2009 Predictions

Monica Bay of Law Technology News has asked for some 2009 predictions for the ED space. Here are mine:

I agree with Monica in her post on EDD Update that some vendors will fail but I have a different explanation for why that will happen.  It seems to me that in today’s economy, big companies thrive and small companies flounder and that is not based on not having a poor business plan or giving poor service. Let’s face it, there is so much ED business that marginal litigation support companies have survived for years and will continue to survive. Why? Because contracts are awarded on the basis of personal contacts or poorly managed RFP procedures or just plain old misinformation. (more on that in a moment)

 

No, the companies that will fail will do so because of plain old economics. Some companies are living on investment capital or vc money and not actual business income. Those people will see the capital run out and the vc money dry up and they will fall by the wayside no matter how good their business plans, their execution or their staff.  If you’re not making money by bringing in projects you’re doomed. 

 

And the big companies which are doing acquisitions will close up some of the folks they buy because they don’t meet the corporate business plan. Here’s a good example from right here in New Orleans. Ricoh buys Ikon and then closes roughly 25 local Ikon shops, some of which are making money, including the one here in NO. The local Ikon shop is immediately purchased by Digital Legal, a regional lit support company with an office here. So the business being generated by that shop is still being done and the income is going to someone else because Ricoh doesn’t see themselves as a “street” vendor.  Two different business plans, both successful: one sees opportunity in the local market and one doesn’t.

 

Ralph Losey mentions the litigation boom that he sees for 2009. I agree but that boom will profit only the biggest companies. Big lit is being handled by big law and big law is using the big lit support companies.  Marketing is a negligible factor.  A regional company like DLS has no possible way of competing against Kroll or KPMG or Lexis, a fact of life we private consultants have known for several years. The regional market will consolidate into several key players in each market just as private consultants are dwindling to a handful as more and more of “us” join the big companies or a GC office. I predict in another year each region of the country will have one or two major regional players as local mom and pop shops lose business while George Socha and Craig Ball will be the last two private consultants left on the national scene.

 

So what is the key issue? Monica hit it on the head when she said ” …. educate the profession (read: talk in plain English).”   There’s the problem I think.  Right now we have too many people who understand each other talking (mainly to each other) in geek speak mode while the majority of attorneys don’t understand what we are talking about and don’t know how to ask good questions of vendors or explain themselves to judges. (I don’t like to speak for someone else but I seem to recall that Mike Arkfeld pegs it at 90% or more) Isn’t this really the biggest take away from J. Grimm’s finding in Victor Stanley, that we’ve erected a technical Tower of Babel that only an expert can understand and explain?

 

So the key is education. Ralph mentions law school courses and of course that is important but they won’t have any impact for 3-5 years. What we’ll see next year is more immediate impact educational efforts; The E-Discovery Training Institute sponsored by the Sedona Conference at Georgetown Law School, the ALSM standards effort, regional conferences like the Thomson LegalWorks, the expanding efforts by EDRM .. all designed to educate people now.  That I think will have be the biggest growth area of 2009 and have the biggest impact on the profession

 

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