The legal profession is not usually associated with innovation. But one Houston computer scientist-turned-attorney saw an opportunity to reinvent a key part of a lawyer’s trade: finding and organizing the millions of documents that can be unearthed during business litigation.
“We can fix the way the law is practiced by introducing great legal technology,” says Kiwi Camara, founder and CEO of Houston-based CS Disco.
Disco hopes to ease the daily grind of lawyering by making it more efficient to sort through millions of e-mails, documents, PowerPoint presentations, and the like. That way, Camara says, lawyers like him can concentrate on evaluating the documents, not finding them.
Two years ago, Camara had a client balking at paying the steep fees—anywhere from $350,000 to $700,000—charged by a document discovery company Camara’s firm was using.
“We told them, ‘If you’ll be our first customers, we’ll take a stab at building new software,’ ” says Camara, a computer scientist who graduated from Harvard Law School at age 19.
The client agreed, and others followed. In early 2013, Camara spun out the service into its own startup, CS Disco, which announced this week that it has raised $2 million in venture capital from Austin-based LiveOak Venture Partners. The money will be used to triple Disco’s staff to 30 people with hires in engineering, sales, and operations.
The startup will also invest in software improvements, including the release of Disco 2.0. One year after launch, Disco has 60 law firms and corporate legal departments as clients in the U.S. and Britain, including three top-20 firms and two of the biggest insurance companies in the world, Camara says.
Disco offers customers a flat fee of $30 per gigabyte per month, which covers processing, early case assessment, hosted review, and an unlimited number of users. Camara says competitor software, such as Mountain View, CA-based Symantec’s Clearwell, typically costs at least $200 per gigabyte for a one-time processing fee, as well as separate charges for hosting, multiple users, and other features.
The original client that led to Disco’s founding, for example, ended up paying $70,000, a fraction of what the outside vendor wanted to charge, he adds.
“We are able to be so competitive on price because we have fully automated processing and production,” Camara says. “So we don’t have the overhead of armies of project managers feeding data into software.”
Krishna Srinivasan, a general partner at LiveOak Venture Partners who will now take a seat on the startup’s board, says the VC firm had lawyers in their network test out Disco.
“This stuff is really superior to what else is out there,” he says. “All of them mentioned how easy it is to use it, the productivity (to be gained) from it, the speed of the search.”
Software may be eating the world, but the legal sector has been largely left off the buffet table. In the last year, however, that has started to change, with entrepreneurially minded attorneys like Camara seizing on e-discovery as a place ripe for innovation.
Last May, San Francisco-based Judicata—which calls what it does “mapping the legal genome”—closed on a Series A round of $5.8 million, while Lex Machina, which is based in Menlo Park, CA, raised a Series A of $4.8 million.
Innovation in the legal sector has been slow, Camara says, because it is traditionally full of late adopters. “The legal industry is probably the last one where WordPerfect is still common,” he quipped.
And setting up a company that can tackle the problem requires not only an expertise in programming, but also knowledge of the law and what lawyers need to know. Camara says he’s put together a knowledgeable team in both areas to help him build Disco, including Barry Hagan, former CIO at Madison, WI-based Sonic Foundry (NASDAQ: [[ticker:SOFO]]), a media software company purchased by Sony (NYSE: [[ticker:SNE]]) in 2003, and Gabe Krambs, who co-founded the San Diego-based TrustEgg.
Camara estimates the e-discovery software market to be worth about $1.6 billion, with 16 percent annual growth. So, while he’s still a partner in his law firm, he’s concentrating his efforts on expanding Disco.
“What we’re doing is freeing up lawyers to win cases,” Camara says.
