Deal Radar 2009: Clearwell Systems

Clearwell, founded in 2004, develops the Clearwell e-discovery platform, which allows enterprises to manage their litigation, regulatory, and corporate investigations. E-discovery can be defined as “any process in which electronic data is sought, located, secured, and searched with the intent of using it as evidence in a civil or criminal legal case.” Corporations can streamline the processing, analysis, cull-down, and review phases of e-discovery for a single case or for hundred of cases.

Clearwell’s solution can be installed and be fully operational in 25 minutes. The intelligence platform provides automated analysis of documents, email messages, and content for compliance and investigatory purposes. The platform is deployed as a 2U appliance outside the email flow, which eliminates the need for additional software, a separate information store, and the need to move mailboxes. The product indexes the data in place but does not replicate it. It analyzes both messages and attachments on any accessible directory and supports more than 400 document types. Clearwell Systems, headquartered in Mountain View, California, has priced the platform at $65,000 for 100 GB of analyzed data.

Clearwell Systems also offers e-discovery services to help customers and partners. These services have been developed and delivered by consultants to optimize and streamline all critical phases of e-discovery. Clearwell also provides services including case management, litigation readiness, and expertise both remotely and onsite, depending on the needs of the customer.

According to Hoovers, Clearwell’s competitors include Applied Discovery, a division of information provider Lexis Nexis Applied Discovery; Fios; and Kroll Ontrack. Acquired by Lexis Nexis in 1998, Applied Discovery is slightly different in its business model since its document management services include data collection, legacy media restoration, data processing, and format conversion, as well as document production and reporting. Fios is similar to Clearwell in that it helps corporate legal departments and law firms to manage and process the large volumes of information and documents that these firms collect, and ensures that their electronic evidence will be admissible in court. Kroll Ontrack’s data recovery unit oversees email and other data recovery, archive management, data erasure, and media disposal, putting it in direct competition with Clearwell.

Despite all the competition, Clearwell is growing. In April 2009, the company reported that revenues in the first quarter increased by more than 250% over the corresponding previous fiscal year and that there was a 73% increase in the first quarter compared to the last quarter of 2008. Customers include Coca-Cola, Cisco Systems, Qualcomm, J.P. Morgan, and the Office of the New York State Attorney General. The company has raised $33 million so far: a $4 million Series A from Sequoia Capital in January 2006; a $12 million Series B from Redpoint Ventures and Sequoia Capital in April 2006; and a $17 million Series C from DAG Ventures, Redpoint Ventures, and Sequoia Capital in August 2007. According to Hoovers, the company had $12 million in  sales in 2008.

According to a recent press release, Clearwell was recognized as one of top three vendors of ECA (early case assessment) in two independent surveys carried out by the Cowen Group and the International Legal Technology Association. The ILTA survey reported that 38% of the law firms that employ more than 700 people claimed to have used Clearwell in the past 12 months. But Christine Taylor on the Network Computing Blog feels that attorneys do not want to spend more money since most of them already have invested in review platforms. She argues that companies like Clearwell need to direct their energies toward educating attorneys on the benefits of ECA to gain a wider acceptance in the market.

Suggested Reading:
*Deal Radar 2009: PSS Systems
*Deal Radar 2008: iForem

This segment is a part in the series : Deal Radar 2009