Lucas Mageno’s journey from building a litigation services empire to developing industry leading eDiscovery software
As the founder of iDiscover Global and Capitol Digital Document Solutions, Lucas Mageno has had a long term and visible impact on shaping the litigation technology and services industry in the United States. However, you may be surprised to learn that his journey to reach the top of his industry rivals that of many unsuspecting heroes from famous literature.
Following is the second article in a three part series covering the tale of Lucas Mageno’s journey. In the first article published on January 15, 2013, titled, “How One Man Conquered the Litigation Services and Technology Industry: Part I,” I covered his journey from starting a car washing business at the age of 8 in Southern California to managing a rock band called Badger to running a furniture business to finally starting his career in the litigation services and technology industry.
In this second article, I will cover his journey during his time with Capitol Digital Document Solutions and iDiscover Global.
Lucas Mageno started Capitol Reprographics in Sacramento in 1997 with the $60,000 he made from the Whitmont acquisition and by selling off apartment buildings he had owned in Los Angeles. And although his initial 400 square foot office at 555 Capitol Mall in Sacramento was cramped, he had a clear idea of how he could quickly grow his litigation services business by offering 24X7 copying, microfilming and electronic scanning to the heavy concentration of law firms in the Sacramento market. Just as Lucas had been able to find the right offerings to attract business and make money for his car wash business when he was 8 years old and later for his band, he was also able to position Capitol Reprographics as a leading provider of legal document management services in the Sacramento market.
In 2000, Lucas formed a partnership with Dave Wilkinson, his biggest competitor in the Sacramento market. As the former General Manager of Rocky Mountain Litigation Copy, Dave agreed to become Managing Director and run the daily operations of the Capitol Reprographics as Lucas concentrated on expanding the business by opening up new offices. David and Lucas became good friends and have been partners in many successful ventures since they first decided to work together in 2000.
Lucas indicated that he had a very simple model for expansion. After he had identified a potential new market, he would check into a hotel for typically 3 weeks per new market city and interview the litigation support contacts at litigation document management companies doing business similar to Capitol Reprographics. “When the name of local litigation services and eDiscovery sales superstars were mentioned more than three times, I would focus my research on those candidates and eventually choose one to be my branch manager,” said Lucas. Lucas found that many of the local sales superstars were more than capable of running their own business. Since, they normally lacked the startup capital. He would approach his target branch managers with an offer to provide the startup capital with 10% profit sharing paid quarterly and 20% of the net value upon the sale of the business. Lucas would allow his branch managers to hire their own teams, was transparent with the financials and showed them how to build wealth. This business model was financially successful for Capitol Reprographics and provided a great opportunity for entrepreneurs throughout the country to start their operations. “I made most of my branch mangers very wealthy,” said Lucas.
While opening up his Houston office in 2000, the new manager told Lucas he couldn’t sell digital discovery or other high-tech services under the name of Capitol Reprographics. Mageno listened, changed the name to Capitol Digital Document Solutions (Capitol LLC), and started building technical infrastructure and personnel to handle the emerging eDiscovery business. “Since making that change in 2000, we haven’t looked back,” says Lucas.
Always looking for ways to keep his key employees happy and productive, Lucas brought in a group of real estate investors to put up a line of credit to set up a program to enable his branch managers and other employees to buy real estate. The program was a great success and allowed many Capitol Reprographics employees making only $35K – $40K to become first time homeowners. “I am really proud of that program as it helped many of the young families within my organization realize the joy and financial rewards of homeownership,” stated Lucas.
From 1999 to 2005, Capitol LLC increased its national work force from 50 to 340, its annual revenue from $3 million to $24 million, and opened new offices at a rate of about one every eight months. In 2003, its growth landed the company at No. 139 on Inc. magazine’s annual list of the 500 fastest-growing U.S. private companies. By 2005 Lucas and his partners had offices in Palo Alto, San Francisco, Los Angeles, Phoenix, Scottsdale, Houston, Washington, D.C. and New York City and were ranked 28th on Inc.’s “Inner City 100” list honoring companies that had succeeded in an urban environment where business climates are considered a bit tougher than in the suburbs.
Beginning in 2004, Capitol LCC was beginning to see a rapidly evolving demand for processing emails. Following his adventurous instincts, Lucas decided to jump into the software business and develop his own email processing software. After several million dollars invested in software development projects with no tangible results, Jim Schraven, Capitol LLC’s branch manager for Phoenix, introduced Lucas to software technologist Robert Simpson. “I would have never met Robert without Jim’s assistance and I will always be grateful to him for introducing us,” stated Lucas.
Robert Simpson was the sole contract developer of the Fed X billing system for Europe and after several years developing the program Fed X decided to outsource the continuing program to an Indian based team. It took 18 developers to replace Robert. “I met with Robert for the first time in Phoenix in 2006 and before the day was over, I knew that he and I were going to develop the next generation eDiscovery software program together,” said Lucas. Robert was a bit of a free spirit and not into the corporate scene, so Lucas promised him that he never had to wear a suit. “I still remember the day that we landed the Intel account,” said Lucas. “Robert was wearing jeans and cowboy boots and with a wicked sparkle in his eye, dazzled the entire Intel litigation technology team,” continued Lucas.
Lucas realized that Capital LLC was not the right corporate vehicle for his new found software venture, so he decided to form a new venture with Robert and other key eDiscovery technologists from the Capitol LLC team. To fund this new venture, Lucas put Capitol LLC up for sale. Ethical Solution Providers (ESP), a litigation technology and services provider out of Toronto, Canada, approached Lucas with a very generous multi-million dollar offer to purchase Capitol LLC and its software. After several months of negotiations, the parties came to an agreement. Because Lucas wanted to retain the rights to software, he couldn’t bring himself to sign the final contracts and the deal fell through. “I really wanted to start a software company and selling everything to ESP was just not going to make that happen,” said Lucas.
In 2006, Lucas sold Capitol LLC to it’s branch managers, kept the intellectual property and started iDiscover Global, the eDiscovery technology solutions company that he wanted. iDiscover Global unveiled Invariant, their first eDiscovery software product, to rave reviews from potential clients and industry analysts at LegalTech in New York in 2007. Invariant processed Electronically Stored Information (ESI) faster and more eloquently than any other eDiscovery software on the market in 2007. Lucas knew at that point that another chapter in his journey was underway.
By 2010, iDiscover Global had over 40 employees and was generating $5.6 million in revenues per year. Based on the positive feedback from his client based, Lucas was now convinced that Invariant could provide litigation service providers, law firms, corporations and other technology vendors the next generation eDiscovery processing power they required to address the dramatic increase in the amount of ESI that they were having to manage. However, Lucas didn’t believe iDiscover Global was the proper distribution vehicle for delivering Invariant to the growing eDiscovery marketplace. As he had always done in his career when he was faced with challenges, he started to investigate his options and plan his next moves.
Having had very positive feedback from his client base regarding the Relativity platform from kCura that iDiscover Global had been utilizing to support document review, Lucas decided to meet with Andrew Sieja and study the reasons for kCura’s success. “I realized early on in our initial meeting that Andrew was an industry visionary and had an ambitious yet believable plan to deliver an eDiscovery platform that covered the entire eDiscovery lifecycle,” stated Lucas. It was at this point that Lucas figured out a potential next move to leverage his investment in Invariant.
In Part III of the series following Lucas on his journey, I will discuss what Lucas did with iDiscover Global and Invariant and what Lucas is doing today.
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