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Start-Up Targets Lawyers With Legal Library On Web
by
Tom Taulli
Jan. 5, 1997

Tom Taulli is the publisher of the Taulli Report, an online investment site.  You can reach him at tom@taulli.com

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The defendant strangled his wife, claiming that he believed that "till death do us part" meant he had the right to kill her if she broke any of her marriage vows. Although the defendant did not hire Johnny Cochran, he did nonetheless find a very able attorney to represent him. The attorney argued that the defendant was not guilty by reason of insanity and even had an expert witness declare that the defendant suffered either "from classical paranoic schizophrenia or schizo-affective illness with significant paranoid features." Well, the trial court did not buy the argument and convicted the defendant to 15-to-life in state prison. Not willing to give up, the defendant's attorney appealed and the case eventually reached the California Supreme Court. The verdict? The trial court was reversed.

This is just one of the many court cases you can find on a Web site called Netlaw Libraries. Stephen McLaughlin, an attorney, started the company in April 1996. "At that time, I had just gotten on the Net and wanted to find court cases to do my legal research," says McLaughlin. "However, I could not find anything. So I created a company to do just that."

After about a year of non-stop work, he and four others launched Netlaw Libraries. The service has two tiers: guest (which is free) and member. There are three payment options to become a member: month-to-month ($50), annual ($600) and daily ($10). "We have only one daily member," says McLaughlin. "What I do is look at the server traffic logs and if I see that he has visited, I charge $10."

The service is centered on California law. Although, McLaughlin plans on adding other states. The guest services include:

• California Codes: There are 29 sections, such as the Water Code, Vehicle Code, Fish & Game Code, Harbors & Navigation Code, and so on.
• California Rules of Court: Here you will find the rules for pretrial, appellate and administrative courts, as well as the California Supreme Court.
• California State Rules of Court: You'll find the procedures and structures of the myriad counties in California.
• California Civil Jury Instructions: This is quite extensive. You will see definitions for such interesting concepts as "right of reasonable detention by property owner," "duty of owner of property abutting sidewalk," "boarding a moving railroad car," "animal with vicious propensities," and so on.
• Rules of Professional Conduct: Yes, lawyers have ethics too, although the rules are quite vague. Really, the only specific rules are in regard to stealing client funds and collecting client fees.
• California State Constitution: Over the years, this document has become bloated (as opposed to the US Constitution, which is a paragon in brevity). Interestingly enough, there are three major sections on water rights.
• 9th Circuit Court Opinions: The US is composed of 11 circuits, which take appeals in the federal system (after the circuit courts is the US Supreme Court). Netlaw Libraries does not collect and post these decisions - but instead has a link with FindLaw.
• US Supreme Court Decisions: Again, Netlaw Libraries has a link to FindLaw. In fact, at FindLaw, you can hear the oral arguments of major Supreme Court cases in Real Audio. Examples include: United States v. Nixon, Roe v. Wade, New York Times v. Sullivan , Miranda v. Arizona, Mapp v. Ohio, Hustler Magazine v. Falwell, Gideon v. Wainwright and so forth (http://court.it-services.nwu.edu/oyez/cases/search.pl). You can also do a virtual tour of the Supreme Court building, using QuickTime Video (http://court.it-services.nwu.edu/oyez/tour/).

But it's with the Member services where lawyers and legal researches get their best value. Basically, it's as if you have a law library at your disposal, as you have access to the complete court decisions of the California Supreme Court and Appellate Court Decisions for the 2nd, 3rd and 4th Series, as well as slip decisions (which are cases recently decided) and daily opinions.

Netlaw Libraries also has a sophisticated search engine to find the cases you need. To create the search engine, McLaughlin used the Microsoft Index Server. Once you find a case, you will then be able to read it in its entirety. Furthermore, each case is hyperlinked to other cases.

After all, when a court writes a decision, it relies on past cases - this is known as stare decisis, which is the bedrock of the American legal system. For example, I did a search and found the In re Dabney case, in which the defendant appeals his conviction for possession of heroin. Justice Tobriner writes: We must finally decide whether In re Woods, supra, 64 Cal.2d 3, as applied in People v. Coffey, supra, 67 Cal.2d 204, should receive full retrospective application.

Both the Woods and Coffey citations are hyperlinked to the full-length cases in Netlaw Libraries (By the way, the Court ruled in Dabney's favor). In fact, Netlaw Libraries is the first company to put California case law into HTML. "And we're still the only one," says McLaughlin.

Competition

To market its services, Netlaw Libraries has done banner advertising, such as on FindLaw. Several months ago, the monthly fee for an ad was $400. Now it is $600. "Despite this, the ads have been very effective," says McLaughlin.

Netlaw Libraries also does private law seminars, trade shows, as well as PR. "Actually, PR is one of our best ways of marketing," says McLaughlin.

But marketing to attorneys is hard. "I should know," says McLaughlin. "When I was practicing law, I had my secretary screen all cold calls. I didn't want to be pestered by sales people."

Also, there are two major law information services that dominate the market: WestLaw and Lexis-Nexis. WestLaw is part of West Publishing (which is owned by Thomson Corporation). Annual revenues are about $1.2 billion and there are 8,200 employees. As for Lexis-Nexis, it is a division of the multinational Reed Elsevier plc group, based in London, with 30,000 employees and $5.7 billion in revenues. The Lexis-Nexis network has about 1.3 billion documents (to see a how many are being added, there is a counter at http://www.lexis-nexis.com/lncc/). Also, there are several smaller competitors, which have online legal libraries, such as Juris Search and Versus Law.

Future

Netlaw Libraries is self-financed. "But we are definitely looking for outside money," says McLaughlin. "We have received some interest from venture capitalists, but their terms were pretty stiff."

No doubt, the market for legal research is huge. In California, there are over 150,000 attorneys (which is kind of scary, actually). Netlaw Libraries is not focusing on the big law firms, though. "They have the money to pay for WestLaw and Lexis-Nexis," says McLaughlin. Rather, Netlaw Libraries is focusing on the solo-practitioner and small law firm market - a segment that needs to pay attention to keeping costs low. "About 70,000 attorneys in California fit into this category," says McLaughlin.

Currently, there are 35 paying subscribers. To break-even, NetLaw Libraries will need to hit 200 subscriptions - which is a small hurdle. After all, this represents 0.13% of the attorney market share - a figure, in the jargon of lawyers, is de minimis non curat lex.



For comments/questions, contact Tom Taulli at ttaulli@bpia.com.

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