FTI Consulting Takes it Up a Notch, and the Trend Continues …

FTI Consulting, the business advisory firm that owns Ringtail and Attenex among other document management software, said Wednesday it planned to hold an initial public offering of its technology unit, raising $600 million to $700 million through the sale of a minority stake. It expects to spin or split off the rest of the unit within a year after the offering.

FTI’s technology segment provides law firms, companies and other clients involved in lawsuits or investigations with services to manage electronically stored information, such as e-mail and voicemail.  Its other businesses include advising companies on corporate restructurings and bankruptcies, and providing forensic consulting. 

The press release can be found here:

http://www.fticonsulting.com/web/about/pressreleases/311/FTI_Consulting_Inc_Announces_Intention_To_File_An_Initial_Public_Offering_For_Its_Technology_Business.html

We assume it is another step in FTI’s business plan to bulk up its e-discovery solutions, much like Deloitte Financial Services has done (you can find a link to our previous story on Deloitte Financial here: http://www.theposselist.com/home.php?page=information&id=39)

For FTI, Attenex currently serves as the on-premises standard for many major companies and they boast a base of over 100 total on-demand corporate customers.  In addition to participation in the enterprise in-house solutions community, FTI maintains a partnership program called Attenex Advantage™ which includes twenty-three of the e-discovery service providers across the globe.  Both Attenex and Ringtail come in multi-language versions.

What this all means is that FTI has the ability to directly address the demands of the corporate marketplace, as corporate customers increasingly want both an on-premises solution to save time and money and the flexibility to use the same technology through a hosting partner. 

It is a trend we have seen developing the last 2 years, highlighted this year in the presentations at the LegalTech 2008 conferences in New York and Los Angeles where for the second year in a row we saw more e-discovery company presentations and e-discovery exhibitors over that of placement agencies, plus more corporate attendees over law firm attendees.  What you are seeing is a stronger trend of  e-discovery companies (and the larger placement agencies) going straight after corporations, skipping the law firms.  It may be a direct result of the law firms quashing the agencies.  Some e-discovery pundits predict the trend will see a majority of contract attorneys hired directly through these e-discovery companies or corporate clients and not the agencies or law firms, and so it will be the law firms who will be cut out of the profitable e-discovery loop.  In the last 5 months we’ve had emails from 230+ contract attorneys who have told us they have done just that:  hired on with e-discovery companies.

How?  Why?  Law firms are squashing the agencies to bring down costs to their clients and to improve their own profitability.  Taking the D.C. market as an example, we saw this a few months ago when Howrey changed its rate structure to agencies.  Thanks to some cooperative law firms and agencies, we’ve seen a number of RFPs (request for proposal) and the charge rate to agencies from law firms has dropped which is why D.C. (as an example) has seen $32/33 an hour projects popping up rather than the standard $35 an hour rate.  The agency eats into its margin and/or knocks down the hourly rate to contract attorneys.  For our primer on agency pricing and the bid process go here:  http://posselist.wordpress.com/2008/06/21/welcome-to-our-posse