2016 eDiscovery Mergers & Acquisitions

By Nicole MacCallum posted 11-29-2016 14:26


Given that eDiscovery is such a rapidly growing industry, full of change as new technologies are developed and honed, mergers and acquisitions are certainly not a foreign concept to the field.  Over the past few years we’ve seen several companies get bought and sold, though 2016 seems to have set a record for activity. We’ve asked two industry experts to provide insights into why this year has seen so much volatility, the impact it has on the workforce, and what the future may hold.

Nikki MacCallum has over 10 years of hands-on experience working in the eDiscovery staffing space. Additionally, she has held several leadership roles within industry specific educational and networking groups such as Women in eDiscovery and spoken on various panels across the US about career trends and developments in eDiscovery. 

“When I first entered the eDiscovery staffing world around 2008, most of my clients were without a doubt law firms; whereas now in 2016, the majority of the companies I work with are on the vendor side.  I’d say that transition really started to pick up around 2013 when how to handle Big Data became a growing concern, and the Managed Services model really started becoming popular.  As a result, more and more law firms were outsourcing their eDiscovery workload, giving the vendors more work and a greater need to keep up with demand in order to be competitive.  I think that one of the greatest initial examples we saw of this was when Epiq Systems acquired Iris Data Services in May of 2015.  Shortly thereafter, DTI acquired Merrill Corporation and by the end of the year, Consilio acquired Huron.  In 2016 alone we’ve seen upwards of thirty acquisitions.

When I’m working with candidates looking to work on the law firm side, one of the first questions I’m typically asked about a law firm opportunity is, How much of the work do they do in-house? Given that the less work a firm vends out, the more valuable one is likely to be.  When dealing with folks on the vendor side, the first question I’m usually asked aside from the stability of the company, is What services do they offer? It seems the more a company is able to be a one-stop-shop (with competitive pricing of course), the more likely they are to be a leader in the market.

From a job seeking standpoint, the market is fairly saturated.  The number of lay-offs has increased dramatically, giving hiring managers the pick of the litter in terms of talent which does not bode well in terms of salaries, specifically when it comes to eDiscovery Project Management.  It’s also negatively impacting the majority of sales professionals, because when companies merge, account ownership and territory often becomes an issue, making it more challenging to drive top-line revenue.  I do think we’re going to start to see a shift in the near future, as technology starts to move to the cloud, these giant vendors will no longer be the most cost effective solution for law firms.”

Kristopher Wasserman has held virtually every role on the vendor side of the e-discovery industry starting as a scan operator in the early 2000’s, graduating into technical project management, sales engineering, consulting and ultimately into in an executive leadership capacity for a large end-to-end service provider.

“Over the past 10 years I’ve worked for three different companies that have all seen some form of M&A activity. The first was a niche processing and hosting provider that entertained the notion of being acquired but could never let go of control of the company. The second was a vendor with a larger regional footprint that had acquired smaller companies in an effort to expand its reach beyond traditional core services to include forensics and staffing. This company, shortly after consolidating, was then acquired along with three others in a roll-up play by a national startup. Most recently, my current employer, a multi-national managed review and staffing provider, acquired an international managed data and discovery services company. This was done to provide fully integrated professional services across the entire discovery life-cycle while simultaneously opening up opportunities to service verticals outside of the litigation space.

If I’ve learned anything through all this, it is the value of being open minded and readily adaptable to change. It seems whenever there is a major shuffling of the deck there are those that can identify opportunities and those that dig their heels in, in an attempt to maintain the status quo. Mergers usually lead to speculation and uncertainty about future job security, culture change, and status for those in the rank and file. Walking into this uncertainty with the right attitude and presenting yourself as someone who can embrace these changes with ease goes a long way towards influencing one’s role in the newer organization.

The e-discovery space has evolved considerably through technology advancements and the hyper-specialization of skills over the last 5 years in an effort to keep up with the ever-changing ecosystem of data management and modifications to accepted practices. The buying power has shifted from the law firm to the corporate legal department and is quickly finding its way to the C-level. Much of this is due to the rising costs that go along with the never-ending increase in volume of corporate data combined with the newly found concerns surrounding privacy and security. This is further compounded by the fact that technology has quickly eliminated geographic boundaries and information stores are often scattered across the globe. E-discovery is no longer synonymous with just litigation anymore. These days the technology and workflow solutions in active development are being used in a much bigger compliance and data governance context. In order to keep up with these demands the days of housing a small network attached storage device in the broom closet to host a review database have been eliminated. The hard costs associated with maintaining high-availability systems in a secure environment, along with the requisite application support and subject matter expertise across the various disciplines within the typical project life-cycle have eliminated all but those companies with the deepest pockets. As a result most of the smaller regional players in the vendor space have been acquired or joined forces with a larger outfit that can fund these needs and deploy repeatable practices that can sustain continued scalability.

The wild west days of e-discovery have ended and the new world order will be determined by those that can position themselves as trusted advisors capable of leveraging the technology of the day with sound business principles and subject matter expertise.  The dust will settle in the coming years and those that are willing to trade in their spurs for Ferragamos will find themselves rising to the top.”

Below is a great link to reference if you'd like to learn more and see which companies are further discussed.

Click here.