The same technology used by lawyers to weed out mountains of extraneous documents to find the smoking gun to win their case is now being used by city governments to process public records requests from journalists and the public.
And a growing number of local governments are hiring a small, relatively unknown company to do it.
District-based Logikcull is a data management business that gets paid by law firms, corporations and government agencies to organize their ever-growing pool of electronic data that lawsuits, investigations and information requests force them to sift through.
Since March, the District and Baltimore have hired Logikcull to process electronic data related to the public information requests they receive each year. D.C. has about five pending Freedom of Information Act requests at any given time, and Baltimore has between 350 and 500 a year, according to attorneys for the cities. D.C.’s contract with Logikcull is for $2,000 and Baltimore’s is $60,000. The work represents a small but growing part of Logikcull’s multi-million dollar business.
“It used to be you had giant storage rooms with file cabinets, and you’d send someone to find a file, bring it back, review it and redact whatever needs to be redacted and then produce it,” said V. David Zvenyach, general counsel for the D.C. Council. “Now it’s different. Thousands of documents can be retrieved at a moment’s notice. Part of the challenge of FOIA in the modern age is the volume of documents. As we started to get more FOIA requests, we wanted to make sure we had a system that met our needs.”
Logikcull co-founder and chief executive Andy Wilson declined to disclose revenue, other than to say it is less than $10 million. The last year Logikcull reported its revenue was 2009, when it brought in $4.4 million.
That’s a far cry from the bootstrap operation that began in 2004 and was run out of a two-bedroom Columbia Heights condo for its first year. Wilson and co-founder Sheng Yang started the company with $20,000 from savings and credit cards, and no investors. They now have 15 employees and are planning to add six more to do business development, sales and marketing.
The process of combing through electronic data is called “e-discovery,” short for “electronic discovery” — texts, e-mails, and other electronic communications that law firms and corporate legal departments must gather, analyze and turn over to adversaries in litigation, and to the government in investigations into corporate malfeasance.
Some liken the process to finding a needle in a haystack, especially given the burgeoning amount of electronically stored information that companies stockpile. Sorting through the bits and bytes is expensive. Discovery is by far the priciest part of litigation, and it can cost hundreds of thousands of dollars to manage electronic data in a lawsuit. Companies and law firms are constantly looking for more affordable ways to manage the process.
Logikcull charges a annual subscription rate of about $2,500 per user. For a legal team of 10 lawyers, that works out to be $25,000 a year. The company charges an additional $100 per gigabyte of data. Its platform operates on the cloud, where files can be dragged and dropped, and doesn’t require downloading software or sending files to an e-discovery vendor.
Logikcull is not the only company of its kind. The e-discovery services and software market is expected to grow from $6.27 billion this year to $11 billion by 2018, according to Complex Discovery, a technology marketing firm. The rate at which Logikcull is expanding — 20 percent month over month for the past year, Wilson said — and its foray into the government market offers a glimpse into the new direction the industry could be heading.
“The market for doing just discovery and investigations is huge and only getting bigger,” Wilson said. “State and local governments are a great untapped market. They couldn’t afford this stuff before, and now they can.”
A year ago, about 60 percent of the Logikcull’s revenue came from corporate legal departments and 40 percent came from law firms. Today, that breakdown is roughly 60 percent from companies, 35 percent from law firms and 5 percent from governments. And the interest from governments is growing.
After news of the Baltimore contract went public, the company got calls from representatives for the city of Chicago, Florida, the Securities and Exchange Commission, the Bureau of Prisons and the Consumer Financial Protection Bureau, Wilson said.
CORRECTION: An earlier version of this story stated that D.C. has about five pending Freedom of Information Act requests at any given time, and Baltimore has between 350 and 500. In fact, Baltimore receives between 350 and 500 Public Information Act requests per year, not at any given time. The story has been updated to make that clear.