EMC joins exploding market for e-discovery services
The electronic discovery and litigation software industry has turned into a free-for-all during the past year. The customer base has shifted from law firms to corporate clients, and several New England companies, including local storage icon EMC Corp., are working to make the most of the opportunity.
"Up to this point, it's been like the Wild West," said Michael Clark, managing director of EDDix LLC, a research firm that specializes in the electronic data discovery market, based in Milford, Conn. "There were about 200 companies doing something with e-discovery a year ago, and now there is double that."
That growth of the sector, which generated $1.3 billion in revenue last year, according to EDDix, has led to a flurry of local activity in recent weeks.
Two weeks ago, for instance, EMC launched an e-discovery platform aimed at integrating content management software, networked storage and professional services. The move is not as much a technology launch -- most of the included software and hardware was already in EMC's arsenal -- but a services play. EMC was looking for a novel way to deploy its current technology and found it in the e-discovery market, according to John Gubernat, director of EMC's compliance practice.
Minnesota's Xiotech Inc., a data storage competitor of EMC's, two weeks ago closed its acquisition of Norwich, Conn.'s Daticon Inc., a maker of e-discovery software, for approximately $30 million.
According to David Hoffer, a partner at Burlington-based Mirus Capital, an investment bank that advised Daticon on its recent sale, the Daticon deal is just the beginning.
"The (e-discovery) industry has seen a lot of consolidation over the past year, and there is more to come," he said.
Two smaller players, Providence's Ibis Consulting Inc., which provides e-discovery consulting services and platforms, and Legal Computer Solutions Inc. in Boston, which does business as Lextranet, a web-based litigation support platform, both report increased business in the past year. Though both declined to provide revenue numbers, Ibis said sales rose 50 percent in 2005.
One of the driving forces behind the activity, and opportunity, is a shift in the decision-making process related to e-discovery. Traditionally the realm of outside law firms, corporations are now more often making purchasing decisions in-house, according to Clark. This opens the market, as law firms traditionally relied on their own professional and social networks to find suitable vendors, he said.
The cost of discovery has increased with the amount of electronic data that needs to be examined for every case, spurring executives to take control of buying e-discovery products themselves, according to Clark.
"When you see discovery numbers rise to the level that they are being addressed at board meetings, they are getting big," said Clark. "Corporations are getting angry because they think the law firms are not respecting the billable hours that are being charged for discovery."
ef@masshightech.com | 617-241-4334
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