Reed Smith, a US based international law firm, announced this week that they would be bringing Relativity in-house, continuing their expansion into the eDiscovery market (in 2011, the firm established a team dedicated to eDiscovery that has grown to over 50 lawyers). This marks a developing trend in the industry; many law firms are taking deliberate steps to ensure they keep eDiscovery work in-house and take back any business they may have lost to traditionally lower cost eDiscovery vendors and service providers. From the firms’ perspective, this makes sense; keep as much business inside the walls as possible, even if that means making capital expenditures.
Reed Smith indicated they would utilize Relativity primarily for document review, which is a relatively cheap (from the firms perspective) and easy way for the firms to make money off their clients. Money, that previously often went to eDiscovery vendors who offered superior technology. Many other firms are employing a similar strategy. With the acquisition of programs like Relativity, the vendors no longer clearly offer superior technology, and decisions about who performs the work become more contingent on relationships, which are often to a law firm’s advantage. In the long term, this is smart business for the firms.
From the clients’ perspective though, this could mean higher costs, as law firms traditionally charge higher rates than their eDiscovery vendor counterparts do. For the eDiscovery vendors, it obviously hurts them, as Firms like Reed Smith will take some, although not all, business that the vendors previously attracted because they had better technology and tools.
Software companies are likewise consolidating the functionality they provide either via development or via acquisition. One need not look any further than KCura’s Relativity for an example of the former, while Symantec ‘s acquisition of Clearwell is a clear example of the latter. Both KCura and Symantec offer products regarded as best in class, and both are aggressively expanding those products’ capabilities, sometimes at the expense of other less dynamic companies and products that not that long ago were consider must-haves in the eDiscovery world.
KCura is aggressively developing Relativity, once limited to review functionality, on both the front and backend of the review process. KCura is improving Relativity’s processing capabilities, adding the ability to ingest and process raw/native data, and creating tools like Fact Manager, which allows users to track and manage important facts, people, and documents within Relativity. The first improvement is a direct attack on programs like Law Prediscovery, while the later provides direct competition to CaseMap, a Lexis product.
By developing and adding these new functions, KCura has not only increased Relativity’s value and utility, but it is threatening formerly symbiotic products by poaching their customers; if you are going to use Relativity for a given matter, and especially if you are going to use it for multiple matters, it simply makes more sense to use the functionality built into Relativity and included in the price rather than license and pay for multiple products. While products like Law Prediscovery and CaseMap and will remain viable options for those not using Relativity, they will also begin to see their customer base shrink because of Relativity, which could mean difficult times ahead if they are unable to adapt quickly.
What all of this consolidation and expansion likely means is that it is going to be more difficult for the small and niche services and software providers to survive. eDiscovery shopping may become more convenient, as one-stop shops and applications become more common, but it may also become more expensive, as customers are forced to pay law firm prices and purchase programs that do everything and have a price tag to show for it.