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Fios of Portland, OR, helps law firms and legal departments tame the morass of documents generated during corporate litigation.

Company: Fios
HQ: Portland, Oregon
Founded: 1999

Management: Gerald Massey is president and CEO. He previously worked at the private equity firm Clayton, Dubilier & Rice, and before that he spent more than ten years at Electronic Data Systems, the IT consulting and services company founded by Ross Perot.

Investors: In September, the company announced a financing of $6.5 million from 3i, Banyan Capital Partners, Digital Partners, FBR CoMotion, and Fluke Venture Partners.

Business Model: Fios provides electronic "discovery" services to corporate legal departments and law firms. In legal parlance, "discovery" is the fact-finding stage before a trial takes place -- it typically involves the exchange of countless documents between the opposing sides. Fios's products, which include software and services, allow customers to collect, process, and review large numbers of electronic documents in preparation for litigation. The company claims it helps customers reduce litigation costs -- and even increase the likelihood of success in front of the judge.

Competitors: InterLegis, Attenex, iLumin

Dirt: Big-time corporate litigation involves reams of documents -- literally rooms full of boxes with every manner of records. As recently as 10 years ago, many of these documents would have existed only on paper and would be tracked by using a crude system known as Bates Stamping, where each document is hand-stamped with a number.

Improved document scanning technologies have now eliminated the need for manual stamping of paper documents, and in any case most documents are now created at the outset in a digitized format like Microsoft Word. This shift has opened an opportunity for technology companies like Fios, which says the electronic discovery market exceeded $1.3 billion in 2004 and is growing more than 60 percent annually  (http://biz.yahoo.com/bw/050906/65372.html?.v=1).

This appears to be a decent growth market and it's clearly the future of document management for litigation...but this still feels like a cottage industry to us. Fios may ultimately be a good acquisition target for a larger company seeking to expand into new vertical markets.