technology M&A

The coronavirus has already disrupted practices and prevented travel, and many companies could be staring down the barrel of heavy business interruption and lost revenue. Weathering this storm could mean an unforeseen amount of flexibility—and in the case of two major e-discovery companies, a unique collaboration.

On Tuesday, Consilio and KLDiscovery announced that the two companies were partnering to provide on-site collections during the COVID-19 crisis. Through the partnership, the two companies will be sharing resources for local collections in geographic areas where one may not have a physical presence, looking both to cut down on travel for employees as well as provide business continuity for remote customers in locations that previously would have required travel.

As usual, first the client chooses an on-site collection or a remote collection with their usual provider. If an on-site collection cannot be safely performed by their provider, the working group for that company will contact the other company for collections assistance. Once the data is collected, it is shipped back to the original company with chain of custody and appropriate paper trail, then the original company continues service like a regular e-discovery job.

According to Consilio and KLDiscovery, pooled resources include not only areas in the U.S, but international locations, including those that have been hit heavily by the virus such as China, Italy and Japan. The two companies said they welcome other e-discovery businesses to join the sharing program, but while they have received preliminary outreach from a few interested parties, nobody else has yet jumped on board.

The partnership is the idea of KLDiscovery CEO Chris Weiler, who proposed it while chatting with Consilio CEO Andy Macdonald late last week. As the two discussed operational issues that were sure to arise with the COVID-19 pandemic, Weiler says one issue stood out to him above any other.

"As I sat back and said where's the weak point in the food chain here, obviously it was collections," Weiler said. "We had already received information from all over the globe where borders were being shut down and there's an inability to fly through air travel. The only real way to do it would be either through remote collection devices, which both of the companies have, or having boots on the ground where they don't have to cross a border and can drive to a collection."

Macdonald noted that the partnership has a twofold agenda: "to keep our clients on track with their deliverables, but also to keep our teams fully employed." The latter, he noted, is an increasing concern for e-discovery companies as client operations are being interrupted as well.

"That's becoming a bigger and bigger issue for us every day: We want our employees to be in a position where they have a paycheck coming in. And this is something that will help," Macdonald said.

But it's one thing to look out for employees; it's another to actively partner with a competitor. Mary Mack, the CEO of EDRM, noted that in her time in e-discovery, the collection process was viewed as paramount, given that it's usually the first face-to-face interaction with a client on a given matter.

"Before we'd subcontract, we'd need to know their bedside manner, if you will, and how they'd present," Mack said. "But more important than that was the trust we would have to have that they would not then take that client elsewhere."

For Weiler and Macdonald, trust is the major reason this partnership works in the first place. The two CEOs have a friendly relationship beyond business considerations, and when asked whether the partnership could have worked without that relationship, both did not believe so.

"One of the big factors in all of this is, I trust Andy, Andy trusts me, we trust each other's companies," Weiler explained. "This is very much dependent on the mutual trust we have for each other, so this isn't a situation where each of us goes after the other's clients and jeopardizes the client relationships. This is strictly tactical mission."

Macdonald agreed, conceding that at first some of his sales staff "panicked" about the agreement. But from his standpoint, "part of it is being open and confident in the business you're running that you don't have to panic about having relationships with competitors."

In order for this sort of partnership to work, though, Mack noted that this trust needs to filter down to those carrying out the collections. "That background of relationship that they have and that trust that they have, that will get them through tough calls. But for the sales people and the people on the ground, they're going to need very clear lines of engagement," she explained.

For now, though, the two companies have their eyes at the immediate task: weathering the COVID storm. As Macdonald put it, "We're willing to look the other way on the competitive side for the good of the clients and the good of the industry and most importantly for the good of our employees."

Weiler agreed, adding, "When there's a global crisis like this that literally hasn't been seen in over 100 years, the need to take care of people transcends any competitive nature that you have as a business."