NEW YORK and REDWOOD CITY, Calif., May 31, 2011 /PRNewswire/ — As companies look to streamline their legal review processes and reduce costs associated with e-discovery, Ernst & Young LLP’s Fraud Investigation & Dispute Services (FIDS) practice has combined with Cataphora Legal, a division of Cataphora, Inc., a leader in the management of digital communications. The combination enables Ernst & Young to further enhance its ability to serve and extend additional value to its clients, while allowing the seller, Cataphora, Inc., to focus on selling large-scale data analysis software to the Fortune 1000. The deal closed May 27, 2011, and terms were not disclosed.

Cataphora Legal’s senior leadership team, including Jonathan Nystrom, Executive Vice President, and Richard Oehrle, Chief Linguist, will be joining Ernst & Young LLP and will remain in similar roles. An additional 17 members of the Cataphora Legal team of industry experts, based in Redwood City, CA; Chicago; Washington, DC; New York City and Mumbai, will join the Ernst & Young organization.

“Cataphora Legal has created a one-of-a-kind, innovative model that truly represents the future of discovery and legal technology globally,” said Brian Loughman, Americas FIDS Leader, Ernst & Young LLP. “This addition is part of Ernst & Young’s growth strategy to continually enhance our fraud analytics offering and broaden our relationships with General Counsels and law firms. It also enables us to expand our client base and win new competitive engagements through a highly differentiated offering.”

Valuable Insight, Defensible Results

Cataphora Legal’s patented technology and proprietary methodology, executed by trained analysts, increases the effectiveness of document review while reducing its costs — up to 70-80 percent compared to traditional legal document review. The objective is to model customized attorney decisions that result in both the broadest recall — inclusion of relevant documents — and precision — exclusion of false positives. The methodology enables attorneys to create rules that consistently categorize documents.

The results are then tested and improved through statistical sampling techniques, a key innovation in the Cataphora Legal methodology. They are also measurable, transparent, and defensible — critical elements that align with Ernst & Young’s approach to providing information services to clients.

“We believe we have built the most established, scalable and defensible e-discovery technology and process in the industry,” said Elizabeth Charnock, Chief Executive Officer, Cataphora, Inc. “The time is right to sell our e-discovery business to the Ernst & Young organization so they can continue to grow it, enabling us to focus on our core business of selling software to meet the big data analysis needs of Fortune 1000 enterprises and government. Best of all, we know our e-discovery customers are in excellent hands with Ernst & Young and we believe the combined cultures and operations to be extremely complementary.”

The work Cataphora Legal does fits seamlessly into the analytics portion of Ernst & Young’s end-to-end discovery services processes and methodology. Ernst & Young’s review platform combines advanced analytics, reporting and data visualization tools with solid processes and highly trained professionals, making it a truly differentiated offering in the market.

Growing Market, Meeting Needs

According to industry researcher Socha-Gelbmann, the e-discovery market was more than $4 billion in 2010 and is growing at over 25 percent annually. As growth continues, there is a greater need for full-service e-discovery and document review providers.

Jonathan Nystrom, Executive Vice President of Cataphora Legal, said, “Clients today are demanding best-of-breed solutions that can identify, manage, and measure increasingly large volumes of complex information. This is an exciting time for the industry, and an even more exciting time for our clients who will benefit from Cataphora Legal’s advanced processes and technology and Ernst & Young’s capabilities and commitment to quality.”

About Ernst & Young’s Fraud Investigation & Dispute Services

Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to achieve your company’s potential. Better management of fraud risk and compliance exposure is a critical business priority — no matter the industry sector. With our more than 1,000 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide. It’s how Ernst & Young makes a difference.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 135,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com.

About Cataphora, Inc.

Cataphora, Inc. develops innovative software technologies for finding patterns and anomalies in digital communications. It has honed these technologies over the course of nearly a decade of analyzing huge volumes of data for large organizations. The technology provides the intelligence necessary to tackle the challenges associated with Big Data, discerning context across multiple sources of electronic data such as emails, documents, IM, phone logs, text messages and social networks. Founded in 2002, Cataphora, Inc. has been awarded many patents and is headquartered in Redwood City, California. For more information, please visit www.Cataphora.com.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. This news release has been issued by Ernst & Young LLP, a member firm of Ernst & Young Global Limited serving clients in the US.

SOURCE Ernst & Young