How One Startup Wants to Solve an 'Insane' Problem for a $400 Billion Industry
Back in 2001, Andy Wilson and Sheng Yang were working at a Washington, D.C., print shop frequented by law firms, banks, and real-estate firms.
They specialized in helping lawyers with what legal types call "discovery," or the process of sifting through emails and documents to find things relevant to the case at hand.
At that point, discovery was done by literally printing out every potentially relevant email for attorneys to sift through.
That print shop got tapped to print the emails for the landmark 2001 Microsoft antitrust case.
Wilson recalls printing out piles and piles of Bill Gates' and Steve Ballmer's emails, boxing them up, putting them on trucks, and delivering them to the courthouse, where as many as 300 attorneys would be searching them for anything relevant to the case.
"This is ridiculous," Wilson recalls saying to Yang not long after. "Let's start a company."
The result was Logikcull, which is trying to make electronic discovery (eDiscovery) cheaper and available to smaller firms.
It seems to be a smart move. Law is a $400 billion industry in the US alone, according to some estimates.
Right now, eDiscovery can account for as much as 70% of the cost of any legal action or lawsuit — for a lawsuit that costs a litigant $2.5 million, as much as $1.75 million of that can go toward discovery. Law firms often spend as much as $100,000 a month on eDiscovery, and one analyst in 2012 found the average cost was about $18,000 per gigabyte.
"EDiscovery sucks," Wilson says. "It's an insanely inefficient process that would drive any normal human insane."
The way you pay for eDiscovery software from legacy vendors like HP Autonomy and Symantec involves a lot of nickel-and-diming, Wilson said.
First you pay for the eDiscovery software itself. Then you pay to have your data processed. Then you pay to keep your files in the system until the case is resolved — which can take years.
Even once those documents are in the eDiscovery software, it usually goes into "really s----y databases," Wilson says. You can search by keyword, or by column heading, but you can't do a lot of deep searching. And usually you could access the database only from a Windows computer running an outdated version of Internet Explorer, if you could get to it from the browser at all.
Logikcull pricing starts at a flat $2,000 monthly fee for four cases, with 50 gigabytes of uploading per month included and $30/GB after that.
That may seem expensive, but remember that it's still a lot less than that $18,000-per-gigabyte average from other vendors. Wilson says it can save law firms as much as 80% on their litigation costs. And the emails themselves get tagged and categorized automatically by things like date or topic so attorneys can find what they're looking for much faster.
The idea, Wilson says, is that lower eDiscovery costs bring down the total cost of litigation, meaning smaller firms can afford to take bigger cases. It evens the scales a little bit, Wilson says.
A 2nd crack at the problem
Logikcull got its start as Logik.com, which launched in 2004. Being based in Washington, D.C., Logik.com found itself tapped for cases ranging from the subprime-mortgage crisis to white-collar crime.
Charging $2,500 a gigabyte, Logik.com took in $4.5 million in revenue and $3 million in profit every year between 2004 and 2009 — with only seven employees.
When the Great Recession hit, Logik.com found that a lot of its business dried up. And so Wilson and team reinvested most of that profit in a second version of the product, without the need for venture financing: Logikcull, released in 2013.
Even without outside investment, Logikcull was able to hire the experts it needed to develop a browser-based, computer-plus-smartphone software solution and was able to build its own data center to support it.
Two months ago, in March, Logikcull took in its first round of venture-capital financing, a $4.5 million seed round led by Storm Ventures. Logikcull was making money, Wilson says, but wanted the investment so it could afford to take more risks with the business. Today Logikcull has just over 20 employees.
"You go from survivor mode to growth mode," Wilson says.