Technology

Like Peanut Butter And Jelly: Why kCura Bought Content Analyst

As far as kCura is concerned, analytics represents a fast growing part of its business.

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ediscovery legal tech legal technology discoveryOn Monday, Chicago based edisovery behemoth kCura, the maker of Relativity, announced that it had bought Virginia based text analytics company Content Analyst. The two companies are privately held and terms of the deal were not disclosed. kCura and Content Analyst have been working together since 2008 and Content Analyst’s analytics software CAAT is embedded in Relativity.

Since 2007, kCura grew their business organically without any outside financing until last year when Iconiq Capital invested a jaw dropping $125 million to become a long term minority stakeholder. This is not kCura’s first acquisition, but it is the first time that kCura acquired another leading company in the legal technology space. And, as others have already noted, it is perhaps kCura’s most significant flex of muscle since the Iconiq investment.

So why did the acquisition make sense?

In a call yesterday with kCura CEO Andrew Sieja and Content Analyst’s CEO Kurt Michel, Sieja emphasized to me that his philosophy is to buy “technology not revenue.” The growth of legal analytics and machine learning cannot be overstated. Advances in machine learning and analytics are paving the way for companies like Kira Systems, Seal Software, Lawgeex, RAVN and several others. Machine learning is proving to be commercially viable for lawyers and it is only getting better, faster and cheaper. As far as kCura is concerned, analytics represents a fast growing part of its business. According to their press release, kCura’s analytics usage has grown by 1500% since 2011.

But to hear Sieja and Michel tell it, this deal seems to have been as much about the team as the technology. “We’re like peanut butter and jelly,” said Sieja, emphasizing the shared culture of the two companies.

Content Analyst will not be moving to kCura’s office in downtown Chicago, but it is no surprise that culture would still play a role in this decision. kCura has invested in its company culture, something on which it prides itself. Early on, that meant Sieja treating the team to drinks at nearby watering holes. Now, it means regular happy hours, a selective hiring process and a creative office space filled with symbolism about staying humble and hungry.

But there may have been other factors at play in this deal. As Bloomberg’s Gabe Friedman pointed out on Monday, several of kCura’s competitors, including Thomson Reuters’ newly launched product eDiscovery Point, license CAAT as part of their product offering. And while Sieja and Michel maintain that they will honor their existing contracts, these competitors cannot feel good about this acquisition. Executives at Thomson Reuters declined to comment on this story.

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Zach Abramowitz is a former Biglaw associate and currently CEO and co-founder of ReplyAll. You can follow Zach on Twitter (@zachabramowitz) or reach him by email at zach@replyall.me.

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