IRIS Legal report they have just won two Axxia sites – one of them is Dawson Hart. Full details to follow.

Aderant has just announced that Farrer & Co has selected Aderant Expert as its new practice management system, to replace its incumbent LexisNexis Axxia software.

Here on The Orange Rag blog and our sister title Legal Technology Insider, we encounter stories involving IT incompetence and stupidity of such gobsmacking awfulness (usually perpetrated by terminally dumb managers within government agencies) that they deserve greater publicity than we've previously be able to afford them.

To remedy this situation, from this week we're starting a regular section on this blog to highlight these stories – in effect this will be the legal IT equivalent of the Darwin Awards. We're calling this section the Midgley Corner in honour of the work of the now largely forgotten American scientist and inventor Thomas Midgley Jr (1889-1944). Who he, you ask?

In fact he is the individual now credited with having single-handedly caused more harm to the Earth's atmosphere than anyone else in mankind's history. His first claim to fame was the discovery that the addition of tetra-ethyl lead to gasoline prevented internal combustion engines from 'knocking' –  yes, he was the man who caused lead to be added to petrol. Not content with this, ten years later in 1930 he discovered a safe refrigerant for household appliances, such as fridges and freezers. Midgley called this new substance Freon – technically this was a chlorinated fluorocarbon or CFC. Fast-forward 70 years and we can now see Midgley as the grandfather of polluted urban streets and global warming.

Sadly for Midgley (although happily for us, as it prevented him from going on to devise a third horseman of the ecological apocalypse) in 1940, at the age of 51, he contracted polio and was left severely disabled. Ever ingenious, Midgley devised a system of pulleys and ropes to allow him to climb in and out of an adjustable bed. Unfortunately, this all went tragically wrong on the 2nd November 1944, when he became entangled in the bed's ropes and died of strangulation.

As ever, please feel free to submit your own nominations for the Midgley Corner.

The Tikit Group plc published its preliminary results for its trading year to 31st December 2007 earlier today (Wednesday 12th March). Here are the summary results...

•    Group Revenues up 12.4% to £26.43 million (2006: £23.52 million)
-    Total services, including consultancy and support, up 16% to £17.56 million (2006: £15.18 million)
        -    Consultancy up 8% to £7.9 million (2006: £7.3 million)
        -    Recurring managed services and support revenues up 23%
            to £9.63 million (2006: £7.84 million)
-    Software sales up 8% to £8.12 million (2006: £7.53 million)

•    Profits before taxation and share option charges up 24% to £3.62 million
(2006: £2.92 million)

•    Proposed final dividend of 3.25 pence per share resulting in a full year dividend up 25% to 5.0 pence per share (2006: 4.0 pence).

•    Cash generated from operations was £2.09 million (2006: £3.61 million).  In the year, £1.58 million of Tikit’s cash resources was used to satisfy earn-out payments and £0.39 million was used to purchase shares into treasury, resulting in net cash of £2.55 million at 31 December 2007 (2006: £4.15 million)


And here is chairman Mike McGoun's statement...

I am pleased to report that solid organic growth in revenues combined with our continued focus on improving margins has resulted in the Group achieving its planned profit growth over 2006. 

This is the first set of full year results announced under IFRS with comparisons against re-stated 2006 results. Total Group revenues of £26.43 million in 2007 represent organic growth of 12.4% compared with £23.52 million reported in 2006. The Group has again increased its operating margins, achieving 13.8% for the full year (2006 12.4%).   Profit before taxation increased by 22% to £3.39 million (2006: £2.79 million) and after adjustment for share option charges increased by 24% to £3.62 million (2006: £2.92 million).

Good progress has been made in many areas of the business, with continued solid growth in our contracted support revenues, major project wins with our existing large legal clients and significant success from our recent move into the accountancy sector. In addition, customer response to the release of new Tikit-developed software, particularly the enhanced version of Tikit e-marketing suite and the Tikit Template Manager System for Microsoft Word (TMS) resulted in sales in the second half and also indicate potentially higher sales of these products during 2008 and beyond.

Our European subsidiaries based in France and Spain continue to make good progress with new customer wins and increased market share. Both France and Spain are experiencing a good start to 2008..


Results
Revenues for the period increased by 12.4% to £26.4 million. (2006: £23.5 million). Reported revenues were slightly below expectations as a result of the earlier implementation of subscription-based pricing on some of our products than was originally planned. In conjunction with one of our key software partners, we offered subscription-based pricing to new clients in the final quarter of 2007. This is an exciting development for the Group, which will secure more predictable long-term revenues. There will be a short term impact on both revenues and profits as we move from initial licence fee recognition of software sales to revenue recognition over typically 5 year contracts.

Total services revenue from our consultancy and managed services businesses increased by 16% to £17.6 million (2006: £15.2 million) of which £9.6 million (2006: £7.8 million) related to managed services and support revenue. These contracted recurring revenues accounted for 37% of total group revenues in 2007.   

The improvement of operating margins from 12.4% to 13.8% reflects higher utilisation rates of our chargeable staff and efficiencies gained through the integration of managed services operations and reducing some lower margin business in non-strategic areas such as hardware sales. 

Profits before taxation increased to £3.4 million (2006: £2.8 million). After adjusting for share options, profits for the Group increased by 24%, achieving an audited profit before taxation and share option charges for the period of £3.6 million (2006: £2.9 million).

Share option charges during the period, as required by IFRS, were £231,000 (2006: £127,000). This is a non-cash charge to profits based upon the best estimate of the market value of shares at the time in the future that share options become exercisable. In order to eliminate the potential dilution effect of share options and to meet the anticipated future liabilities associated with share options, the Group has purchased 250,000 Tikit Group shares and hold them in treasury. The average price paid for these shares was 251 pence per share.

Earnings per share, before share option charges, increased by 10% to 20.1 pence (2006: 18.3 pence). However, the effective tax rate on profits increased from 22.4% in 2006 to 30.0% in 2007. On a normalised tax basis, earnings per share increased by 21%.  Normalising tax means restating the prior year earnings as if the effective rate of tax was 30%. Basic earnings per share were 18.6 pence (2006: 17.3 pence).

Our balance sheet remains strong, with net assets at 31 December 2007 of £8.2 million (2006: £6.9 million), including cash balances of £2.5 million (2006: £4.1 million). Cash generated from operations was £2.09 million (2006: £3.61 million). The reduction in cash generated is primarily as a result of an increase of £2.45 million in trade receivables at 31 December 2007 over the prior year.

In summary, 2007 was a good year for the Group. We enter 2008 with a strong order book of projects to be implemented, reflecting the blend of consultancy, support and software business sold in the last quarter.

Tikit is in an excellent position to continue to support its clients in the legal and accountancy sectors. Both of these sectors have shown good resilience in previous economic downturns and it is our belief that the excellent range of services and products available from Tikit will enable our clients to manage their businesses more effectively during such a period and beyond.

During the last twelve months, we have seen a strengthening in the partnership with LexisNexis to expand their business in the legal and accountancy sectors. LexisNexis, part of the Reed Elsevier group of companies is an established global provider of information-based subscription services to the legal sector. In recent years they have expanded, through acquisition, into the provision of software, such as Interaction and more recently Redwood Business Analytics. Tikit are their partner in the UK for these products.

We have recently been appointed as a partner for the implementation of Thomson Elite products into the legal market place. We expect to capitalise on this arrangement in 2008 and beyond, not only in the UK, but also in mainland Europe, utilising our own operations and clients in that territory.

Its always good to see that marketing and promotional materials aren't wasted. Here's one of DDS supplier nFlow's insulated drinking mugs sitting on top of a mountain in the Alps. The photo was taken by Damian Blackburn of Davenport Lyons. Funnily enough Davenport Lyons actually use the rival Bighand DDS software. Clearly some suppliers giveaways reach places others can't.

Following on from last summer’s report that the Spanish law firm Garrigues had decided to implement SAP, in conjunction with Accenture, as its new practice management system, comes news of a second big Iberian legal win for the supplier. This time the firm is Cuatrecasas (with 22 offices, 193 partners and 1368 fee earners) that is ordering SAP to handle finance, practice management, analytics, HR, workflow and elements of CRM. SAP say the contract was won ‘in a competitive engagement’ against the Thomson Elite 3E product.

DocsCorp has announced the acquisition of US based redlining software specialist DocuComp. DocsCorp say that with this acquisition they have gained access to the most mature and sophisticated text comparison technology in the software industry. DocuComp was first introduced in 1988 and its core comparison algorithm was awarded a groundbreaking patent in 1989 for its ability to accurately identify fine-grain text changes in documents of any length or complexity.

The acquisition of the DocuComp algorithms and technologies will enable DocsCorp to build on the success of its own document comparison solution (pdfDocs compareDocs) released in late 2007. It also underscores DocsCorp's commitment and resolve to develop a leading-edge comparison tool for those seeking an alternative desktop or server-side solution.

Editors note: after the demise of CompareRite redlining system, DocuComp was the only serious competitor for Workshare's DeltaView software.

Rob Hailstone, CEO of home information pack provider Hipag, has welcomed the Department of Communities & Local Government’s announcement that area trials of HIPs have been successful. "It is heartening to learn that three quarters of customers surveyed are satisfied with HIPs. It’s specially welcome to hear that nearly one third of buyers plan to carry out the recommendations contained in the Energy Performance Certificate in order to improve the energy efficiency of their homes. However, I am surprised to learn that 81 per cent of sellers understood the documents. That probably means that 81 per cent understood what the documents were and not what the information contained in those documents would mean to them or their buyers."

We did ask Mr Hailstone whether he actually meant to insult homebuyers by suggesting they were too dim to understand the HIPs documentation and this is what he replied...

"I think the use of the phrase '81% of sellers understood the documents' used by the CLG may have been a bit misleading. The implication is that a high proportion of the general public would understand some very dry legal documents written mainly for lawyers to interpret. What I suspect happened was that the public were asked if they understood what a Water and Drainage Search etc was, not what information that document contained, in exactly the same way as I would not expect to understand the contents of a medical document for example.

"As an ex property lawyer I would not expect most of my clients to understand the documents I was employed to explain. The guide I have produced is to help begin to explain the kind of information that you would find in the documents in a HIP if those documents were delved into thoroughly. I was most certainly not intending to be condescending. I am sure the majority of home owners are bright, however most have no legal training, nor are they expected to. The HIP (in its current form) without a guide or a lawyer to interpret is not really a document for the layman."

Hipag do produce a comprehensive layman's guide to HIPs as part of their HIP package.

Lyceum Capital, a UK mid-market private equity firm that recently announced its latest £255 million fund, is targeting the legal services industry to tap investment opportunities arising from the Legal Services Act 2007.  To assist in identifying and evaluating investment opportunities in the legal sector, Lyceum has recruited to a new legal industry advisory board three senior figures: Tony Williams, Paul Hewitt and Professor Richard Susskind, OBE.

Tony Williams was Managing Partner of Clifford Chance from 1998 to 2000, undertaking the substantial reorganisation of the firm and completing its mergers with Rogers & Wells in the US and Punder in Germany.  He then became Managing Partner worldwide of Andersen Legal and head of its UK practice, developing the firm’s international strategy and restructuring its various groups.  In 2002, Tony established Jomati Consultants, international management consultants to the legal profession.
 
Paul Hewitt has substantial experience in both young private and established public companies.  He is currently chairman of YSC, senior non-executive director of the Kiln Group and a non–executive director of Co-operative Financial Services and GMT Global Aviation. Previously, he spent four years with the Co-operative Group, latterly as Deputy Group CEO and four years with RAC as Finance Director, after three years in the same role with Redland. At both RAC and the Co-operative Group, Paul was instrumental in developing legal services businesses offering a range of services to consumers.
 
Richard Susskind is an independent adviser to law firms, in-house legal departments, and national governments. He specialises in future trends in legal services and the impact of IT. He is the author of numerous books including the legal best seller, The Future of Law, has written more than 100 columns for The Times and has been invited to speak in more than 40 countries.
 
Described as the lawyers’ equivalent of the City’s Big Bang deregulation of 1986, the Legal Services Act will enable law firms to secure private or public investment and will permit non-lawyers to compete in the provision of legal services – together with or separately from legal professionals.  Research by Smith & Williamson published in November last year indicated that nearly a quarter of firms interviewed would be seeking external capital in the next five years, typically of up to £20 million each.  Most of those seeking capital were expected to be small to mid-sized firms and private equity was deemed a more popular source of finance than the public markets.  

Lyceum Capital has a track record of successful investment in service businesses. The firm’s funds provide capital for expansion through organic growth and acquisition, and the Lyceum team provides operational and strategic support to management in pursuit of growth, operational efficiencies and innovation. Lyceum anticipates that mid-market private equity firms of its size and focus can bring several strengths to legal services businesses, including investment in areas such as improved systems and IT, capital for acquisitions and the purchase of partnership equity interests, as well as expertise in accelerating growth and value.

Commenting on Lyceum’s expansion into the legal services sector, Managing Partner, Jeremy Hand, says: “The legal services market is large, fragmented and offers considerable potential for continued growth – all characteristics of the sectors in which Lyceum has been successful.  We anticipate consolidation of small and mid-sized legal services businesses and believe that, in spite of increased professionalisation of the legal industry in recent decades, many opportunities remain to improve service standards, efficiency and profitability.  Although the Act does not come into full force until 2011, now is the time to build the early businesses that will have first mover advantage when the Act’s changes come into effect in three years’ time.”

Paul Hewitt comments: “The deregulation of legal services will provide many opportunities for firms providing these services to develop and improve their offering.  I am excited to be working with Lyceum to identify the best of these."
 
Professor Susskind says: "I believe that external investment in legal businesses will be vital in coming years, not least to support the development of modern systems and processes. I am very pleased to have this opportunity to advise on the most promising IT-related investment opportunities."
 
Tony Williams adds: "The Legal Services Act presents many opportunities and challenges for legal services firms, but will clearly transform the profession over the medium term.  I'm delighted to be working with Lyceum Capital as they have a strong and successful track record of investing in growing businesses."

Yesterday, at the AIIM International Exposition & Conference taking place in Boston (Mass), ISYS Search Software – a supplier of enterprise search solutions for business and government – announced the availability of ISYS:web and ISYS:sdk for the Linux operating system.

ISYS:web for Linux is a direct port of ISYS:web for Windows to the Linux platform and therefore transfers the majority of capabilities and supported file types to the new system. ISYS:web for Linux provides users with enterprise search functionality, such as automatic categorization and entity detection, while administrators can take advantage of controls that enable rapid implementation and instant monitoring of search trends and performance.  

ISYS:sdk for Linux provides software developers and system integrators with the ability to incorporate the power of the ISYS search API into custom applications and solutions, whether for commercial distribution or internal use. Over the years, ISYS has licensed its ISYS:sdk technology to a variety of organizations, including EMC Corporation, Autodesk and TOWER Software.

Recognising that over the years various legal IT vendors had tried, without much success, to generate interest in law firms over 'open source' alternatives to Windows, we asked Dave Haucke – the VP for global marketing at ISYS – whether he thought there was any demand for a Linux version? This is what he replied...

"Re your question about demand in the legal sector, the answer is we don't expect to generate too much demand directly from the legal firms themselves, but there are some exceptions to that outlook.

"1. Legal software vendors looking to embed best-of-breed search from a third party often offer both Windows and open source versions of their software. The problem we ran into in the past is these vendors (both inside legal and outside) wouldn't give us serious consideration with having just a Windows version ... did them no good to integrate us only into their Windows apps. That right there was the primary motivator for us, since like you, we've never seen much value in offering an open source version otherwise. We can't turn away chunky OEM deals when they come calling. :)  This also relates to the point we made in the release about being ready for anyone hesitant over selecting FAST, MS or Autonomy. As you know, we're not trying to compete with FAST or Autonomy, but we are actively marketing our stuff as an effective and affordable short-term solution while companies wait and see what happens with the high end vendors.

"2. Law firms to some extent need this, and general counsel most definitely needs it. Think of the e-discovery scenario – you're tasked with indentifying and collecting information, some of which resides on open source systems. Now, ISYS has always been able to go out and get that stuff, but you've never been able to install us natively on a Linux box. So, from that standpoint, we reduce the headache somewhat by giving firms and GC a tool that can run natively, which means indexing and searching is faster, and the whole "pre-discovery" process is faster. Make sense?  I have a current real-world example of that with the firm Robins, Kaplan, et al in Boston. They're excited about the prospect of a Linux version for the very reason I cited above."