While a larger focus on M&A is welcomed by some e-discovery providers and practitioners, it may strain staffing and client budgets.
U.S. antitrust enforcement is tightening, and e-discovery practitioners and vendors that have positioned themselves in the M&A market are expecting an uptick in work. But the influx of time-consuming and complex M&A discovery may drain resources for other corporate e-discovery matters.
To be sure, it's not just President Joe Biden's picks to lead antitrust enforcement in the U.S. Department of Justice or Federal Trade Commission that has heightened the e-discovery community's work expectations. Stiffer and more complex antitrust enforcement is also signaled by Biden's July 9 executive order on promoting competition, said Joey Seeber, CEO of alternative legal service provider (ALSP) Level Legal.
"There's going to be a lot more scrutiny not just on the monopoly power or the lack of competition but the data and the privacy of data," Seeber said. "[In] the executive order a couple of weeks ago the Biden administration linked privacy to competition. It's a backdoor way to regulate privacy because they have not been successful in federal legislation. That will make [the work] very complex."
Seeber said he anticipates corporate clients' mergers and acquisitions will be under intensified scrutiny and there to be challenging second requests, a process where an investigating agency requires additional information to complete its competitive harm analysis.
Some in Big Law that manage discovery during M&A deals are also anticipating an uptick in work.
Mayer Brown counsel Meytal McCoy, whose practice includes antitrust merger clearance before the DOJ's antitrust division and FTC, noted that the emergence of ephemeral messaging and the U.S. government looking for more data has upped the workload for those involved in M&A discovery.
"You kind of have that big confluence of events," she said. "One, you have to be more creative technologically with the devices we're looking at—there's more work on that side. And there's just more volume of data and more places within companies we will be finding data or information. So all of that leads to more work."
To keep up with the anticipated demand, Big Law's antitrust lawyer hiring is rapidly increasing. Vendors are also considering onboarding additional hires to keep pace. Seeber, for instance, said ALSP Level Legal may add additional team leads and managers to oversee an upswing in assisting law firms analyzing regulators' requests and e-discovery needs. However, finding contract attorneys to work on these projects is becoming increasingly difficult, Seeber noted.
"It's supply and demand," Seeber said of hiring contract attorneys. 'There's more work to go around [but] with the same amount of attorneys." It's the tightest job market he's seen in a decade, he added.
But while some in e-discovery are anticipating a boom in work, others view tightened antitrust enforcement as an impediment for M&A transactions, noted Ashish Prasad, vice president and general counsel of e-discovery, tech and data management provider HaystacklD. "One thing that is often said is that this type of enforcement activity might reduce corporate merger and activity generally over time and the reduced mergers [and acquisitions] activity could lead to less work for alternative legal service providers and e-discovery," Prasad noted.
However, Prasad added, "I don't see it that way." Instead, he sees a strong economy and low interest rates keeping M&A deals and legal fees flowing.
"I think the conditions fueling the strong mergers and activities across the economy will continue, and therefore lead to strong mergers and acquisitions independent of the Biden administration's enforcement priorities at least for the first few years," Prasad said.
However, stiffer M&A enforcements and additional discovery work for those transactions could syphon opportunities from other discovery matters.
Morris James partner and e-discovery practice group lead Ian McCauley said his discovery work for corporate litigations, which doesn't include M&A deals, might dry up as organizations focus their legal spend on lengthier antitrust investigations and second requests.
"If you think about it, if corporations are spending money on the investigation side they may be less apt to litigation," said McCauley. "There's less money in the budget for that, that's tangential but ... if the government starts going after antitrust there's less money for litigation."
Reprinted with permission from the July 26, 2021 edition of Legaltech News © 2021 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.