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Tanking Economy Begins to Affect E-Discovery Firms
The National Law Journal
January 28, 2009
Economic belt-cinching has hit some electronic discovery firms, prompting layoffs and rumors of realignments.
Rumors of recent layoffs at i365, a Seagate Technology company, were confirmed by a spokesman who declined to provide details.
"We're not able to disclose any specific numbers about our recent realignment," said John Sun, spokesman for i365, a data retention and recovery company.
The firm has "periodically undertaken reorganizations and consolidations in order to capitalize on synergies across the company," Sun said. The company "recently realigned our engineering teams" and "eliminated some duplicative support and administrative infrastructure across our broader portfolio," he said, but refused to give specifics.
Sun added that it does not expect "any major changes in the next year."
Seagate, the hard drive-maker, announced in mid-January that it was laying off 3,000 workers, or 6 percent of its global workforce. It did not disclose how many were related to the i365 firm's document control division.
Electronic discovery is an emerging market in the field of data storage, archiving and recovery of electronic data such as e-mail and voicemail to assist companies and law firms in responding to lawsuits and government investigations.
At Electronic Evidence Discovery Inc. (EED) of Kirkland, Wash., there has been a "tiny, tiny" number of layoffs in the last six months, 15 employees out of a 300-member workforce, according to Dennis Palmer, a company spokesman. "But we're backed by the $30 billion Welsh Carson Anderson & Stowe, the largest private equity firm focused on information business services and health care," Palmer said. "We'll be here forever," he added.
Palmer said the economic downturn has forced other firms in the industry to shut. Some have come to EED in the hopes of a buyout, but when it didn't happen, they went under, he said. Palmer declined to identify the firms citing confidentiality agreements.
But he warned, "If I was a law firm with a civil suit that involved e-discovery, I would want to know the firm I gave my data to would be around until the end of the lawsuit. If it is not, you have to cram the information into someone else's system or you may lose it altogether," he said.
Kate Holmes, a spokeswoman for Attenex Corp., a Seattle-based e-discovery software firm, said there have been no layoffs at her company. SPi, an Austin, Texas-based electronic discovery firm owned by ePLDT, did not return calls and e-mail seeking comments on rumors it may be shedding positions.
