Opinion: Response By Anon – Responds To Sean Hocking Article On SLAW “Christmas Comes Early For Lexis Employees”

An ex senior manager at Lexis in North America contacted  lln/HOB after i published the following opinion piece on SLAW recently
As you’ll be aware there was a reasonable amount of surmise in the piece as Lexis ( as we are all aware) tend to be pretty guarded about their modus operandi.
In this opinion piece  “anon” fills in some of the gaps and corrects me on a few things. I’m a big boy and can take it. The fun starts with some of the opinion about LN and the way they operate.
Some of this won’t be news to all of us but some of it is very instructive and the odd thing rather worrying.
Here we go……

I read Sean’s posting Christmas Comes Early for Lexis Employees in the USA. He offered three theories on what is causing the visible chaos at LexisNexis. I thought they were good theories but there were some issues. We discussed those in an email exchange. Sean asked me to provide one person’s opinion on what is going on in LexisNexis. Because of the depth of the problems at LexisNexis, this discussion is rather lengthy.

The Lexis Advance disaster has been the spark that ignited what has been building up for decades. If you have tried Lexis Advance you know what I am talking about. If you have been fortunate to not use Lexis Advance, the no-holds-barred comments from law students give a truer picture than the blogs written by people who get trips to New York and fancy dinners paid for by LexisNexis. LexisNexis has spent a lot of money but has made little progress moving customers from Lexis.com to Lexis Advance, let alone attracting new customers.

For those working there, the current situation as like the Red Army purges just before World War II. One day you can be getting an award from Mike Walsh (LexisNexis CEO) for outstanding performance. The next day you can be fired to cut costs.

I. Reed Elsevier has mismanaged LexisNexis for years.
To appreciate how things came to there current state, you have to go back in time. When Reed-Elsevier bought it in 1994, LexisNexis was a pioneering technology company. LexisNexis had invented search long before there was Google and Bing. That all changed when Reed-Elsevier bought LexisNexis.

Reed-Elsevier treated LexisNexis as a cash cow to be squeezed for maximum short-term profit. Lexis.com provides the most visible example of this. There was little product development after the Lexis.com was released. Lexis.com in 2013 is almost identical to the Lexis.com of 20o3 (For comparison, think of Microsoft Word in 2003 and what it looks like now). Behind the scenes, Reed-Elsevier wiped out effectively all of LexisNexis’s internal software development capability and replaced it with outsourced development from India. Over two decades, Reed-Elsevier transformed LexisNexis into a technology leader into a technological basket case.
II. Mismanagement comes back to bite Reed-Elsevier
Nothing lasts forever. Technology change happened. Lexis.com (and Westlaw) were built on mainframe computer systems. These have become increasingly expensive to own and operate. It is difficult to find people with experience running these systems. Even finding spare parts to make hardware repairs is a challenge. The day when the mainframe could not longer be maintained could be seen on the horizon. Reed-Elsevier had two choices: Either LexisNexis replaces the mainframes or the end of LexisNexis is in sight.
a. LexisNexis was in no position to implement a project the size of Lexis Advance.
This is where neglect comes back to bite. Technology change forced LexisNexis to invest in a new system but it no longer had the skill to build large projects. You need experience doing the $1,000,000 projects before you can effectively build the $10,000,000 projects. You need experience doing the $10,000,000 projects before you can effectively do the $100,000,000 projects. LexisNexis was facing an even bigger project.

LexisNexis needed a ramp up period before building its new system. It needed to rebuild its technology organization. It needed to get product people on board who were not retreads from West. It needed to get its business systems in order. LexisNexis needed to make cultural changes to eliminate the mutual hatred between the technology folks and product folks. It needed to eliminate the culture of suppressing innovation. Only then, it would have had the skills in place to build a new system.
b. LexisNexis build an organization capable of building a success product.
Instead of ramping up and rebuilding, Reed-Elsevier simply threw money at LexisNexis. LexisNexis in turn threw the money all over the place (notably offshoring vendors). The result was Lexis Advance (in other words, squandered investment).

III. The perfect storm hits LexisNexis.
Several factors combined to create a perfect storm.
·       In Lexis Advance, LexisNexis has spent a “John Carter” budget to get “John Carter” box office.
·       The capital costs for “John Carter” need to be paid back.
·       Sales have gone from flat to declining.
·       Until customers migrate, LexisNexis needs to maintain two systems, doubling operating costs.
·       The Lexis systems outside the U.S. need to move off of mainframes too.
·       LexisNexis still needs to spend fortune to rebuild the organization and still needs funds to build a competitive next generation product.
·       Reed-Elsevier demands increased profits.

The senior management responded to this storm by hunkering down. They have created a Lexis Advance roadmap extending years into the future. As long as these folks can get Reed-Elsevier to allow them to stay on the roadmap, they can stay in their jobs. For the short time anyway, they can use layoffs to increase profit

This hunkering down was apparent at the rah-rah meetings after each release of LexisAdvance. These were hilarious for two reasons. First, the senior members of the product team would give presentations on the product that showed they did not have a clue how legal research is done. Their fantasy world descriptions of legal research match up exactly with what you see in Lexis Advance. Second, there were never any problems. The senior managers, after looking at the scathing customer comments, unbelievable NPS scores, and lack of sale figures would tell the worker bees, “Just keep doing what you’re doing.” Except for those in customer support (who use the product constantly and listen to customers), very few of the troops have any idea how bad Lexis Advance really is.

IV. The LexisNexis research strategy is in ruins.
A year ago, LexisNexis was touting three research products: 1) Lexis Advance; 2) Lexis for Microsoft Office; and 3) Lexis Practice Advisor. What a change a year makes.

a. Lexis for Microsoft Office is a case study of mismanagement.
There was virtually no innovation at LexisNexis. The product organization affirmatively works to kill new ideas in the company. The next new idea at LexisNexis is the last new product somewhere else. Lexis Advance is a copy of the WestlawNext concept. Lexis Practice Advisor is a copy of Practical Law Company concept. The first product I worked on at LexisNexis was a copy of a West product championed by a former West employee who supplied us with all of West’s confidential sales data.

The one exception to the lack of innovation is Lexis for Microsoft Office (LMO). It is a great idea; Integrate legal research with other tools lawyers work with. It generated a lot of customer excitement when it was announced. Sadly, things were never right with LMO. While I was at LexisNexis, LMO (along with business systems) was one of the two disasters no one spoke openly about. Since leaving LexisNexis, I have heard more details from friends who have interviewed laid off LexisNexis employees

The problem for LMO is that ideas have to be implemented. Normally, you would assign a few of your programmers to jumpstart an idea like LMO—but Reed-Elsevier had destroyed LexisNexis’s development capabilities. So LMO had to be outsourced to India where it cost a fortune to build a prototype. To turn it into a real product, LMO needed a rebuild with a sound design. However, the business folks would not pay for that and demanded that new features be piled on the weak foundation of a prototype. The result was a disaster.

I tried LMO after each release and wanted to cry every time. I could see the underlying good idea but the implementation was an abomination. Finding the citations in a 30-page brief took a ridiculous 4 minutes. The user interface was so screwed up, it could only have been built in India. LMO was simply unusable. I recently found out that it slowed down Office so much that many customers were forced to uninstall it.

LexisNexis has since wiped out the LMO team. It looks like LMO is dead without a formal announcement. This illustrates how Reed-Elsevier has gutted LexisNexis to the point that the company is incapable of implementing an original, great idea.

b. Lexis Practice Advisor is the unknown factor.
I had no dealings with Lexis Practice Advisor (LPA) and have never tried the product. I give no evaluation of its merits but will just state the near obvious. LPA certainly is not tearing up the market to the point it is visible in the ABA survey. I can be certain that LPA is handicapped by LexisNexis’s bloated development costs. I would wager that the Practical Law Company developed a better application at one-fifth the cost of LPA. I also have to believe the LPA product team is now shooting themselves for integrating LPA into Lexis Advance rather than making it a standalone application.

c. Lexis Advance: Res ipsa loquitur.
Lexis Advance speaks for itself. At the risk of beating a dead horse, I point out two issues that illustrate how things go wrong at LexisNexis.

A recent LexisNexis blog post advocated using the Lexis Advance Legal Issue Trail feature. Legal Issue Trail is the type of feature that one would expect in new legal research systems today. It is supposed to take you from a legal issue in one opinion to all citations to that issue (as opposed to the entire document). Unfortunately, Legal Issue Trail is wrong nearly all the time making it completely useless. How does something that bad go out the door?

Normally your programming team would have experience in your product and will have acquired some legal expertise. Maybe you even have a lawyer on your programming team. They would notice when their work product was wrong nearly all time. Unfortunately, model of outsourcing to the cheapest body per hour gets you a programming team in India that was working on banking before it came to you and will be working on telecom afterwards. How would such an offshore programming team know if their work is functioning properly when they cannot tell one legal issue from another?

Then comes testing. However, that gets offshored to India as well to people who cannot follow a legal issue. So you pay less per body per hour to get absolutely nothing in return.

Finally, the product folks should catch the problem. Unfortunately, they do not have a clue about legal research either. The result is a feature that exists in name only.

My other specific Lexis Advance illustration is the tabs. If you have used Lexis Advance you know what I am talking about already. If not, I briefly explain that tabs are a central feature of the Lexis Advance user interface. When you open a document in Lexis Advance, the application opens it a new tab. You would expect the tabs to behave like a web browser tab—but they do not. When you switch tabs there is a long delay and tab switches rarely take you back to the same place in the document where you left.

When I asked why the tabs are so bad the answer I got (I am not a programmer so I am just repeating what I was told) is that this is because Lexis Advance uses Microsoft Web Parts for the user interface. This tool is incapable of implementing the tabs efficiently. However, I am told they could be made to work right­­ using Java (I note that some non-U.S. versions of Lexis have internal tabs that actually work). Here is the absurd situation of either (depending upon your viewpoint) the product folks insisting on a user interface that does not work with the technology or the technology folks insisting on using a tool that does not meet the business requirements. In any event, something that bad should never have been released.

V. West does much better.
This is where WestlawNext leaves Lexis Advance in the dust. I suspect that West has a lot of the same institutional problems that LexisNexis has (i.e., a parent company milking them). As with Lexis Advance, I suspect the motivation for WestlawNext is to get off mainframe systems. However, West has managed WestlawNext much better than Lexis Advance. If you look at Lexis Advance and WestlawNext side-by-side (or at close proximity at a trade show) you see that the two are nearly identical from a functional perspective. The difference is that WestlawNext does not have the in-your-face user interface bugs that Lexis Advance has. WestlawNext is indisputably a better product than Lexis Advance. While I am not a fan of WestlawNext, West clearly has done a much better job of managing the product process than LexisNexis has.

West has the advantage of a better brand. Even with Lexis.com being somewhat better than Westlaw Classic, Lexis only managed to get 1/4–1/3 market share. With a vastly inferior product, LexisNexis will be crushed by West’s brand advantage.

IV. LexisNexis pins its hopes on a new user interface.
Over the past few weeks, I have spoken to a number of LexisNexis customers who have vented their frustration over Lexis Advance to the company. They have said that LexisNexis admitted to them that things were not right and promised a new user interface that will make everything right. The first time I heard of such a user interface was over a year ago. If such a user interface exists, LexisNexis is clearly having a hard time implementing it. In any event, new makeup is not going to transform Joan Rivers into Brooklyn Decker. The problems in Lexis Advance go way beyond the user interface. LexisNexis built the wrong thing from top to bottom.

V. Things are worse under the covers.
So far I have only talked about the U.S. LexisNexis has similar systems all over the world running on mainframes. The same pressure to migrate applies to them. Unlike the U.S., LexisNexis tends to be the leader in other markets.

Ideally, you would build one platform that would work for all countries. The Lexis Advance platform is a mess. The lack of internal development skill has created a system that is an inexplicable combination of HPCC and MarkLogic. The shared services have been implemented in a manner so specific to dubious requirements of Lexis Advance that it will be nightmare getting international applications running on it. The platform overhead requirements are so heavy that it is slow and expensive just to load data. Plus, if you are a product manager in Europe who is number one in market share, do you want your application running on a platform that only has something as bad as Lexis Advance to show for it? Just look at the Australian version of Lexis Advance to see what you are in for.

And then there are business systems. I suspect that they were the first outsourced to India. Having been subjected to that kind of abuse the longest, they are the biggest mess at LexisNexis. I repeatedly hear that business systems are such a mess that that migrating international systems is constantly being pushed back. The LexisNexis solution to the business system problem is to repeatedly fire the head of business systems.

For the international business unit, these delays I am hearing about may be a blessing in disguise. As they discover that the Lexis Advance disaster extends deep down to the core, they may have time come up with a better solution on their own.

VI. Sean’s slightly missed the mark.
Having set the stage with that long winded introduction, let me now address Sean’s three theories on the layoffs at LexisNexis.
A) Preparation for sale
B) Further moves away from publishing and content and more emphasis on technology
C) Further outsourcing plans
I address these in reverse order.

a. Offshoring plans
Yes, LexisNexis is doubling down on offshoring. They seem to recognize that getting rid of internal development has placed them at the mercy of offshoring companies. Offshoring leaves you with no stable knowledge base. When you need to do an upgrade, you can wind up with an entirely new product team that needs to relearn everything. LexisNexis is responding by “insourcing” to LexisNexis in the Philippines. The last time I checked, all the jobs on LexisNexis’s job board were in the Philippines. People will be losing their jobs to the Philippines but this does not explain the extent of the layoffs.

You should hear the embarrassing way the LexisNexis management talks about the Philippine employees in meetings. They describe them as subservient Stepin Fetchits. “They are so happy and smile all the time.” and “They sing songs  to us.”

b. Content Issues
While most of this tome has been negative, content is the one bright spot at LexisNexis (no, I did not work there). That part of the organization is good at identifying gaps and filling them. There will be less emphasis on print but content will still be a big part of LexisNexis (more next section). I agree with Sean here only in that there will be less printed content. I do not see a focus shift from content to technology because content is the strongest piece of LexisNexis.

c. Preparation for sale
Sean, not yet. The reason I do not think Reed-Elsevier is getting ready to sell LexisNexis is I do not believe they are aware of the seriousness of the problems. As long as profit increases 1% a year, Reed-Elsevier is as happy as a pig in a poke and as inquisitive as Sergeant Schultz. My clue is in this statement in the latest financial reporting, “The roll out of new product releases continued with 60% of customers active on the New Lexis platform at period end.” That is a total load of crap. Given a seriousness of putting such a misleading statement in a financial report, I conclude that Reed-Elsevier does not know any better and is just repeating the rosy tales it is being fed by the LexisNexis management. That 60% figure probably means something like “60% of customer have access to Lexis Advance” or “60% of customers have logged into Lexis Advance and have done a couple of queries.”

LexisNexis is now in a mode where it can only increase profits through layoffs. I estimate that LexisNexis can continue on that path for another two years before it blows up. Then, I think Reed-Elsevier will look for someone to buy LexisNexis.
Reed-Elsevier will have the problem of “Who would buy it?”  LexisNexis is no longer a cash cow. A buyer needs to view it as a termite infested old house that needs to be stripped to the studs (i.e, the content).  How much is that worth?

Probably not as much as Reed-Elsevier paid for LexisNexis.

How many buyers are there out there who can invest the $1–2,000,000,000 above the purchase cost that would be required to make LexisNexis a viable competitor for 20 more years?