IN THIS ISSUE
Dotcom recession hits the UK legal market - job cuts at Epoch and closure at Geodesia - L&H duo to spend next fortnight in jail - ISPs fight to avoid publisher definition - Law Gym opens for business - Clifford Chance online in Hungary - Virtual data room previews - UK company beat US dotcom claim - US Court tech companies settle out of court - Windows XP set for delay - Wireless networks security warning - Microsoft in new DRM lawsuit

DOTCOM RECESSION HITS UK LEGAL MARKET - JOB CUTS AT EPOCH
Epoch Software, the company behind the Desktop Lawyer online legal service and at one time one of the UK's fastest growing legal IT businesses, has had to lay off 20 staff - approximately a third of its total workforce - because of the recession hitting the dotcom world.

Epoch co-founder and joint CEO Richard Cohen told Legal News Media that because of the shutdown within the venture capital market and the way the banks "kept moving the goalposts" the company had not only had to drop its flotation plans but was also in line for a far smaller amount of money than it had originally hoped to raise in its forthcoming third-round of funding. Cohen declined to say how much money was at stake, as negotiations are still ongoing, but hinted that it was likely to be less than the £6 million Epoch had raised in the previous round.

Although still bullish about the company's longer term future - it already has over 900,000 subscribers to its digital legal services both in the UK and USA, as well as a number of long term (between 3 and 20 year) contractual deals with legal expenses insurers - Cohen said the job cuts were made in order to cut back the company's burn rate and speed up its path towards profitability. Epoch now expects to be profitable by the end of the year. All the job losses have been in the company's sales, marketing and administrative departments. And, the company has also cancelled a major advertising and marketing campaign it had planned for the small business sector.

DOTCOM RECESSION HITS UK LEGAL MARKET - GEODESIA CLOSES
Geodesia, a developer of virtual dealrooms and similar of web services for the UK legal community, has closed less than four months after it originally launched its WorkRooms extranet application.

Managing director Peter Rouse told Legal News Media that the company was forced to close because it had run out of money. He is now looking for a job and Geodesia (020 7488 2266) is hoping to sell off its assets, which include portal technology and various IP assets. Rouse estimates it would cost another organisation £1.5 million and twelve months to replicate the company's systems.

Rouse says the "paralysis" gripping the venture capital sector had meant the company had been unable to raise the extra funding it needed to keep trading however he reserved his strongest criticism for Microsoft which, he said, had undermined confidence in the ASP business model by saying it was unlikely to be viable until the year 2005.

TAKEOVER BIDS LAUNCHED FOR INTERACTIVE-LAW
One glimmer of good news. In what the company describes as an "unexpected move" to major legal publishers - one UK based and the other a US operation wanting to move into Europe - have made offers to acquire the Interactive-Law.co.uk business. Talks are currently being described as "at a critical stage". The company (which is no relation to Centaur's Interactive-Lawyer service) is the parent of an online legal services group that runs seven web-based marketing referral networks for law firms, including AccidentCompensation.com and Employment-Solicitors.co.uk.

Elsewhere within the UK marketing and referral sector, the casualties are starting to mount, with three of the services launched at last year's Solicitors NEC exhibition already either closed or moribund. Attempts to locate the Local-Legal.co.uk home page produced error messages. The LegalWeb2000 site consisted of one blank page, while the Law2U.co.uk URL directed visitors to a placeholder site containing no content.

L&H DUO TO SPEND NEXT FORTNIGHT IN JAIL
With the exception of Poirot and Tintin, two of the best known people to come out of Belgian in recent years have been Jo Lernout and Pol Hauspie, the founders of the troubled speech recognition systems company Lernout & Hauspie. But, last week they were arrested for questioning over forgery and stock-price manipulation charges and this week their lawyers said they would not be appealing against a decision by an Ieper (Ypres) court to detain them in prison for a further two weeks while the local district attorney's office continues its investigations.

In a related development L&H's new management, which is continuing its investigations into the parlous state of the company's finances, has uncovered another $96 million in fictitious sales. This brings the total of fake sales from early 1998 to mid-2000 to $373 million - representing 45 percent of all reported revenues.

UK ISPS FIGHT TO STOP NEW DEFINITION AS PUBLISHERS
Internet service providers in the UK are lobbying their contacts within Parliament in a last ditch attempt to amend a new Bill to ban tobacco advertising. What concerns them is that the Bill defines ISPs as "publishers" with a legal responsibility for the content hosted on their servers. The proposed Bill also apparently contradicts an EU directive on e-commerce which treats ISPs as merely "conduits" for information, with liability only arising if they fail to remove content that they have previously been notified is unlawful.

Revealing how out of touch the Government is on this topic, Lord Mitchell, the so-called Labour Party "e-lord" in the House of Lords said: "If it is a crime for an ISP to knowingly carry tobacco advertising, when it is made illegal, then why should it be different from an ISP which knowingly transmits pornography which is illegal? Its the same issue."

LAW GYM OPENS FOR BUSINESS
London solicitor Patricia Ogunfeibo, who last year opened her VATad.com online tax law service, this week launches her latest virtual law firm venture: the LawGym. LawGym Ltd (08707 307308) - strapline "is your business fit to compete" - is a Law Society regulated and fully indemnity insured legal practice that complements its inhouse skills with a panel of freelance solicitors, all of whom will be at least five years post qualification.

Although this sounds similar to John Yates' V-Lex virtual law firm, LawGym.com's spin on repackaging legal services is in its approach to pricing, with clients being offered a choice of fee rates for the same piece of advice depending upon the urgency of the work. For example, clients can choose if they want advice immediately by phone (£75 + VAT per 30 minutes), in writing within one hour (£85 + VAT), in writing within 12 hours (£65 + VAT) or face-to-face (£300 for a half day). There is even a 50 percent fee discount if agreed delivery times are not met.

CLIFFORD CHANCE LAUNCH ONLINE SERVICE FOR HUNGARIAN MARKET
The Budapest office of Clifford Chance has announced the launch of an online legal service for the telecoms sector. Called e-Lex.hu this is a subscription-based service providing an interactive source of information for company senior management, regulators and lawyers working in the telecoms sector on all current regulatory and legal issues critical to daily and long-term management and strategic planning. Unisys Hungary provided technological support in the development of the service. For more information on e.Lex-hu contact Mihaly Varga, head of business development in the firm's Budapest office, on +36 1 4291 300.

VIRTUAL DATA ROOM SERVICE TO BE PREVIEWED
Williams Lea Legal Solutions (Elliott Slone as was) and PeopleDoc have combined their skills to provide what they believe is a viable solution for law firms wanting to create virtual data rooms to support M&A work. Although the service can also support an interactive, collaborative virtual dealroom environment, the two companies believe their approach tackles the equally pressing need of providing interested parties with controlled access to the huge volumes of documents associated with this type of work.

The service will be offered on an ASP basis - thereby removing the need for firms to make the capital investment in developing their own dealrooms - with prices starting at less than £1000 a month. Williams Lea is running a number of seminars to demonstrate the new service in London, starting on 22nd May. For details email events@williamslea.com

UK COMPANY BEATS US DOT COM DOMAIN CLAIM
The World Intellectual Property Organisation (WIPO) last week issued a judgement declining to transfer the domain name kcts.com from Middlesex based company Get On The Web Limited to Seattle based KCTS TV.

KCTS TV had claimed that the owners of the disputed domain name had no good reason to register it. In their submission to WIPO, KCTS TV claimed "that it is reasonable to conclude that most internet users associate the .com generic top level domain with US based markets and companies".

WIPO disagreed and allowed the small Middlesex internet web site development company to keep the domain name. KCTS TV claimed to be well known and famous in the UK and Europe and that internet users would be confused to discover "kcts.com" was a tourist information site relating to the London borough of Kensington & Chelsea. KCTS TV claims to be the fourth largest public TV station in the USA and Canada.

Joanne Ashley, a solicitor specialising in domain name disputes at Sprecher Grier Halberstam (who represented Get On The Web Limited) said "KCTS TV's bullish approach was typical of a company which had failed to take simple steps to protect its business name on the internet. The company's US-centric approach probably did not assist it and WIPO may have taken exception to KCTS TV's assumption that it had complete rights to the .com domain name."

COURT TECHNOLOGY COMPANIES SETTLE OUT OF COURT
Phoenix-based inData Corporation, the developers of the TrialDirector trial presentation software system, has settled its lawsuit with fellow Phoenix trial technology company Verdict Systems. As part of the confidential settlement, the companies agreed to jointly release the following statement:

"Verdict Systems acknowledges that its principals, during the tenure of their employment with inData, had access to both proprietary and non-proprietary information of inData concerning its products, business, strategies and development plans. Verdict Systems acknowledges that access to portions of such information was useful in the development and creation of its products and business strategies. inData and Verdict Systems have disputed and continue to dispute the appropriateness and value of Verdict Systemsâ use of such information, which resulted in the litigation between the two companies. Despite their differences, inData and Verdict Systems have entered into a confidential settlement agreement to terminate their litigation and allow both companies to devote their entire resources to continue to compete in the marketplace."

MICROSOFT WINDOWS XP ROLL OUT TO BE DELAYED
Microsoft has confirmed rumours that its next generation operating system Windows XP has hit problems and will not now be released to PC hardware manufacturers in June, with a view to a formal launch four to six weeks later. Microsoft says XP will not be ready until at least August or even early September, raising doubts as to whether the new software will be available in time for PC suppliers to have it installed in their machines and into the shops for the start of the pre-Christmas/holiday selling season which kicks off in early October. Shawn Sanford, a Windows group product manager, is quoted as saying XP is "still on track for delivery in the second of half of this year".

WIRELESS SECURITY ALERT
The Wall Street Journal has warned that the growing use of wireless computer networks is exposing businesses to security risks because they not appreciate how inherently insecure they can be. Although they dispense with the need for huge amounts of cabling because most networks use the same radio signal frequencies, anyone with a PC equipped with a wireless networking card and a suitable antenna can theoretically detect, intercept and read an individual organisation's network traffic - including email messages. According to the market research group Cahners InStat, thanks to the dramatic drop in the cost of wireless network technology over the last 18 months, they are predicting that worldwide over six million wireless devices will be shipped this year, with that figure doubling over the next couple of year.

MICROSOFT FACES WINDOWS MEDIA DRM LAWSUIT
InterTrust Technologies, a small Silicon Valley-based company, last week commenced proceedings in the San Jose, California US District Court alleging that some of the DRM (digital rights management) copyright protection technology Microsoft uses in the latest version of Windows Media software infringes a patent issued to InterTrust in February.

InterTrust is asking for unspecified damages and an injunction to prevent Microsoft violating the InterTrust patent by shipping Windows Media in its new Windows XP operating system. A Microsoft spokesman said the company was reviewing the complaint but added that Microsoft had been working on its own DRM technology "for many years". Since the Napster case blew up last year, DRM has become a hot topic as it is seen as a practical way of protecting content while still permitting material to be distributed over the internet and via other forms of new media. For example, it could theoretically be used to allow an internet user to download and play an MP3 music file a couple of times but then have to submit credit card details and pay a fee if they wanted to hear the track again.

From the publishers of Legal Technology Insider. Click here for the latest legal IT jobs, events diary and additional law reports. Next issue - 10.05.2001