Bellevue-based Applied Discovery, which assists law firms in sorting through mounds of e-mails and documents for lawsuits or mergers, was bought by LexisNexis, a Dayton, Ohio, company that provides information to the legal industry.

Although both companies declined to discuss the financial details of the acquisition, Applied Discovery President Tim Kilgallon said, "The valuation we were able to achieve is not on par with most of what you have seen in the market."

The 75-person company was able to get such a positive return during such a difficult environment because it increased its revenue and became profitable quickly.

It was founded by attorney Richard Corbett and entrepreneur Michael Weaver in 1998, raised $10 million in venture capital, and became profitable in 2001. It worked on the Enron case and on the Compaq merger with Hewlett Packard.

Kilgallon said Applied Discovery had been looking for a partner to help the company grow. Thirty-five of the top 50 law firms in the country are customers, but it will gain access to LexisNexis customers, including 100 top U.S. law firms and most Fortune 500 companies.

"We've been successful in getting early adoption, but the credibility and name recognition of LexisNexis should accelerate our growth," Kilgallon said.

LexisNexis has wanted to be part of the growing e-discovery market, spokesman Steve Edwards said, and Applied Discovery is the industry leader.

LexisNexis, which is owned by the Reed Elsevier Group, also bought Bellevue-based Courtlink two years ago. It provides electronic court-filing and court-docket access.

Kilgallon said the company will stay in Bellevue. Its biggest competitor is the printing industry, which prints documents in a company's database so lawyers can go through them manually. Applied Discovery puts the information into a searchable electronic form.

"The large law firms are seeing the benefits, cost savings and the effectiveness," Kilgallon said. "Eventually all cases, whether significant or smaller in size, will look to electronic disk."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com