The Consilio press release says that the combined company will have more than 2,500 employees, 14 data centres and 23 document review facilities in 11 countries, offering information governance, risk management, eDiscovery and document and contract review services.
Few dissent from the view that electronic discovery, and the growing number of business services which depend on eDiscovery skills and tools, will continue to grow, and even more quickly outside the US than in it with the spread of regulation, the growth in International trade, and the increasing need to meet cyber security and data protection demands. As companies become increasingly global, they expect the professional service providers to march with them and to be able to meet their increasing demands.
Andy Macdonald has been CEO of Consilio as it went through a series of strategic acquisitions, including Huron Legal, Altep and EQD. He will be CEO of the combined company, whose name has yet to be decided.
I spoke to Andy Macdonald, looking for some detail beyond the facts and aspirations set out in the press release. Two specific points had already emerged from an interview he gave to Bloomberg Big Law Business: one was that “Consilio’s clients will benefit from Advanced Discovery’s depth of product offerings and that Advanced Discovery’s clients will benefit from Consilio’s geographic reach”. The other is that there are significant differences in the primary client base of the two companies with less than 5% of their clients overlapping.
The main driver, Andy Macdonald said, was the needs of clients, with specific examples in Germany and mainland China. Their message might be summarised as “we need you to grow with us”.
Advanced Discovery earns a higher proportion of its income from the data side of eDiscovery than Consilio does. Andy Macdonald sees opportunities for the merged company to sell a wide range of services on the back of the processing of data.
In addition, he said, Advanced Discovery has software called Riskovery designed to help corporations focus on compliance and risk management – that is, functions which should take place prior to any specific eDiscovery exercise. Once engaged with the client for these purposes, the merged business has opportunities to offer to do more with the organisation’s data, both in terms of the software and services to be applied to it and in terms of the geographical spread.
With scale comes the ability to concentrate on certain technologies. Both companies are heavy users of Nuix for processing and Relativity for review. In addition to an obvious saving on licences, the merged business will be able to focus its internal skills and training in these tools, extending their benefit across a bigger team.
There is more to this than just cost-cutting. I have recently interviewed senior people at Epiq, the other major product of a merger who, when asked to identify the major benefit from investment said “more robust security and privacy tools”. Unsurprisingly, perhaps, Andy Macdonald gave exactly the same answer to my question about the benefits of size.
There is more to a services industry than technology. It also becomes easier to attract talent – as Andy Macdonald put it “people like to work at growing businesses”.
One of the things I learnt in my conversation with Andy Macdonald was that both Consilio’s and Advanced Discovery’s largest offices by headcount are the UK. Advanced Discovery last week opened a data centre in Ireland which will bring expanded opportunities as the UK leaves the EU, potentially putting at risk the UK’s status as a compliant home for EU data following the implementation of the General Data Protection Regulation in May.
I asked Andy Macdonald what this merger says about the market generally which encourages an investor to stake so much in it.
The industry is maturing to meet the demands of its clients, Andy Macdonald said. Major clients with significant data-related problems take comfort from using a large and well-capitalised services provider and one which is capable of development and investment to meet clients’ growing needs. A specific example is Consilio’s preparations for the General Data Protection Regulation which has prompted a very significant amount of investment at Consilio which smaller providers may not be able to match. The merger brings the opportunity to spread that investment across a wider base.
One particular point drives this focus on scale, and that is the demand for client audits. Until recently, Consilio had faced only a handful of those but has now undertaken 67 audits on its offices and data centres and employs five people whose sole job is to deal with them.
This merger is of a different kind to the many which we have seen recently. It opens a very large gap between the two biggest players, Epiq and Consilio + Advanced Discovery, and it will be interesting to see the effect on smaller providers as they jostle for position among themselves to offer efficiencies and the security available from the big players.