CS Disco (LAW) Misled Investors Regarding its Business Prospects

A shareholder filed a class action on behalf of all persons and entities that purchased shares of CS Disco, Inc. (NYSE: LAW) common stock between July 21, 2021 and August 11, 2022. CS Disco asserts that it provides cloud-based, artificial intelligence-powered technologies to simplify electronic discovery, legal document review, legal hold and case management for enterprises, law firms, legal services providers, and governments.

According to the complaint, beginning with its July 2021 initial public offering and throughout the class period, "CS Disco repeatedly touted strong growth in its revenues attributable to customer usage of its cloud-based electronic discovery platform and asserted that it had good advance visibility into changes in the demand from individual customers over time."

However, on August 11, 2022, CS Disco revealed financial results for the second quarter of 2022, in which revenue growth had tapered drastically over past quarters, and the Company alerted the markets that it would no longer be including in its guidance any revenues attributable to its largest customers for the entire year.

Plaintiff alleges that during an investors call following the earnings release the Company’s Chief Executive Officer denied that CS Disco's declines in revenue were the result of losing any major customers, despite knowing for months that the Company was losing their business. As a result of these disclosures, the price of CS Disco stock declined $15.53, to drop more than 53% on August 12, 2022.

On January 30, 2025, the court denied in part defendant's motion to dismiss the class action, paving the way for the case to proceed. Damages awarded in the class action could diminish the value of the company and delete corporate assets.

What Now: Shareholders who own CS Disco, Inc. stock have legal options. Submit a form to speak with an attorney.

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