Modus Is Trying to Shake Up the Fat eDiscovery Industry

Modus eDiscovery logoIt’s no secret that most lawyers are not on the cutting edge of technology.

And while the internet has been great for many businesses, it’s buried lawyers in an avalanche of digital data they are ill equipped to manage. This has driven the growth of an entire “eDiscovery” industry, with software and services vendors of all sizes, from mom-and-pop shops to publicly traded behemoths.

First, some background for the uninitiated: In any litigation, there is a “discovery” phase where the plaintiff and defendant exchange information in the form of documents, admissions, and depositions. In a major case, it’s a slog that can last years, with millions of documents exchanged and dozens of day-long depositions taken.

Abtin Buergari experienced some of that avalanche first-hand as a legal assistant at the Washington, D.C. office of the law firm Preston Gates & Ellis (now K&L Gates). Buergari helped lawyers interface with the firm’s young ediscovery unit (which, incidentally, spun out Attenex Software, sold to eDiscovery juggernaut FTI Consulting for $88M in 2008), and became familiar with industry standard eDiscovery software and practices. Buergari worked with the tools at hand, and watched as the firm and its vendors racked up immense bills without delivering immense value. Buergari later worked at two eDiscovery vendors, and saw the same inefficient churning process repeated again and again. According to Buergari, “eDiscovery is not a happy, healthy industry. It’s a corrupt industry.”

In 2008, Buergari dropped out of law school and founded Modus eDiscovery to attack that inefficiency head-on. Modus’s main innovation is its business model. The company is a professional services provider and does not produce its own software, although, like other similar sophisticated eDiscovery providers, it does have technical staff on hand for integration and data work. However, unlike most vendors who bill law firms and their clients on a variable-cost model (hourly labor, per-gigabyte, etc.), Modus instead signs its clients up for fixed-fee managed service deals. According to Buergari, when the economy went south in 2007–08, companies started scrutinizing their legal spending more closely and realized something was wrong, and have responded very positively to Modus’s fixed-cost model. Where other vendors variable cost model incentivizes maximizing the size of discovery productions, Buergari says Modus’s goal is to reduce the amount of data. Less data means more efficiency and better alignment of client, law firm, and vendor goals.

I asked Buergari whether law firms were afraid of companies like Modus disrupting their profitable eDiscovery practices. He said he had not yet heard those complaints directly from law firms, and that “that’s life”—if law firms or their vendors don’t like efficiency, they will, ultimately, not be able to compete in the marketplace.

Even with its more modest bills, Modus is growing quickly: according to Buergari, the company is doubling its revenue every year. About a year ago, Buergari decided that Modus was ready to expand. Modus acquired Ivize, another litigation support vendor based in Georgia, which gave it a substantially larger footprint. Now Modus is set to enter the lucrative—and competitive—New York and California markets, where it is starting to hire.

Buergari is aiming high: his personal goal is to completely displace one of Modus’s major competitors. He seems confident he’ll succeed.