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A year and a half ago, Victor Schachter of Palo Alto, Calif.’s Fenwick & West was eager to sell software. An employment lawyer who had spent more than 20 years training managers in how to avoid getting sued, Schachter saw the potential in going digital. The idea, as Schachter puts it, was to find a technology partner who could take his training expertise, or “jewels,” and turn them into an interactive computer program that companies could distribute to their employees. But Schachter’s troubles began when he started talking to potential business partners. The software companies wanted to buy his firm’s legal training content at a substantial discount, he says, and then be able to go to market without paying royalties. “Their feeling is you get the publicity out of it. The content is apparently not very valuable to them.” Schachter isn’t the only employment lawyer to have seen the possibilities in so-called e-training products. In software, law firms have a cash cow — a product that can bring in fresh revenue simply by repackaging an existing asset. And with one report by San Francisco’s Equity Research pegging the overall e-learning market at over $7 billion this year, it’s not surprising that lawyers are eager to get their hands on the software pot. But as some firms have discovered, the software business is not always an easy sell. One hurdle law firms encounter is that software companies often prefer to keep control of the business rather than structure a partnership. At Integrity Interactive Corp., for instance, lawyers are viewed more as contractors than as business partners. The Massachusetts-based software publisher creates its e-training titles using in-house lawyers. Before releasing the product, IIC hires an outside lawyer to review the material. But employment law firms often want a bigger role in the venture. After all, they’re the experts. For years, attorneys have convened managers in company conference rooms for long lectures on appropriate, and inappropriate, workplace behavior. Moving from live seminars to digital, e-training products was almost a no-brainer, say many employment lawyers. The firms get much more reach with a software product than they ever could by relying solely on flesh-and-blood lawyers. Employers benefit economically from e-training since their staff can take the courses at their leisure — no need to fly in the managers from every satellite office for a “training day.” Rather than search for the right technology partner, some employment firms have opted to do the whole thing on their own. In the late ’90s, San Francisco’s Littler Mendelson created a separate company called Employment Law Learning Technologies. “In terms of the quality, the legal accuracy, the things we think are so important — time and again we’re told we are the best product on the market,” said Scott Rechtschaffen, who manages business development for Littler. ELT’s harassment product recently won an award from the industry film producer’s association, says Rechtschaffen. But while its products have been groundbreaking in terms of their quality, ELT hasn’t been a home run from a business perspective. Last spring, sales were “anemic” and the company was near bankruptcy, says Rechtschaffen. Lazard Freres, the company’s outside investor, pulled out, and ELT restructured its sales model, shrinking its direct sales force from 10 to four people. “There were serious questions about the continued health of the company,” he says. But the company is doing better than ever now, he says. New clients like AOL and Calpine have given ELT its strongest sales months to date. In fact, Rechtschaffen says the company has even started to run cash positive. Of course, this took a lot of learning in terms of selling e-training products. “One of the questions is, who are you selling to: the HR department, the training department, the IT department, the general counsel?” These are lessons newcomers to the e-training game may have to learn on their own. Chicago-based Seyfarth Shaw and San Francisco-based Curiale Dellaverson Hirschfeld Kraemer & Sloan both have e-training products slated for release in the next few months. Like Littler, Seyfarth has established a separate company to support its e-training ambitions. But its expectations are relatively modest. Sales for the first year will probably be around $5 million to $8 million, says Dennis Flavin, president of the enterprise, dubbed WorkSharp Technologies. “We don’t expect to be profitable, but we don’t expect to be losing a lot of money either.” According to Flavin, the fact that the overall field of e-training is more established now than in years past should help WorkSharp on the sales front. Similarly, Curiale, which is working on an e-training product, believes the software will eventually bring in money. “I would not be doing this as a loss leader, or as a method to market our firm,” says Glen Kraemer, the managing partner of Curiale’s Los Angeles office. “I can’t tell you whether ultimately that means three months, six months or a year, but we’re patient and confident.” At Fenwick & West, Schachter is no closer to developing his electronic training product than a year and a half ago. While he claims to still be looking for the right business partner, he admits that his “heels have cooled a bit.”

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