On August 3, 2015, ediscovery SAAS provider Logikcull unveiled the first all-inclusive, flat rate pricing plans in the ediscovery industry. I interviewed Logikcull’s CEO, Andy Wilson, about his company and its business model. What follows is an abridged version of that interview, vetted by Andy for accuracy.
JR: Andy, your company, Logikcull, is offering flat rate plans that include all of Logikcull’s features. Is that an important development in the ediscovery industry and, if so, why?
AW: It’s extremely important because it makes our ediscovery rates completely transparent and predictable. That will help put pressure on other providers to publish and simplify their rates, which will help more people and organizations adopt and use ediscovery automation tools. Also, our rates are a fraction of what any other providers charge, so prospective clients benefit from those rates.
JR: Aren’t rates charged by other providers transparent and predictable now?
AW: No. Only one in ten providers publicly discloses its rates. Many providers go so far as to get their invoices sealed by a judge when they’d otherwise be available in the public record. We have a recent blog post about this.
JR: Why does that matter?
AW: Lack of public information prevents price competition, and so it lets providers charge more. Also, uncertainty makes potential clients nervous because they don’t know what costs may lurk down the road. They also can’t compare apples to apples because there’s a lot of conflicting information out there about rates and services.
JR: What do you mean?
AW: It’s still a relatively young industry, and standards and benchmarks aren’t settled. Take “processing,” for example. One provider might say that her product can “process” a yottabyte a second. But there’s processing and then again there’s processing.
JR: What does Logikcull mean by “processing”?
AW: At Logikcull there’s only one type of processing, and that’s complete and thorough processing. Soup to nuts. We index all of the data and all of the metadata from all data containers and anything attached to or embedded in them. We de-NIST, dedupe, and near-dedupe everything , and we OCR every image file.
JR: How can Logikcull afford to offer flat rate plans at such low monthly rates? Aren’t you concerned about your variable costs, especially storage and processing costs?
AW: Our business model is unique in the industry. Logikcull is the only company focused on directly providing end-users of any size with a complete ediscovery solution that requires no incidental IT cost and virtually no training. We chose that model because it’s the most efficient. As a result, we can offer the most competitive pricing.
Logikcull was built from the ground up to be scaleable. We have a robustly redundant, single-instance data center, and enough processing power to devote multiple processes to each incoming data file.
We know that our new pricing plan will result in some additional data load from our existing clients. Since we deal directly with each of our clients, we know what to expect from them. They tend to start by using Logikcull for a small litigation or an internal investigation, and then organically begin using it for larger actions and information governance projects. They seem to like Logikcull’s search capabilities better than other corporate governance solutions.
Because of our architecture, we’re able to scale to accommodate our existing clients’ data requirements even if the costs of storage and processing stayed at today’s levels. Our data costs are so cheap that it doesn’t make sense to charge for processing or storage. Any gain to Logikcull would be outweighed by the additional bookkeeping costs. So we’re more than comfortable that we can handle increased data load from our existing clients.
We also expect to win a lot of new business because we’re the easiest, most efficient, least expensive solution on the market. Making our pricing plan completely transparent will pressure other providers to be more transparent. That will enhance price competition and underscore our competitive advantage.
And we expect to benefit much more than other providers from the major trend that’s currently driving the industry.
JR: Which trend and why?
AW: Companies are increasingly bringing ediscovery capabilities in-house. That lets them do more of the initial cut in-house, which dramatically lowers their outside counsel costs. Many matters can be handled entirely in-house by a team of two or three lawyers. It also provides a better path for litigation readiness, reuse of litigation work product, and corporate information governance.
House counsel are increasingly working directly with providers. Not in the old way of buying and maintaining software, which carries a lot of indirect costs like increased IT load. Instead, they’re looking for reliable, efficient, complete solutions with predictable costs. That’s us.
JR: Isn’t the fact that Logikcull doesn’t provide a predictive coding workflow a competitive disadvantage?
AW: Not at all. We explained why in a recent blog post. In a nutshell, in the vast majority of cases there aren’t enough documents to be able to use predictive coding. In cases that are big enough to use it, it has limited and, in many cases negative value.
JR: Do you think other providers can and will adopt Logikcull’s business model?
AW: Many existing providers can’t, and ultimately won’t survive. Eventually, providers of in-house software will be out-competed by cloud providers because of large incidental costs like security and other IT. It’s much cheaper and easier for a single provider to handle those issues once than for each client to create a new bespoke solution. We’re more efficient than providers of in-house software because you don’t need to increase your IT spend in order to use Logikcull.
We’re more efficient than hosted cloud providers because there’s no middleman. Hosted cloud providers have created an industry that’s addicted to per-gig charges. To set up shop requires up-front capital expenses of at least $1 million, and then there are maintenance charges of at least $500k per year. That’s an expensive beast with a huge appetite. The only way to recoup that is to impose high data charges. With Logikcull, there’s no middleman, and so we eliminate that entire layer of expense.
JR: What about cloud SAAS providers who, like you, sell directly to end users?
AW: They’ll have to lower their prices.
JR: What about new entrants?
AW: Market forces make it inevitable that new entrants will have to abandon the old business models and adopt better ones – if not Logikcull’s then others.
JR: By the way, crackers seem to be getting into everything these days. How does Logikcull handle security issues?
AW: Our security system has repeatedly been audited on behalf of our Fortune 500, AmLaw 100, and government clients, and it has repeatedly been found to be much more secure than any other provider. All data transmitted to and from Logikcull is protected in transit by military-grade encryption. That eliminates the major security risks. Also, Logikcull maintains all of your data solely in encrypted form while it’s at rest in our data center. No other provider encrypts data at rest. And none of your data is stored offshore. Once you’ve transmitted your data to Logikcull, the only way for anybody to see it in unencrypted form is for an authorized user to view or download it.
JR: So, in a word, you’re optimistic.
JR: Thank you Andy.
AW: My pleasure Josh.