Is There Gold in Them Thar Courts?
by Wendy R. Leibowitz
Can anyone make money in electronic filing? ("Is there gold in them thar courts?") The recent acquisition of Bellevue, Washington's CourtLink Corporation by Dayton, Ohio's Lexis-Nexis, a division of Reed Elsevier Inc., for a rumored $25 million, hints that the answer to that question may be: "Not right now."
If anyone could be profitable in e-filing, you'd think it would be CourtLink, with its large implementation in many states, accompanied by aggressive marketing and intensive training for judges and attorneys, and--most importantly and uncomfortably--its arrangement with CaseStream to sell access to court records. With CourtLink, e-filing costs were borne by attorneys involved in complex civil litigation (generally large firm attorneys who use messenger services to file documents), with generous law firm administrative budgets. Courts from Washington, D.C. to San Diego signed on, with Colorado tapping the company for a statewide implementation.
And yet the consensus, according to knowledgeable sources, is that CourtLink was struggling financially, spread too thin and too fast. The efficiencies in e-filing did not pay off financially for the attorneys or the courts--the former printed out all documents, replicating the paper system, and the latter struggled with archiving and storage issues, where savings are not quickly seen.
E-filing requires the attorney to be actively involved in the administrative act of filing the documents, instead of handing the documents off to a secretary or messenger, and some attorneys grumble at that. Solo and small firm practitioners turned out to be a higher percentage of e-filers than was initially thought, and they count every penny, and frequently file by regular postal mail, not by messenger. The smallest difference in price between low-tech filing and electronic filing provoked complaints. (A judge noted that the solos did not count their time invested in filing the documents, but examined only the price).
Assuming pricing issues can be ironed out, and attorneys and judges towed onto the information superhighway, each private e-filing company may produce a different system. We'll end up with a patchwork quilt of different e-filing systems and uncertainty when companies merge or acquire one another.
There are some exceptions to this gloomy picture, of course. Local companies with focused markets in one jurisdiction seem to able to leverage their technology to serve their local courts profitably. Other small e-filing companies can maximize their economies of scale as they work with government agencies that must file thousands of documents regularly with the same courts.
The immediate future of profitable e-filing may be centered not in law firms at all, but with government agencies handling their voluminous, repetitive filings in the same court. Working with plain old attorneys filing in the diverse universe of state court matters is a mountain that looks ever more daunting as time passes. (The federal e-filing system--with its relatively homogeneous forms and limited practice areas--plugs along with funding from the Administrative Office of the Courts.)
I could be wrong. Lexis-Nexis is familiar with electronic filing, of course--it pioneered the first e-filing system, CLAD, in Delaware, for use with specific complex cases. ("CLAD" stood for Complex Litigation Automated Docket). Perhaps Lexis-Nexis can figure out how to sell an e-filing system that serves court staff, judges, attorneys, and their clients effectively, efficiently and profitably, in the law firm world.
To those who believe in electronic filing, as I do, Lexis-Nexis saved CourtLink just in time. Jim Keane, an e-filing guru, former CourtLink counsel and technology consultant in Potomac, Maryland, applauds the purchase: "The CourtLink acquisition gives the JusticeLink eFile service [CourtLink's electronic filing system] a permanent institutional home with a deep foundation." Perhaps this will allow e-filing to spread, believes Mr. Keane: "Having acquired a proven market leader with a field-tested system, Lexis now has an opportunity to roll-out eFiling to every court in the US, State and Federal. They invested heavily in the company initially, and will reap significant market share and first-to-market leadership with the JusticeLink Service."
But as other insiders see it, Lexis-Nexis has purchased CourtLink not as a profit center, but as an information source to increase content in its expensive database, to which it can charge access. E-filing might even be a loss-leader for them--an area where they are happy to lose money as long as it leads people to their true profit center, their database. In that sense, there IS gold in them thar courts, and the gold being mined (or data mined) is people's personal information.
The data-mining services are sold, quite legally of course, to private investigators, insurance companies, real estate and credit agencies, and financial service companies using the information housed in the court. It's doubtful that anyone envisioned this role for electronic filing when it debuted, but that appears to be the direction in which the industry is currently heading.
Courts become publishers, providing information from their files to companies that splice and sell the data. Lawyers and their clients--who are compelled to use the courts to settle many disputes, such as divorces and bankruptcies--pay for the privilege of supplying the data. The clients' personal information is the gold, and the clients--the general public--are being mined for all they're worth.
I'd welcome your thoughts, suggestions, criticism, or personal information for resale to the highest bidder. Please send them to me at: Wendy Leibowitz, 1140 23rd Street, N.W., Washington, D.C. 20037. E-mail: email@example.com.