Andy Jimenez, CEO and President of FRONTEO USA (formerly UBIC North America), is based in San Francisco and has been in the legal support field for 20 years. FRONTEO is a leading provider of e-discovery technology and managed review support services. MCC spoke with Mr. Jimenez about the company’s growth and new direction after multiple acquisitions, their recent rebranding, and changes coming to the e-discovery and legal technology marketplace.
MCC: Please provide our readers with a little bit of information about your background and your role at FRONTEO.
Jimenez: I founded a company called Evolve Discovery in 1997 and ran that for about 18 years. We were acquired by UBIC about 14 months ago. Recently, we re-branded globally as FRONTEO where I am the CEO and responsible for U.S. operations and the vision and direction of the global legal business unit.
MCC: It’s been a busy year for FRONTEO on the new product development front and also in many other areas. You’ve done some re-branding, saw changes in leadership, and made another acquisition. Give us some idea of what the strategy was going into the year and how it’s played out for you?
Jimenez: This year integration was our priority. After our acquisition in 2015 (Evolve Discovery), during the first quarters of transition, we operated as an autonomous business unit. Most of the year was spent getting acclimated to operating as a public company, jousting with auditors to meet SOX compliance standards and learning how to take our private company into the public realm. Fully integrating TechLaw Solutions and EvD Inc. was step 1; then merging it all together with UBIC was step 2 and finally rebranding to FRONTEO was step 3. During this process we realigned our resources to offer more cross border support, specifically to Europe and Asia.
So, in 2016, once we got our bearings and understood our resource structure, we then realigned ourselves to support the global business. The second half of the year, we turned our focus back to generating new business to support our growth strategy under the FRONTEO moniker. We continue to report healthy CAGRs as we anticipated, and we’re on plan.
MCC: You recently acquired Essential Discovery. What are the benefits of that acquisition?
Jimenez: The biggest cost for discovery is the expense of review. We have built some pretty massive review centers on the East Coast but felt we could still grow our footprint in the West further. Essential Discovery had a really good profile and didn’t have overlapping clients with competitive issues, so it just turned out to be a really good fit for us.
MCC: It seems counterintuitive to observers that in an area that’s so identified with technology, that the people piece of it, the management piece, continues to be not just important, but from what we are hearing, almost increasingly important. Is that true, or is that overstating it?
Jimenez: It certainly is important, even when we’re using technology such as predictive coding or analytics, it’s the people that really make the difference. At the end of the day, the attorneys need to make good decisions on documents, so in addition to technology, having a really solid process and certified professionals governing the review of documents before they go to outside counsel (or in conjunction with outside counsel), is a critical component of what we do. As we’re getting more and more engaged in review of documents, we are having an impact on the entire legal strategy and how cases are presented. It is critical to show excellence there and so yes, it is absolutely important to get the people part right. I think we have excelled at bringing thought leadership into FRONTEO.
MCC: There seems to be a lot of consolidation in the market, and I would expect there will be more. What do you see coming in the year or years ahead?
Jimenez: I see it. I’ve put together presentations for our shareholders on what I believe is going to happen in the future. Part of the original strategy for joining FRONTEO reflected that climate of consolidation happening in the legal market and we wanted to be an early mover. Continued consolidation is inevitable, and it has been accelerating. We were really looking to align ourselves with the proper partner. One with international footprint so we can continue that growth for our business. There are a few things in the software space that are going to change and it will have a pretty large impact on how documents are processed. I expect to see an impact in the next 12 to 18 months.
MCC: Technical developments or corporate developments?
Jimenez: Corporate and technical developments. The largest provider of the discovery software in this space is a company called kCura, and they make software called Relativity. They’re rolling out Relativity on a platform that is really going to change the face of how service providers deliver service to clients. Today, we all have massive data centers and do all of our own security and have all these different resources managing it. Relativity is going to put it into a cloud-based environment, and it’s really going to level the playing field for all providers. Today, only the largest providers can say they’ve got gold-standard data centers. Tomorrow, when Relativity is fully operational in the cloud, one guy in a room can say he’s got a gold-standard data center, just like the big guys do. It will rebalance the industry.
MCC: Are the law firms receptive to a cloud-based solution?
Jimenez: Anyone that is using Relativity now, or anytime a law firm is working with an outside provider, they’re using Relativity in the cloud. Relativity is building it up within a Microsoft Azure infrastructure. From a security standpoint, that should probably make law firms more comfortable, right? So not only is it taken care of, but Microsoft is going to be managing the security. If I was a buyer or consumer, I would feel more comfortable.
MCC: That seems like a huge change coming. What are the priorities for FRONTEO in the year ahead, including getting the acquisitions accustomed to being a public company?
Jimenez: Cloud is indeed a huge change, and we’re embracing it as we come up on our fifth year as a public company. We’re now moving toward increasing SOX compliance. We have a lot more compliance officers on staff and it’s been a significant and strategic shift. Becoming a public company and meeting all the regulatory standards are not for the faint of heart.
That said, my sense is that 2017 is going to be a bit more of the same. We have continued to grow at a very good pace. We also officially opened up our UK office in London. We’ve had a data center there and periodically people have worked out of the UK to support clients, but now we have full time staff on the ground and we have a small team that we expect to expand through the first couple of quarters in 2017. Now we are in a position where we are clearly a global company and as they say, the sun never sets on FRONTEO.
MCC: It appears that being a public company helps you scale. FRONTEO seems extremely strong in foreign language, especially, since you have language capabilities that a lot of people do not have. Your language capabilities seem to be a real differentiator for you. Do you look at it that way?
Jimenez: Our technology, our software, specifically our review processing software, absolutely was built from the ground up to address CJK [Chinese, Japanese and Korean] and allows us to handle a lot of proprietary formats in the Asian markets. A lot of the corporations out there had built their own email systems and U.S.-based software just treats it as an exception, or ignores it, so there’s a huge advantage there for FRONTEO to differentiate in the market on this. Also, with the indexing of CJK documents, most of the U.S. tools and indexes are at a disadvantage. We’ve done a really good job building bigram and morphological search into our Asian tool sets. Beyond that, the biggest differentiator is not just the technology, but having a local presence in those key markets. It’s is a real cultural advantage.
There can definitely be a lot of anxiety, especially for Asian corporations who are not serial litigants. Perhaps this is the first time they have been investigated by the DOJ or maybe the first time they are facing any type of investigation. It’s shocking, it’s terrifying and FRONTEO, having a great deal of experience and being able to relay the best way to address those things in the native language with native people, is really important. We really pride ourselves on being a global company with a local presence for local delivery.
MCC: With the current global enforcement environment, so many countries getting into the act and patterning after the FCC and the DOJ, that can only get more complicated, more data intensive and you can provide much more value for the companies that are struggling with that mightily. Do you agree or disagree? Please provide our readers with your perspective.
Jimenez: Absolutely. We are in an environment where things have to change. Asia and Europe are probably as much as five years behind in terms of their preservation behavior and litigation readiness. How can companies minimize costs and make sure they can be defensible quickly and responsibly? The human element is key. It’s going to be the biggest step for us over the next few years. We take very seriously our global presence and our global delivery at a local level. As the world continues to shrink and borders continue to blur, I think we are readying ourselves to be very successful, to provide great service, and great service delivery for our clients on a global scale.
MCC: Anything else you want to say about FRONTEO?
Jimenez: The FRONTEO brand is supported by a wonderful motto – Moving Towards a Brighter Future. I think our company is in a great position to continue to grow and innovate in the legal business services space. It’s core to who we are. But we also have another innovative arm to the business that is focused on software development, specifically artificial intelligence (AI). So when we combine all this with our amazing people and loyal clients, we’re on track to continue to innovate on best-in-class technology, deliver industry-best services and have a lot of fun doing it!
Published December 6, 2016.
