areas where the law is different for each state and have a short list of other areas to cover from 2009 onwards."
And as for the future?, I ask. What about the EU, the Mideast, Asia?
"The ‘grand plan’ for PLC," he says, "is definitely to look at other markets as well. But at the moment the US is our key focus."
PLC’s business model is deeply intriguing. Think of it as outsourcing KM for the profession to one provider who benefits enormously from economies of scale. This requires deep investment on their part, and, more importantly, impeccable quality and credibility.
Those last two characteristics are attributes which, as we know all too well of late, can be forfeited in a heartbeat. It’s a daring model for that, and a potentially chancy one. But based on their track record in the UK, their launch in the US is their next inevitable move. I for one will be watching PLC with great interest.