The legal business isn't usually called a hotbed of high-tech activity -- just think of those judges' robes, those legal pads, those leather-bound reference books of case law.
The goal is to use multimedia sparkle to win over judges and juries, as in cases like these: A 48-year-old man died during quadruple heart bypass surgery. His family sued the hospital and the doctors who performed the operation. Lawyers for the hospital asked FTI to develop a series of 3-D animations to defend the doctor who was responsible for oxygenating the blood during the surgery. The animations used simple colors and motion to explain the complex process for telling how much oxygen is in the blood and at what point the blood needs to be "recharged."
McDonnell Douglas Corp. was ordered to testify before the National Transportation Safety Board on the design of its DC-10 plane that crashed at the Sioux City, Iowa, airport in 1989. The concern was that the design of the jet's hydraulic system was inadequate. FTI was commissioned by the company to produce an instructional video on the design of this system, which operates the jet's flight controls.
A fully loaded concrete mixing truck rolled over on a roadway. Witnesses at the accident scene said the truck was speeding. FTI examined police accident reports and photographs and then videotaped a recreation of the accident using a model truck. FTI, working on behalf of an insurance company, performed computer simulations that demonstrated that the driver was at fault.
FTI officials said these kinds of high-tech demonstrations, by breaking down complex information into easily understood pieces, can go a long way toward convincing judges and juries. FTI's clients, which include law firms and major corporations, agree that these presentations work.
"They can be quite dramatic," said John Vardaman, a senior partner at Williams & Connolly in Washington, which has used FTI's services for about three years. "You're seeing more and more of these sophisticated types of multimedia presentations."
According to chief executive Jack Dunn, 47, these presentations are becoming an integral part of the legal brief. In Delaware, for example, it has become routine for lawyers in intellectual property cases to prepare visual demonstrations, usually videos, explaining the technology behind a suit, he said.
As both sides in a case deploy them, however, the net effect can be that one side's graphics cancel out the other's.
Long well-known inside the legal business, FTI is starting to gain recognition outside the profession, too. In its June 1 issue Business Week selected the firm as one of its "Hot Growth Companies" for 1998, ranking it 87th among fastest-growing small companies. Its sales increased an average of 47 percent annually over the past three years, while profit jumped an average of 70 percent a year in the same period.
Chief executive Jack Dunn is hoping Wall Street will take notice. FTI was one of the first litigation-support services companies to go public, raising $11.1 million on the Nasdaq Stock Market in May 1996. FTI's stock debuted at $8.50 a share and closed Friday at $16.87 1/2, up $1. Dunn calls that performance disappointing. He said competitors such as LECG Inc., a California company that went public last December, are trading at valuations that exceed FTI's.
But Dunn has a game plan for waking up the investment community. He took the first step last month, changing the company's name from Forensic Technologies International Corp. to FTI Consulting Inc. It was a symbolic move, Dunn said, one that portends a much larger transition in the evolution of the 300-person company.
A big part of the future will be acquisitions, something that should be relatively easy to do in such a fragmented industry, Dunn said.
"This is an industry ripe for consolidation," he said, pointing out that corporate clients are looking to buy legal services in larger chunks, thus leaving the little guys with nothing to chew on.
For example, DuPont Co., an FTI client, has in the last few years pared its primary law firms to 34 from about 350, according to a DuPont lawyer. And DuPont uses seven litigation-support companies like FTI, down from several hundred previously.
FTI was founded in 1982 by Joseph Reynolds and Daniel Luczak, two engineers who decided to turn their expert-witness consulting activities into a full-time business. Dunn, who was formerly a managing director at Baltimore investment firm Legg Mason Wood Walker Inc., joined the company in 1992.
The company's initial activities were mostly low-tech. Luczak and Reynolds, now the company's vice chairman, helped lawyers find expert witnesses for testimony or coached them on explaining technical matters to juries. They also aided law firms in managing the reams of paper that are part of any lawsuit and provided research on the psychology of juries, studying how to develop and present a successful message.
In perhaps its most high-profile case, FTI provided O.J. Simpson's defense team with courtroom diagrams that showed a time line of who was where when. The company also aided the defense lawyers in jury selection.
FTI still provides these services, but they too have evolved with technology. For example, the company today uses special software for managing documents. Another software tool, called C.B. Trial, digitizes deposition video and electronically links the deposition transcripts to the video, allowing attorneys to search for specific video excerpts.
After shelling out nearly $600,000 for computers, the company got into the animation business. "We were trying to convince attorneys that they needed something that they didn't even know they needed," recalled Luczak, who was the company's chairman from 1992 until May.
It worked. Today these kinds of "visual communications services," as FTI calls them, make up the bulk of the company's revenue. Last year, $20.1 million, or 46 percent of total revenue, came from computer animations, graphic illustrations for the courtroom and the like.
Revenue in 1997 was $44.2 million, up $13.6 million from the previous year. The increase came partly from internal growth, partly from two acquisitions last year -- a trial research and consulting firm and an insurance claims management firm. The insurance acquisition gets FTI into a new area, Dunn said, and is part of his plan to further expand the company's service offerings.
FTI officials say their goal is to build the company's revenue to $100 million by the year 2000.
"I'd like to be thought of as the total solutions provider for any case," Dunn said. "We'll be the first person they call and because of the comprehensive services we offer they won't need to call anyone else."
Another area that FTI is entering is economic consulting -- helping clients assess potential damages of a suit. In that arena, the company will face tough competition, including big consulting firms such as Arthur Andersen.
Analysts warn that "rolling up" multiple companies into one brings special challenges in any kind of business, including how to successfully integrate all the disparate pieces into a cohesive whole.
But in FTI's case, some analysts said, the one-stop shopping approach could work well. "It doesn't make them dependent on any one service and it also creates cross-selling opportunities," said Raymond Reed, an analyst at Legg Mason Wood Walker. CAPTION: In what he called a symbolic move, Jack Dunn changed his firm's name to FTI Consulting Inc. CAPTION: A LOOK AT...FTI CONSULTING INC. (This chart was not available)
