Database of discovery

The evidence is in the efficiency: eDiscovery Tools founder Jo Sherman

Jo Sherman’s business idea was to trim the excesses of the lawyer’s picnic – and take some of the crumbs for herself.

The lawyer and information technology specialist spotted the potential for efficiency dividends in using powerful databases that could speed the search of large volumes of material for the legal process known as discovery. (Discovery is the pre-trial phase of a civil suit, in which each party requests documents and other evidence in the preparation of its case.)

Essentially, the databases allow huge volumes of material to be gathered, searched and culled electronically rather than printed, filed and manually wheeled around on trolleys.

Efficiency is not a big sell in the legal market because bills are charged by the hour. “To be blunt, there are good rewards for practices that are inefficient,” Sherman says. However, as client dissatisfaction mounts, common sense will begin to prevail, she believes. “Our tools are all about making litigation affordable and accessible ... keeping the costs proportionate to the amount in dispute.”

The local market for her idea, however, was too small for her company to expand beyond boutique size, so the answer was to go global quickly. United States firm Socha Consulting estimates the US market for electronic discovery is worth about $4.5 billion in 2010. “The market outside the US is probably at least half that again,” Sherman says.

Having worked for Minter Ellison, Clayton Utz and the Court of Appeal in Queensland, Sherman established eDiscovery Tools in 2003. The first commercial versions of her eDiscovery products were released in Australia in 2006, and later that same year in the United Kingdom, with the assistance of a “soft landings” package offered by UK Trade and Investment (UKTI) (see box, below left).

The profile of top-end law firms in the UK and Australia was similar in terms of technology, terminology and litigation, Sherman says, but there was also a cultural aspect to her choice. “The Poms are more receptive to Aussies in a commercial context – they have a lot of respect for Australian innovation,” she says. “There’s a more patronising perspective in the United States.”

Within two years, half the company’s revenue was earned in the UK, although this was cut to 35 per cent by the global financial crisis.

Sherman is sticking to her strategy, having picked up east-coast US and European clients who are easily serviced from the London office. The revenue, combined with that of its offices in Brisbane, Melbourne and Sydney, plus one in Vietnam, has grown by at least 25 per cent each year and will tally more than $1 million in 2009-10. A Singapore office will open this year, and a potential Paris partnership is being explored.

The company’s biggest challenge has been funding growth entirely through cash flow. “We could have moved a lot faster if we’d obtained an injection of investment funds, but we decided the risk involved was best avoided,” she says.

Overseas offices develop new business, while Australian offices support clients in different time zones through email and voice over internet protocol. Navigating the foreign tax regime has been achieved with help from UKTI.

The biggest speed bump in 2010 has been the volatility of the dollar. “Since November, we’ve really copped a beating,” Sherman says. “Hedging is another thing on the to-do list.”

Welcoming land of opportunity

Expanding overseas when the destination is in a downturn sounds foolhardy. However, it can position a company to take advantage of recessionary bargains, reducing the cost, risk and time of establishing an overseas office.

UK Trade and Investment (UKTI, the business development arm of the British government) is urging Australian businesses to take advantage of the United Kingdom’s slow recovery.

Richard Morris, the UKTI director-general for Australasia, says profitable Australian businesses can expand into the UK market and capitalise on the abundance of skilled labour and cheaper property (following a 30 per cent price slump and lower rental rates).

UKTI is promoting its high skill and technology bases in sectors including information and communication technology, energy and the environment, life sciences and manufacturing.

It offers a suite of “soft landing” packages to help companies establish themselves in the UK, with separate packages tailored to suit the strengths of 12 regions in England (including London), Scotland and Northern Ireland.

Specific support offered in the soft landing packages ranges from rent-free or discounted office, industrial, warehouse and virtual-office space, to help with recruitment, networking, supply chains and exporting, as well as banking and legal advice.

There were 1744 new foreign investment projects in the UK during the 2008-09 financial year to March – an 11 per cent increase on the previous year, and a fifth successive year of growth.

Sixty-five of these projects were from Australia, (roughly the same as China, but fewer than Canada, India and Japan).

Treasury forecasts the UK’s gross domestic product will grow by 1.3 per cent this year, and 2.1 per cent in 2011.

BRW

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