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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | JANUARY 2, 2001 COMPANY CLOSEUP By Spencer E. Ante Keeping Far-Flung Staff Legally up to Snuff LRN eases the burden of legal training for corporate employees, and it's one of the few application service providers that aren't disappointing investors
No longer. Thanks to the Web-based legal-education service of LRN, Motorola can train employees from afar about everything from sexual harassment to securities law to trademark infringement. "Our very best attorneys are looking for help anywhere they can get it," says Falkner. LRN, based in Los Angeles, is using the Web to reinvent the legal research and education market -- and itself. Created in 1993 as an offline research service, LRN is now using the Internet to offer legal courses to its blue-chip clients. For anywhere from $250,000 to $2 million for a three-year subscription, companies can provide employees access to legal tips anytime, anywhere. TAILOR-MADE. Here's how it works. An employee logs on to the LRN-hosted service and answers several dozen questions such as: Do you enter into contracts? Do you make pricing decisions? And so on. Using this information to create a profile, the system then tells the employee what courses he or she must take to comply with company requirements or the law. Employees can then read the coursework online at their convenience. LRN tailors the content and service to each company. The service also allows the employer to track and confirm that employees have completed training. "We're creating a standard for a legally aware and ethically aware workforce," says Dov Seidman, a Harvard Law School grad who is LRN's chairman and CEO. Investors seem to like the idea as much as harried in-house lawyers. In January, 2000, Softbank Venture Capital and Softbank Capital Partners each invested $15 million in LRN. The company is one of 30 application service providers that Softbank has funded during the past year. ASPs, which allow companies to rent software or applications from a third party, were supposed to be the Internet's next sensation. By making software available online, the theory went, ASPs would save companies the trouble of installing and maintaining systems. But so far ASPs have been as disappointing as box-office receipts for the latest Arnold Schwarzenegger flick. That's largely because most ASPs are selling hosted versions of software already available by license. CONTENT IS KING. But LRN's strength is content that's not readily available elsewhere. And that's what has attracted customers. "Dov's folks are legal-content providers," says Rick Harrington, general counsel of Conoco, an LRN customer. "He's the only one who comes from a content perspective." That angle was also what helped LRN draw big-name backers like Japan's Softbank. "By far, LRN is the ASP furthest ahead in our portfolio," says Rex Golding, a managing director of Softbank Capital who sits on LRN's board. "I defy anyone to show me an ASP that has a better customer list than LRN." Raytheon, Conoco, and Johnson & Johnson are among the 50 companies that have signed up for the Net training service since the company launched it in January, 2000. Softbank's Golding says he expects revenues for 2000 to top $10 million, with about 45% coming from online training and research services. The rest comes from offline research. He predicts that sales will double in 2001 as the company pours an undisclosed amount into sales and marketing to try to dominate the market for corporate legal training and education. Online services will likely account for 75% of revenue in 2001, says Golding, and the company should turn a profit in 2002, he says. From the start, LRN has had big ambitions. When Seidman created it in 1993, the company sold legal research to corporations for a fixed fee, saving them the per-hour charges of a typical law firm. Today, LRN relies on 1,700 researchers, including law professors and former heads of government agencies, plus a database covering 50,000 issues, to serve 200 of America's biggest corporations. NO FIELD OF DREAMS. But how has LRN made headway on the Web when countless other ASPs are foundering? First, the highly fragmented, inefficient legal research and training industry lends itself particularly well to the ASP model. Legal training has typically been handled by already overworked in-house lawyers or by a firm that specializes in one area of law, such as trademark and copyright. That meant that several firms would have to be hired to cover all issues, and numerous sessions would have to be scheduled to reach an entire workforce. Second, ASPs, too, often suffer from the Field-of-Dreams syndrome: Build it, and they will come. LRN, by contrast, is using ASP technology to solve a business problem that already exists. Customers understand the difference. Conoco has even created a "Conoco Law School" using LRN's service. So far, 2,500 of the company's 16,000 employees have taken courses through the school. Harrington says the service is a cost-effective way to reduce the risk of legal liability and criminal violations. Plus, unlike most other mom-and-pop training operations, LRN offers education on dozens of subjects. "I don't know of anybody who provides the full suite of training," says Harrington. With LRN's marketing push, Seidman is trying to make sure that companies continue to think of LRN first when they're in the market for legal training.  Spencer E. Ante covers the Internet for Business Week in New York  | | |
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