In what is by far its biggest acquisition to date, Litera Microsystems has acquired UK-headquartered document comparison rival and market leader Workshare, in a move that will enable firms that currently use both suppliers to consolidate their relationships and simplify the drafting process in line with other recent ‘best of breed’ acquisitions.
The acquisition is understood to be driven in large part by Litera’s private equity owner HG (formerly HG Capital), continuing the work of former owner K1 Investment Management, which in 2016 began piecing together leading companies from across the drafting experience to provide users with a single desktop experience. Those acquisitions include Microsystems, XRef, Litera, The Sacker Group and now Workshare.
The acquisition completed today (9 July), and while many of the details are still being finalised, we can tell you that Workshare’s chief technology officer and founder Barrie Hadfield will be joining the new company to help evolve the merged comparison technology. Workshare’s CEO Michael Garrett, who joined in October 2018, will be assisting Litera’s CEO Avaneesh Marwaha and HG with the integration, although his long term role is as yet unclear.
Workshare’s tech stack includes Compare, Secure and Transact. There are overlaps between the first two and Litera’s existing products Metadact and Change Pro Premier. Transact, Workshare’s software to help deal teams run closings, is unique to Workshare. It has been gaining traction in the UK (clients include Fieldfisher and Clifford Chance) and Australia (Gilbert + Tobin) and it seems likely that Litera will now drive adoption of Transact in the US.
Speaking to Legal IT Insider about the acquisition, Marwaha said: “This combination will give the end users a simplified way of working and adds huge value: the more we can bring together the best of the breeds, the more we feel our customers will benefit.
He added: “Workshare brings in some technology and IP in areas that we have gaps and this will speed up the process of filling those.” Pressed on what the gaps are, Marwaha said: “We’re going to work through it all and come to market with what the end result is going to be . The gaps weren’t huge, but enough for us both to say ‘this makes sense and we can work together in a better way and be smarter.’ We’re going to be doing a full analysis and, just as with previous acquisitions, making sure the end result is the best possible result for our customers.”
Litera is headquartered in Chicago and has a presence in London but the acquisition of Workshare will give it a far greater presence in the European market and Marwaha said: “Our strategy is to be a truly global vendor and Workshare helps us to achieve that.”
In terms of the product overlaps, Marwaha told Legal IT Insider: “We’re going to spend two to three months looking at the overlap of comparison and secure and our goal in Q3 is to come out with the direction we’re taking the product in those areas.”
The acquisition has been welcomed by Linklaters, a client of both vendors, where global chief operating officer Matt Peers said: “As far as I’m concerned, the more consolidation of top suppliers we see, the better.
“Our focus at Linklaters is to provide our lawyers with the technology they need to focus on their clients and deliver the highest value work. Increased integration between these technologies, especially when we can source from a single supplier, is key to helping us keep up with the pace of change and demand the industry requires. We have been using products from both Litera Microsystems and Workshare for years and this combination is a very positive step from our perspective.”
He added: “Consolidation might have a long term impact of pushing up prices but the amount of time and money that’s wasted today because of inefficiencies and trying to get solutions to tie together is often unrecorded, misunderstood and ignored.”
Marwaha is at pains to add that customers of compare and metadata products don’t need to fear that they will be sunsetted. “As with previous acquisitions, our goal is to make their experience seamless and to make sure that any pain is our pain and not theirs. We’re not making any decisions quickly and we’re making sure we do our research,” he said.
The integrated Litera desktop has been gaining significant traction with clients wins including Clifford Chance, K&L Gates and Neal Gerber Einsenberg.
The acquisition of Workshare points to a wider trend towards consolidation in the legal tech market, where law firms interact with multiple product point solutions but the appetite is for less complexity, few logins, fewer systems to interact with, and better integration.
If you look at our UK Top 200, the drafting sector that Litera, Workshare and DocsCorp stands out for being one where law firms are likely to have two, or even three providers.
With so many other demands now placed on resource and time–strapped IT teams, it is not surprising that they are anxious to simplify the process. But choice brings competition and customers will need to be assured that the move towards consolidation – particularly given that it is being driven by private equity – will not drive up costs and drive down quality.
While Peers is a fan of consolidation for the reasons set out above, he also warns: “I am a fan of competition and don’t think consolidation to a single vendor in any one service offering is a good thing, when this happens it tends to be a disaster for the customer.”
Speaking to Legal IT Insider, Marwaha says that what this acquisition opens up is not the ability to extract more money out of existing customers, but to expand the combined company’s reach and market share.
“We’re not looking to go to the same customers and squeeze another dollar out of them.” He says. “Our approach is to offer value, and as workflow specialists we’ll be able to touch a broader base of customers. We want to be able to provide our desktop solution globally so its in the hands of every lawyer. Legal technology needs to leapfrog from a point solution to a platform. We want to be an open platform that means you can work where and how you want.”
This accords with Workshare’s long term goals, Hadfield says. “This is always what we wanted to do in terms of helping the customer with their workflow and accelerating their drafting process. I’ve always believed that technology’s job is to not exist, because it does the job so amazingly well. All of this consolidation and working together is a natural progression.”
The market will be questioning what the driving factors for selling are for Workshare, which has in the last two years lost market share to DocsCorp. When Garrett was appointed last year, that appointment is understood to have been led by Workshare’s private equity backer Scottish Equity Partners, said to have become impatient at the rate of growth at the company, which they injected £20m into in 2012.
However, Hadfield told us: “We’re in the strongest position we’ve ever been in and have just come from a record breaking quarter with revenue growth of 40%. We’ve smashed profitability. A lot of that has resulted from the transformation plan that Michael put in place over the last few months. The internal vision is to create sustainable growth and I feel incredibly proud that we’ve delivered on that vision, which has helped where we’ve got to today.”