Smoke and Mirrors

     When they announced two weeks ago that a “white knight” was going to plunk $20 million into a troubled IT project for managing cases, members of California’s Judicial Council could hardly contain their enthusiasm.
     Justice Terence Bruiniers, who is the principal defender of the enormously expensive IT project, called the $20 million gift “literally a game changer.”
     Marin County’s head court clerk, Kim Turner, who is a principal cheerleader for the project, called the gift giver an “excellent partner.”
     The recipient of such high praise is South African businessman Patrick Soon-Shiong who made billions selling a drug to women with breast cancer. He is also offering to host the data from the IT project on his network. How generous, indeed.
     State court judges, for all their attributes, generally are not trained or skilled in business dealing, and they can make enormous gaffes when they lead courts into deals with private operators.
     The Colorado Supreme Court simply gave away all of its data to Lexis Nexis in exchange for an efiling system that allowed Lexis to charge $8 to lawyers essentially to deliver an email, with the ability to ratchet the charge up over time. The private publisher doubled down by hosting and selling the documents and data to lawyers and businesses. column continued
     The Supreme Court then mandated use of that efiling system, forcing all the lawyers in Colorado to pay that extra fee if they wanted to go into court. The publisher charged a similar fee to those who wanted to get records from the court, acting as a toll booth on all lanes to and from the virtual courthouse.
     Lexis made millions off that deal.
     Colorado’s court administrators have now spent years now trying to extricate themselves from that deal, with Lexis fighting through that state’s Legislature to hang on to its cash cow.
     Last year, judges in San Francisco Superior Court had all but signed off on their own deal with Lexis for efiling. But thought better of the deal at the last minute.
     Now California’s court administrators along with the Judicial Council are, I very strongly suspect, falling into a similar trap. To be sure, it is cleverly disguised.
     But I don’t think the deal with Soon-Shiong is a philanthropic “gift.” I believe it is a sale.
     The offer to host the data has been portrayed by the administrators as part of the gift, as further evidence of the magnate’s civic-minded generosity. But I think it is half of the bargain. It is what the state is giving up in exchange for some undisclosed amount of cash.
     As usual with California’s state court administrators, the financial details remain shrouded in murk. The valuations for the in-kind part of the gift and the cash part of it have not been disclosed, and the overall value estimate of $20 million has been cast into doubt by subsequent statements from members of the council.
     Even the definition of the deal shifts between “strategic partnership” and “grant opportunity.”
     Keep in mind that the IT project, called the Court Case Management System, has already cost the California public an amount somewhere between $400 million and $600 million. Even though the courts’ administrative office has been slammed repeatedly by the Legislature and the state Auditor on its cost estimates, the numbers are still no clearer.
     In the same alternate reality of floating numbers, the administrators have long had a dream that the courts would make millions off the documents and data in the CCMS system. The office paid for a cost benefit analysis earlier this year that spelled out the system’s money-making potential.
     Now, it looks like they are trying sell that dream, offloading it to a businessman who is trying to set up a network for both legal and medical information. But all it would do is prolong the agony of the 10-year-old IT project.
     What we found in looking at a series of surveys of state judges initiated by the state’s Chief Justice earlier this year is that the local courts were willing to give up fairly minor elements of their power. But control of the court’s management system and its content is something that most of the local courts appear determined to hang on to.
     The announcement of a gift from a “white knight” was accompanied by the statement that the money, however much it turns out to be, would be used to upgrade the CCMS system for two state courts and possibly install the system in a third.
     That is the gamble by the businessman, that the court administrators can push the rest of the local courts into the system. I would bet against it.

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