SAN FRANCISCO (CN) - A new gold rush has come to California, with the state's massive legal system open for mining as courts and lawyers move to new technology. Warren Buffett's right hand man has joined in the race along with enormous software and publishing companies from around the nation. "It's truly the Wild West here in California," said an industry insider, "a land grab."
They are scrambling for a mother lode of multimillion-dollar contracts for software and licensing, vast additional sums for upkeep, and the right to set up a toll booth on Court Road for 38 million people.
The rush of deal-making follows the collapse of a half-billion-dollar, ten-year state project to develop a Court Case Management System for all California's 58 trial courts. Widely savaged by judges as a "fiasco" and a "boondoggle," the software developed by Deloitte Consulting was abandoned last year.
"When CCMS finally collapsed, the combination of pent up demand and deferred maintenance of local courts resulted in a vendor feeding frenzy that while strong today, will only grow over time," said an industry executive who asked not to be named.
In the ruins of the statewide project, a group of judges, tech staff and administrators wrote a model contract and selected three top bidders: New Mexico-based Justice Systems Inc., Texas-based Tyler Technologies and Pennsylvania-based LT-Tech owned by Thompson Reuters formerly West Publishing.
The deals have three basic financial components, licensing and installation for millions of dollars, yearly upkeep for hundreds of thousands of dollars, and, a golden egg, the right to charge lawyers a fee, generally around $5, for every document electronically filed.
In one big Southern California court, for example, about 750,000 documents are projected to be filed this year. That's in Orange County's civil section alone. Multiplied by a $5 fee, the flow of money would amount to $3 million a year.
Extrapolating based on population, total income from the per-document fees could easily rise to $40 million a year throughout the state, paid by California's lawyers. That's just for civil litigation and not counting the millions paid by the courts for software installation, licensing and yearly upkeep.
Helping to propel the technological shift, lawyers in California uncharacteristically have not resisted change. They have generally embraced electronic filing in large part because it is much cheaper than paying a runner to deliver paper documents.
A Better Typewriter
With the market heating up, Fresno in California's vast Central Valley became the latest to announce a deal. On Monday afternoon, the court said it had agreed with Tyler to replace its old software, including an early version of CCMS for criminal cases and the Banner system for civil cases. They will be replaced by Tyler's Odyssey system for $4.8 million.
"We have a very, very old civil case management system and it was nine versions behind and we could not update it anymore," said the court's head clerk Sheran Morton. "We referred to it as 'the typewriter.' That's how far out of date it was."
The central administrative office in San Francisco will pay about half of the purchase price and the rest will come out of the Fresno court's budget. The deal covers case management, e-filing, document storage and public access. Morton said the per-document fee charged to the filing lawyer has yet to be worked out.