Consolidation Presents Risks And Rewards For EDiscovery
We've watched companies grow for years. There are two sides to that coin.
It’s overquoted pablum to point out that some Chinese languages use the same character for crisis and opportunity. Alas this isn’t really true. The more accurate story is that the written character for “crisis” is a combination of “danger” and “opportunity” but even that’s not really true because the mark for “opportunity” has a more fluid meaning than this maxim would suggest.
Unfortunately, some kind of relatable frame must undergird this journey to the heart of legal tech and “crisitunity” fits the bill too well to let the cliché police stand in our way.
Having endured the marathon slog of ABA TECHSHOW and Legalweek 2022, there’s a lot to untangle in the legal tech industry. When it comes to the world of eDiscovery — or perhaps just “discovery” at this point — the sector feels delicately balanced with consolidation presenting as many opportunities as risks.
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On the plus side, consolidation cleaned up the decision-making process for clients. Engineering victories partnered with other cutting-edge providers to produce better products to keep clients from having to choose between capabilities. Outside of Econ 101, a market with infinite choice is more debilitating than empowering and consolidation advanced the ball in providing clients a more manageable selection.
It also forced these larger entities to seek out more use cases for the core technology in order to feed to org chart with revenue. Everyone seems to be going about this in different ways, though Eric Crawley of Epiq described the challenge broadly as providing insights “before, after, and in lieu of document review.” The folks there told me that they’ve been working on democratizing data for users to get out of it what’s useful to them. AI is a powerful tool — it has to provide more than just document review.
Compliance is the most popular alternative use of the technology, of course, but not the only one. There’s also fighting global crime and terrorism. Bobby Balachandran told me about the role Exterro played in freeing human trafficking victims in the Philippines. International law enforcement and human rights organizations have just as much to gain from a robot crunching through opaque mountains of data as civil litigants. Perhaps even more because the human stakes can be so much higher.
Scott McVeigh from Onna raised a possible use I’d never thought of — using AI to create curated digital libraries. Firms have paid for legal research over the years, but when they lose associates or staff, that research can disappear into the ether. Use the discovery technology to keep it accessible. After all, classifying and finding unstructured content is the crux of the technology.
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But getting the product into these other use cases sometimes involves buy in from departments outside legal. Thankfully, cross-pollination within a given company is a lot easier as general counsel have evolved from the “department of no” to a genuine business development role.
Another development pushing expansion within an existing customer’s ecosystem is the near universal adoption of SaaS. As David Carns of Casepoint sees it, this opened the door for providers to provide additional services with the flip of a switch where in the past customers might be reticent to take the plunge into a new use case based on fears of having to bolt on new stuff.
That said, consolidation carries risks. Redundancies put high levels of talent on the market and that helps everyone else build out their rosters. CEO Joey Seeber said this was “a fun time to be in this business,” because, having avoided the consolidation craze, Level Legal is swooping in and scooping up both talent and engagements where bigger players are either conflicted out or frustrating existing customers with declining service levels.
Likewise, John Tredennick learned that some of the most talented data folks he’d worked with during his time building Catalyst weren’t retained after the company’s sale, so he rehired them for his new venture Merlin and built a product that certainly feels like the fastest document search ever.
There is such a thing as too big. Have providers started to push that envelope? If so, there are a lot of vendors ready to pick up that work.
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Because the one risk the sector doesn’t face is a serious slowdown. Data is piling up faster and faster and it’s no longer possible to keep on top of it with a set of mere human eyes.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
