IN THIS ISSUE
Recession set to hit US law firms - UK media lawyers win prizes - Barnes & Noble hit by e-books scare - Supreme Court Pyrrhic victory - Napster & Gnutella hoax - Solution 6 in FRx deal - West start webcasting - Conference database going live - Inland Revenue & Solicitec - Law Society talks positive - Latest web traffic survey underway - Microsoft & the story so far - Keystone shifts focus to US - Changing places at LSSA - All at sea with web domains - Next issue - 12.07.2001

RECESSION SET TO HIT US LAW FIRMS ?
The American Lawyer this week reported today that combined gross revenues for the 100 largest US law firms topped $31 billion in 2000, a new record, as the magazine released the results of its annual Am Law 100 ranking of the largest law firms based on 2000 financial data. But profits at these firms grew only half as fast as revenues, signaling that after years of boom times, the US economic slowdown is finally reaching the legal world.

In a repeat of last year's performance, New York's Skadden Arps Slate Meagher & Flom remained the only US law firm to break the billion-dollar revenue barrier. Skadden posted growth of 12.6 percent to top the Am Law 100 revenue rankings again with $1.2 billion in gross revenues. In the coastal rivalry that has developed over the past few years, the largest New York firms continued to bring in significantly more money, on average, than their West Coast counterparts but the gap is closing. The top five Bay Area firms grew average revenues by more than 44 percent last year, compared to an increase of just 14 percent for New York's top five.

Profits, however, softened in 2000. While average revenue grew by almost 20 percent, average profits per partner increased only 10 percent. Seeking to take advantage of merger and acquisition and IPO work when the market was hot, many Am Law 100 firms have increased the size of their legal staff by up to 10 percent annually since 1998. Legal and other staff expenditures now account for 45 percent of law firm expenses. These escalating personnel costs, coupled with increased expenditures in other areas, ranging from office space to technology, appear poised to take an increasing bite out of profits if revenue growth slows in the years ahead.

"For the first time in recent memory the AmLaw 100 face a year of belt-tightening in 2001," said Aric Press, editor in chief of The American Lawyer. "Revenues and profits continued to climb, but productivity declined while merger and acquisition activity within the industry continued to grow. There's a growing body of evidence that the business winds have shifted significantly this year. While some firms remain in public denial, others are already taking steps to reduce costs, and even summarily reducing the number of partners who share in firm profits."

UK MEDIA LAWYERS WIN PRIZES
At last week's Lawyer Awards in London - the UK's legal world equivalent of the Oscars - Theodore Goddard won the media/IP & IT team of the year award. The award stemmed from the firm's work advising the British Horseracing Board in its precedent setting dispute with bookmakers William Hill over the application of the Copyright & Rights in Databases Regulations 1997. The Theodore Goddard team was headed by Hamish Porter. The runners up were Olswang, for its work on behalf of Dyson Appliances in a patent infringement dispute with Hoover, and White & Case for its work representing L'Oreal in its multi-jurisdictional trademark dispute with Johnson & Johnson.

The award for the inhouse media & communications team went to MTV Networks Europe whose projects over the last 12 months have included dealing with the legal implications of the live web streaming of the MTV Europe annual awards. The runners up were Northern & Shell - the legal team there helped obtain an injunction for Catherine Zeta Jones and Michael Douglas, under the Human Rights Acts, to prevent the distribution of an edition of Hello! magazine containing unofficial pictures of the couple's wedding. And New International, whose legal team secured the overturning of a libel jury's award of £80,000 in damages to the footballer Bruce Grobbelaar after a seven year legal battle.

BARNES & NOBLE HIT BY E-BOOKS SCARE
The online bookseller Barnes & Noble.com last week temporarily pulled a number of electronic book (e-books) titles from its web site following concerns that there was a security flaw that could lead to them being pirated. The books in question, which included Stephen King's "Riding the Bullet" and Arthur C Clarke's "Death and the Senator" were all in the Adobe Acrobat eBook Reader format. Adobe Systems subsequently admitted they had learned of a Russian software program, available for sale over the internet, that allowed users to decrypt e-books that had been formatted for Adobe Acrobat eBook Reader 2.1. Adobe has now closed the security loophole with a new version 2.2 of its software and Barnes & Noble has put the titles back on sale on the web.

SUPREME COURT PYRRHIC VICTORY FOR FREELANCERS?
Last week the US Supreme Court, in a 7-2 majority decision, ruled that US publishers who reproduced freelance journalists' articles in electronic databases and CD-Roms without explicit permission had infringed the writers' copyrights. The decision brings to an end a seven year long legal battle headed by Jonathan Tasini, the president of the US National Writers Union and, although there were no real surprises in the decision, which upheld an earlier lower court ruling, there is a suspicion that this may have been a pyrrhic victory for journalists.

The five media companies being sued - New York Times, Tribune/Newsday, AOL Time Warner, LexisNexis and ProQuest - did raise the argument in front of the Supreme Court that they did not need any permission because incorporating the articles in a database was merely a "revision" of the original product for which they had already paid however this argument was rejected and the case has now been sent back to a lower court to work out the details of the decision, including how much in back royalties the journalists are entitled to by way of compensation.

However this is where the pyrrhic element creeps in for although some journalists are claiming that the publishing industry may be obliged to pay between $2.5 billion and $600 billion in compensation, since the mid-1990s almost all publishers have amended their freelance contracts to automatically include the purchase of electronic rights. Rather more ominously, rather than start talking about compensation, some of the publishers - including the New York Times and AOL Time Warner - have responded by starting to strip out of their databases any articles written by freelancers.

Or, as Arthur Sulzberger Jr, the chairman of the New York Times Media group (which is set to remove 115,000 articles written by 27,000 journalists between 1980 and 1995) put it: "The decision means that everyone loses. Even historians, scholars and the public lose because of the holes in history created by the removal of these articles from the electronic issues of newspapers."

NAPSTER & GNUTELLA HOAX
Online message boards are warning that a purported MP3 virus as a hoax. A document dated 27 June and posted to several internet newsgroups warns of an "imbedded hybrid computer code" named MusicPanel that has been secretly buried in the MP3 files of 500 popular songs distributed over the past eight months among users of music file trading networks, such as Napster and Gnutella. The warning says the virus will strike downloaded MP3 music files on 4 July. With something approaching 65,000 different computer viruses now in circulation, it is becoming increasingly difficult to distinguish between the genuine from the hoax however there is one basic precaution that can avoid a lot of problems - do not open any unsolicited attachments you receive in your email.

SOLUTION 6 IN FRx DEAL
The Solution 6 Group this week announced that its CMS Open practice management system will now include the FRx Forecaster advanced budgeting, planning and collaboration application, from FRx Software, as part of its core product offering.

FRx Forecaster provides CFOs, controllers and financial analysts with fast and accurate budget planning, reporting and forecasting capabilities. The system's completely web based architecture allows budget administrators and other authorized personnel to input and view data and reports from anywhere via an internet connection. FRx Forecaster also enables financial professionals to use their CMS Open general ledger data to establish a baseline budget and eliminate problems with spreadsheet based budgeting. And, it provides CMS Open with a product to compete with Keystone's Net Results software (see separate story).

WEST START WEBCASTING
In the United States the West Group has announced a partnership with Continue Learning Networks (CLN) to provide live Web casting and online archiving of CLN's LAWYERStv continuing legal education programs through West LegalEdcenter. LAWYERStv (www.lawyerstv.com) offers more than 100 hours each year of live, televised CLE from the American Law Network, which broadcasts the satellite seminars of the American Law Institute-American Bar Association committee on continuing professional education. The West LegalEdcenter also indexes and tracks courses for users, files for CLE credits, and sends e-mail alerts to customers when desired programming becomes available.

NEW MEDIA CONFERENCE DATABASE GOING LIVE
Smith Bernal International, best known for its court reporting services and the Livenote real-time transcription system has launched a new joint venture with conference organisers IBC that will move the company into the broader events market. Called KeyNote Online, the service will draw on Smith Bernal's transcription and digital audio recording skills to provide delegates with not only the full text of conference presentations but also copies of speakers' PowerPoint slides and searchable recordings of what was actually said at the event. Along with providing a comprehensive record of an individual event, it offers a way for firms to build up a library of conference papers that can also be used for ongoing education purposes by non-attendees. The service, which will be accessible to subscribers via the internet, will initially focus on IP, competition, IT and media law conference. www.keynote-online.com

INLAND REVENUE OPT FOR SOLCASE
The UK's Office of the Solicitor of Inland Revenue have installed Solicitec's SolCase case management system. The Inland Revenue acquired a 200 user system which to date, has been successfully rolled out to the Enforcement, PI, Employment & Advisory sections. The implementation was a result of close collaboration at every stage of the project between the Solicitor's Office, Solicitec and EDS, the Inland Revenue's strategic IT partner.

Within the enforcement section, SolCase automates the production and completion of enforcement documents and monitors the progress of each case, including the production of daily to-do lists. In addition, according to Jill Wigney, the Revenue's development manager for the project, the Inland Revenue now has quicker, more immediate access to accurate statistics and management information on performance and caseloads.

LAW SOCIETY TALKS POSITIVE
The English Law Society business development director John Miller described last week's briefing meeting for legal systems suppliers, which was attended by representatives from 15 companies as well as the industry association LSSA, as "positive". Miller said the meeting, called to discuss the Society's plans for the next edition of its Software Solutions Guide, clarified a lot of issues and laid the foundations for a project that would be to the mutual benefit of both solicitors looking for IT systems and their suppliers. The Society is issuing a short consultation paper on the project this week. Interested parties should submit their views by the end of July. For a copy of the paper visitwww.it4law.co.uk or email us at news@legalnewsmedia.com for a copy.

LATEST LEGAL WEB TRAFFIC SURVEY UNDERWAY
Legal News Media, the publisher of this bulletin, is currently conducting its latest survey of the UK's busiest legal web sites. The results will be published in a forthcoming issue of this ezine. If you think your site could make the chart, email your request for an entry form to news@legalnewsmedia.com

MICROSOFT - THE STORY SO FAR
Deadlines meant we were unable to carry a report on last week's unanimous ruling by the US District Court of Appeals in the Microsoft antitrust suit however here are the key elements:

The court reversed the trial court finding that Microsoft had illegally tried to monopolise the market for web browser software - it said this allegation was "no longer viable" - by bundling Internet Explorer with Windows.

The court did uphold the finding that Microsoft had attempted to illegally maintain a monopoly in the operating systems market - but tempered this finding by saying that breaking up Microsoft into separate companies would not be an appropriate penalty for this monopolistic behaviour.

And, the court ordered that the case now go back to the trial court for reconsideration - however even here Microsoft can draw consolation from the fact the appeals court removed the original judge - Thomas Penfield Jackson - from the case because he had engaged in "serious judicial misconduct" by making derogatory comments about Microsoft and Bill Gates.

So what happens next? The Department of Justice and other US antitrust organisations are still left with the problem of how to deal with Microsoft's monopoly powers in the operating systems market. One solution would be to negotiate a settlement with Microsoft however if the talk do not go according to plan, Microsoft would have the option of challenging this part of the Court of Appeals ruling in the US Supreme Court.

And then there is the question of bundling and the rather ambiguous part of the ruling that says Microsoft may be allowed to bundle two previously unrelated products, such as its Windows operating system and web browser, unless the government can show the action would "unreasonably restrain competition". The problem here is previous antitrust cases have dealt with the bundling of distinct products - such as camera and film - not software and even the Court of Appeals expressed concern that banning the bundling of software "might stunt valuable innovation". Meanwhile, the countdown to the launch of Windows XP, which arguably takes software bundling to another level, continues.

SYCAMORE TO FOCUS ON KEYSTONE US
Kaye Sycamore, the popular face of Keystone Solutions since the company launched in the UK in the mid-1990s, has been reassigned to the United States as part of the build up to the US launch of the Americanised version of the Keystone Professional PMS product later this year. The company has also reassigned Brent Nicholson, one of its heaviest hitters from the Australasian market, to support the US project.

Still in the USA, top ten US law firm Mayer Brown & Platt has become the latest practice to order Keystone Net Results, the company's MIS and financial analytics software. And Neil Cameron - now Keystone's director of product strategy but still better known in the UK for his previous work as an independent consultant - gave the recent Javelan user group conference in Buffalo a major presentation on the future of legal technology. (Javelan is Keystone's legacy PMS product in the US market.) Keystone will be staging this year's global user group conference in Australia during September 20 & 21.

CHANGING PLACES AT LSSA
The UK's Legal Software Suppliers Association annual general meeting last month saw Solicitec's Neil Ewin stand down as chairman after a two year stint in office. Ewin is succeeded by former vice chairman Alan Richardson of Norwel. Philip Snee of Linetime is LSSA's new vice chairman. Ewin, who deserves much of the credit for establishing a better working relationship between suppliers and the English Law Society over the last couple of years, will continue to head the LSSA team liaising with the Law Society on its Software Solutions Guide.

The LSSA AGM also agreed to devote more resources to its XML working party after initial studies indicated that various primarily US oriented XML initiatives, including LegalXML and LEDES, were not sufficiently relevant to lend themselves to a direct transfer to the UK legal IT market. LSSA member Solicitors Own Software (SOS) is already working on an XML system for handling Legal Services Commission reporting requirements.

ALL AT SEA WITH WEB DOMAINS
Finally, spare a thought for the Royal New Zealand Yacht Squadron, the current home of the America's Cup, which inadvertently failed to renew its domain name registration fee with its internet service provider and promptly had the URL - www.rnzys.com - poached by a Canadian porn site. The yachties have now bought back the address, reportedly for less the US$5000, so they can sleep easily in their hammocks tonight.