Concentration and lack thereof in the business segments that serve corporate law departments

A recent book on networks mentions that “you’ll typically find that the top three suppliers account for between a third and two-thirds” of any manufacturing or commercial category. Richard Koch and Greg Lockwood, Superconnect: Harnessing the power of networks and the strength of weak links (Norton 2010) at 108, observe this level of concentration in almost any field.

If we had market share data on the various niches of commerce that serve law departments, would this same concentration pattern hold? In the matter management system sphere, do the two or three largest user bases account for 40-60 percent of the installed systems? (I think not.) What about with publications, where Corporate Counsel, InsideCounsel and the ACC Docket surely account for that level of dominance. Software for Boards of Directors, patent annuity tracking services, and red-lining have probably reached this level of convergence. Surely the online legal research market, overwhelmed by LexisNexis and Westlaw bears proof. In general, however, the cottage industries ringing law departments have a long way to go to reach such a degree of concentration.

The law firm market, notably, has not. The Gini coefficient of concentration there nowhere resembles the typical end state of a mature industry. Nor does e-discovery and LPO, both of which service groups are bound to shrink dramatically to a handful of dominant providers. SuperConnect goes further and says that on the internet, concentration reaches even higher levels. A single winner tends to take nearly all. LawDepartmentManagementBlog, anyone?

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