At LegalTech, as usual, Equivio had the chance to speak with lots of people from a broad cross-section of the e-discovery industry - service providers, law firms, corporations and software vendors. These are their distilled takeaways from the show and their conversations with all those people:
1. THE SHOW WAS LESS SHOW, MORE BUSINESS.
LegalTech was different this year. There was less hype, less bravado, less showmanship. People were a lot more focused. People came to the show with a very clear mandate to get business done. Before the show, bearers of doomsday prophecies predicted a 25% fall in attendees. The show organizers noted a tiny reduction in attendees, but it was imperceptible to anyone on the floor. What was perceptible was the change in atmosphere - fewer parties, fewer cocktails, fewer people using the show as an excuse for a good time in New York. People were there to cut deals. That augurs well for business.
2. THE CORPORATIONS ARE PLAYING HARDER.
This is a trend that's been emerging over the last 18 months, but it just took a massive acceleration. Corporations are pressed for cash and litigation is very cash-intensive. We are seeing corporations become much more involved in e-discovery decisions, especially in the choice of service providers and technologies. These types of decisions are no longer the exclusive, unmonitored domain of the law firms. For instance, looking at the statistics of visitors to our booth at LegalTech this year, the number of corporations was up by more than 200% over previous years.
3. THE LAW FIRMS OPEN UP.
It's too early to proclaim the death of the billable hour, but there is change afoot in the law firm. At LegalTech, law firms were telling us that they need to adopt new technologies that will enable more efficient review. They explained that that's where they need to go to compete effectively, and to provide value for money for their customers. A year or two ago, you would have heard this very refreshing sentiment from only the most visionary law firms. Now it's almost standard.
4. THE BEST-RUN SERVICE VENDORS GET STRONGER.
Darwinism comes to e-discovery. Those e-discovery service vendors best adapted to the changing market conditions are thriving. Not so the less well adapted. Some have already gone under and others will likely follow.
The gold-rush style land grab that characterized the first phase of e-discovery is officially over. Volumes continue to grow. But success and wild growth is no longer assured for everyone and anyone in the market. To survive and thrive, service providers have to be something they were never expected to be - they have to be efficient. Prices continue to drop. Only the efficient will make it.
Interestingly, scale does not guarantee economies of operation. Some of the smaller regional players are very tightly run operations, and have been better at maintaining profitability than the some of the acquisition-intensive giants that were good for gaining market coverage, but were operationally inefficient.
5. THE TECHNOLOGICALLY-STRONG SERVICE VENDORS GET STRONGER.
The economy is creating massive pressure on corporations to reduce litigation review costs. This, in turn, is driving change in the e-discovery service vendor market. Over the last couple of years, the dominant market positioning adopted by service providers was "reliability" in one form or another. Reliability was important in an immature market where lack of baseline expertise in e-discovery had produced some famous project failures. With the latest shift in the market, reliability is not enough. Corporations are now demanding innovation. We have even seen some corporations playing matchmaker between Equivio and the corporation's service providers to ensure that they can deliver the technology that the corporation requires. It would be interesting to examine the correlation between the adoption of innovative technology and the success rate of service providers. The anecdotal evidence in the rumour mill at LegalTech suggests that the correlation is almost one to one.
I'd be interested to hear your comments on all this. If you agree or disagree, or have something to add, send me an email right now.
Vice President, Marketing and Business DevelopmentEquivio Inc.
5260-G Nicholson Lane
Kensington, MD 20895