As it works to recover from the abrupt departure of its founder and CEO amidst allegations of sexual harassment and misconduct, Austin legal tech company CS Disco Inc. continues to look into complaints as its employees push for a more robust response.
The company on Oct. 31 said that an investigation into employee concerns is nearly complete.
“In recent weeks, we’ve engaged the law firm of Paul Weiss Rifkind Wharton & Garrison LLP to review our workplace policies and procedures, and are in the final stages of interviewing and retaining an outside consulting firm to advise us on our cultural transformation,” a spokesperson for the company stated.
Disco uses artificial intelligence and other technologies to help legal teams discover and catalog evidence, documents and other materials.
Its co-founder and CEO, Kiwi Camara, abruptly resigned from his post on Sept. 11, and the company didn’t provide a reason for the departure. At the time, Krishna Srinivasan, chair of Disco’s board of directors, thanked Camara for his “vision, passion, and dedication to DISCO over the past decade.”
About a week later, The Wall Street Journal reported the company’s board had opened an investigation into allegations that Camara groped a female employee during a Sept. 6 dinner. The story also noted that the dinner incident came about a year after an employee filed a formal complaint about Camara’s conduct around young women at the company.
More recently, the WSJ reported that unnamed sources at the company said Disco’s leadership didn’t openly address workplace problems and that a group of about 150 employees sent a letter to the company’s board calling for an independent investigation into the company’s “toxic culture.”
A Disco spokesperson said in a statement to the Austin Business Journal that the company responded to that letter within a day.
“We will continue to take action to foster a safe and supportive workplace for all employees,” the spokesperson stated.
Disco’s (NYSE: LAW) stock initially fell from $9.48 to $6.38 in the days following Camara’s departure in September. It has mostly been trending downward since, sliding to $5.64 around noon on Oct. 31. The company, which grew from about 330 employees in 2021 to 600 currently, appointed board member Scott Hill as interim CEO while it seeks a new leader. Its search for a permanent replacement continues.
Disco was founded in 2013 out of Camara's law office in Houston before moving to Austin in 2018 after connecting with local venture capital firm LiveOak Ventures, which went on to be the company's lead investor.
The recent allegations of misconduct by its founder followed years of growth and investment leading up to its 2021 IPO. The company was named to the Deloitte Technology Fast 500 in 2019 and 2020, and it landed back-to-back Gold Stevie Awards for Legal company of the year in 2019 and 2020. In 2021, Camara was named one of Austin's best CEOs by the Austin Business Journal.
Camara's departure came after he secured almost $110 million in compensation last year, up from just $1 million the year before. The big compensation figure was mostly driven by $109 million in stock options that were approved by shareholders. It wasn't clear if or how his departure impacted that compensation package.
Over the past year or so, Disco began to struggle at times as layoffs across the tech industry mounted. Disco cut 62 employees at the start of the year, or about 9% of its workforce. Then, in May, it cut another 47 employees, or about 8% of its team.
In its second quarter earnings report, Disco said its total revenue was up 2% year-over-year to $34.3 million and its net loss was $14.9 million, narrowed from a net loss of $20.2 million in the second quarter of 2022. The company is poised to share its third quarter results on Nov. 9.
