eDiscovery Daily Blog
eDiscovery Markets Are Growing and Legal Tech Investments Are “Skyrocketing”. So, Who’s Buying?: eDiscovery Trends
No, I don’t mean who’s buying the drinks. Though the growth of the markets and the growth in legal tech investment is certainly worth celebrating (especially for those who’ve seen their investments pay off). ;o) But what I’m asking is: who’s buying the technology?
First, the investment part. As discussed earlier this week in Legaltech News® (As Legal Tech Investments Skyrocket, Startups Combat Tech Adoption Perceptions, written by Victoria Hudgins), it’s been a record-setting year for investments in legal tech, with the industry reaching the $1.2 billion threshold this year for the first time, according to Bob Ambrogi’s excellent LawSites blog. And, that was as of the middle of September!
Hudgins has some excellent quotes from several C-Suite execs from legal tech companies that have received funding from investors and part of the tone of the article is the challenge associated with convincing investors that tech-averse lawyers will really buy the software. As an example, Litify chief revenue officer Terry Dohrmann, whose law firm management software company raised $2.5 million in 2018 and $50 million last June, noted that there are differences in pitching legal tech to investors.
“The short answer is yes, there is a difference,” Dohrmann said. “A lot of that is driven by the universal acceptance that law firms are a little behind in adoption of technology.”
So, it’s the law firms that are fueling this growth in the market? Maybe partially, but I’m not so sure they are the major factor.
As we’ve covered many times before, Rob Robinson on his terrific Complex Discovery site tracks the eDiscovery specific mergers, acquisitions and investments here (he’s got them all the way back to 2001). By my count, we’ve had 44 such transactions so far this year (that we know of), with a total estimated amount (at least where amounts are available) of over $560 million, just for eDiscovery company investments. And, that doesn’t include two investments of over $2.5 billion which have been announced, but not closed. So, that $1.2 billion threshold could be shattered before year’s end. Crikey!
Also, as we covered just last week, Rob presented his worldwide eDiscovery services and software overview for 2019 to 2024 on Complex Discovery last month and his annual “mashup” of industry estimates shows the eDiscovery Software and Services market is expected to grow an estimated 12.93% Compound Annual Growth Rate (CAGR) per year from 2019 to 2024 from $11.23 billion to $20.63 billion per year. Here’s the combined eDiscovery markets for 2019 to 2024, represented graphically:
Of that, the eDiscovery Software market is expected to grow at an even larger estimated 13.05% CAGR per year from $3.39 billion in 2019 to $6.26 billion in 2024, growing about 85% in five years. Here’s the eDiscovery software market for 2019 to 2024:
Which leaves the eDiscovery Services market, which is expected to grow at an estimated 12.88% CAGR per year from 2019 to 2024 from $7.84 billion to $14.37 billion per year. Here’s the eDiscovery services market for 2019 to 2024:
Charts courtesy of Complex Discovery.
So, who’s buying? Seems a lot of the technology is being purchased by the service providers, who are (in turn) using it to provide services to corporations, law firms and government entities, who are buying those services. Obviously, corporations, law firms and government entities are buying some of the technology as well and law firms providing some of the eDiscovery services. But, it seems like it’s the service providers who have the biggest impact on the growth of the market. Do you agree?
So, what do you think? Will the growth of the market and the “skyrocketing” investment in legal tech continue? Please share any comments you might have or if you’d like to know more about a particular topic.
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