Two Decades and Counting, an Interview with Jim King of IPRO

By Joe Howie
 

In an era and in an industry marked by the overnight appearance and disappearance of companies there is at least one that has grown steadily through internal growth for more than 20 years — IPRO. For the past ten years IPRO has averaged an 18 percent growth rate. In fact, over half of its thousands of customers have been with the company more than eight years.

This article gives the background and philosophy of IPRO and its remarkable CEO, Jim King. In the book Good to Great by Jim Collins, the author states that one test of a great company is whether the company can continue functioning well when the founder is no longer active. King takes great pride in noting that a little over a year ago he went on a church mission for twelve months and was virtually incommunicado with IPRO, but under the direction of the management team, and Jim’s life long friend and IPRO business partner Greg Horne, the company operated superbly and experienced a 31 percent growth rate for 2008. King jokes about going away again so they can achieve 60 percent growth.

Talking with Jim is always interesting and always educational. Here’s his story:

In 1989 IPRO founder Jim King had just sold Bankline Systems Inc., a banking software company, to Security Pacific Bank and was working with SPB as part of the acquisition agreement. While there, he encountered an information system that used FileNet document imaging. It was designed as part of mortgage loan work flow system where each page was indexed so that parts of a document could be routed to different people for decision-making and then reassembled into one document. At that time, document imaging was implemented primarily using mainframes or minicomputers. King firmly believed that these functions could be provided using personal computers with documents being indexed at a document, not page, level.

He researched the options by attending numerous trade shows and evaluated various products on the market. He then launched IPRO to capture paper-based records and permit them to be managed as computer images for litigation support. Among the first significant cases where IPRO played an integral part was Resolution Trust vs. Charles Keating savings and loan cases where Judge Richard Bilby decided to replace traditional photocopying with scanning and imaging. IPRO developed a system where the “container” information such as Location, Box and Folder were captured at the time of scanning so that even without a document-level index, users would know where the documents came from. Beginning and ending page numbers were used to track where documents began and ended. It was the first use of computer imaging to manage documents in large, complex litigation.

To view the documents required the use of an expensive scanning station, but Dennis Brawn of IPRO accomplished what Jim King calls a “30-day miracle:” in just a month he developed an image viewing system that did not require the use of a scanning station in just a month. This formed the basis for the IPRO View software. It permits the user to view and print documents and to build an image-based document production.

The IPRO viewer was the beginning of a suite of software providing, production, management and capture components. These products also became best of breed to be used in conjunction with different database software through “coopetition” with Jeff Lipsman’s Dataflight Software and John Siegerman’s Summation. Both Summation and Dataflight had proprietary image viewers but they could not view images prepared with the other’s software. The IPRO viewer could view both types of images, giving law firms and corporations the critical flexibility to move images into either system.

Phase I — Software and Services

King relates that in the early days marketing presented the image of a large company despite being relatively small. Two attorneys visited IPRO “world headquarters” to check out IPRO as its vendor on a large savings and loan melt down case. After a nice lunch the lawyers were taken over to the office that at that time consisted of a single-story building with garage doors in back of the building. Needless to say the lawyers were a bit shocked at the small size of the company but elected to use them nonetheless.

Eventually IPRO grew to providescanning, OCR, coding and printing services as well as software and had offices in Washington, Ohio and Phoenix. This was an important phase because IPRO learned the “first rule of litigation support.” To use an OB/GYN analogy, “you couldn’t drop the baby” — it was critical that everything went off as promised. However, as King says, “We did drop some babies; if someone says they’ve never done it, they just haven’t been in business long enough or they don’t know that they’ve already done it.”

Phase II — Software Only

IPRO wanted a business with larger recurring revenue and decided to have IPRO focus exclusively on software publishing – King and the management team wanted to quit competing with its software channel. At one point during phase I IPRO had 25-30 resellers who provided scanning, OCR, printing and building services. However, when IPRO made a presentation for large service opportunities, it would often find itself across the table from one or more of its resellers, e.g. Arthur Anderson or LIT. The resellers were uncomfortable competing against the company which supplied their software because IPRO always had a pricing advantage — it didn’t have to pay itself a license fee. Unless a project had to be managed locally, IPRO always maintained an advantage. During phase II IPRO has gone from approximately nine service providers by the end of phase I, to a current group of 451. Law firm users of the software-only model continue to be in the thousands.

Another reason for focusing on software was that it was getting harder to decide where to reinvest, e.g. should IPRO buy 10 Bell & Howell scan stations or a rack of computers for ESI and OCR or spend money on software engineers and build out client services? There weren’t enough resources to support both.

At the end of phase I IPRO decided to sell its litigation support services business to Lason from Michigan. It retained the IPRO name and all software intellectual property. Out of 200 employees before the sale, IPRO emerged from the sale as a true software company with only 12 employees in 1999. IPRO currently employs 94 employees the significant majority of which are software engineers and technical support.

Phase III — ESI

When the growth in ESI was first coming on line, IPRO transitioned from a paper-based development focus. During this transition IPRO was able to continue to generate paper-based revenue. Service providers using IPRO software processed over one billion pages of paper last year.

Current IPRO Suite

IPRO has a number of different software packages for all phases of the discovery life cycle including processing, reviewing and producing for both ESI and paper-based discovery. Its offerings include user-installed software as well as “cloud-based” or Software-as-a-Service in which IPRO provides the infrastructure to host and process the data and users access their data via the Internet. Some of the principal offerings include:

• eCapture. eCapture is IPRO’s distributed, multithreaded processing platform of choice for unfolding, culling and processing. King says the self-healing aspect of the application is a big deal. “It’s one thing to have machine time capability where people have to watch for when it breaks. It’s a completely different game to have machine time capability with a very small labor footprint and the confidence to know that when you come in the next morning the job’s done and it didn’t just hang up at 1 a.m.”
• eReview. eReview is IPRO’s first-pass “cloud-based” review platform. King calls it a light-weight review tool without the overhead of the full blown litigation management capabilities and without requiring the installation of software or plug-ins on the user’s computer.
• Nimbus. IPRO provides the computing resources to process and host document collections. Clients run the software as if they owned it behind their firewall using their regular web browser software to access their data. Not having to roll-out installed software is a huge advantage in law firms and corporate legal departments where rollouts of new releases can be a protracted and expensive processes. According to King, “SaaS (Software as a Service) lets users focus on the case and we take care of the technology.”
  
  Nimbus meets the heavy security requirements imposed by the type of data processed in litigation. The IPRO cloud system has been audited under SAS 70, a set of auditing standards published by the American Institute of Certified Public Accountants (AICPA) that provides customers with third-party validation that a provider has effective internal controls in place.
• IPRO Eclipse. Four years in the making, Eclipse is user-installed software that provides the ability to manage all aspects of a case — from capture through review to production — through a single discovery management application.

Partnering with Firms

Some law firms have an adversarial approach to vendors whereas others treat the vendors as partners and make full use of the vendor’s experience and insight. IPRO’s goal is to work with the law firms that want real partners, which have the right mindset. IPRO wants a close relationship with the users of the software. As King says, “In the first ten years of our business we ‘ate our own cooking’ in the sense that we actually used our own software in a production setting to make things happen. One thing we lost when we went to a software-only model was the benefit of that experience. Now we depend on our customers to tell us what works or doesn’t work and what other features they’d like to see added.”

Industry Pricing

One of the changes King sees coming in litigation support is a move away from high charges for machine time, for example, high per gigabyte processing charges. Executives at corporations buy hardware and systems for their own operations and they have some idea about hardware costs. In King’s view, a company’s business model should be based on what a reasonable return should be, not on what a company may be able to get away with charging in the short term. “Customers remember what you charge and when they find they can get essentially the same service for a fraction of the cost, they don’t want to use you anymore,” he noted.

As an example, IPRO licenses much of its software to service bureaus on a “click” or per unit fee. The company could have charged $.25 per page when it first started, but charged from $.0025 to $.0050 per page because that was a more realistic long-term price after the market “commoditized” scanning and OCR. Much the same thing is happening now in ESI. According to King, “Opportunistic billing by the industry has driven corporations to look at other avenues or approaches to handle their discovery. At the same time the high margins attracted new companies who expected the high margins to last forever, and when they don’t those companies leave the market. Each year at Legal Tech there are new faces and the old faces of the companies that couldn’t sustain, are gone.”

Some of the corporate responses to high ESI costs include implementing knowledge management in their businesses so that, in part, they can handle ESI without having to call in computer forensic specialists or litigation support vendors. Litigation preparedness is another response to the high cost of gathering and processing ESI. Companies are also spending millions of dollars to build federated search capability. They talked about doing it for years but could never cost justify it. However the high level of per gigabyte charges can justify some pretty expensive systems. As King says, “Of course it begs the question of whether the new systems will work. We don’t really know yet.” One thing that hurts the industry is when companies believe it is so expensive to litigate that they just decide to settle their cases.

Advice to Service Bureaus

King’s advice to service bureaus: if you’re going to be in the litigation support business, be in the whole business. Customers want end-to-end capability. Some service providers saw the large margins in ESI and they dropped other service components like paper processing, microfiche, etc., selling the scanners and other equipment and letting the project managers go. Then full-service vendors are able to get even the ESI business because they can serve all the needs of a case for the client. When margins continue to erode, they eventually end up going out of business. Probably 70 percent of service bureaus end up going out of business within six months of deciding to focus only on ESI.

People

There have been literally thousands of people who have been impacted by IPRO and who have made tremendous contributions to IPRO and it would be impossible to name all of them. However, King wanted to make it very clear to me in our interview that his view is that this industry is amazing because of the people in it and that it’s these people who have made IPRO what it is today and what it can achieve in the future.

New faces at IPRO include Rick Branan, recently brought in as vp of sales, who had broad experience, including 8 years as a partner and vp of sales at Quorum. Joe Utsler was also recently brought in as vp of product strategy. He served for many years as software evangelist at Dataflight Software and later at LexisNexis. John Peeke-Vout is the new senior vp of operations brought on board to streamline the ever-growing IPRO operations.

Note: IPRO has set up a page on FaceBook for clients or well wishers; it includes pictures of various IPRO staff and clients as well as some of the classic ads IPRO has run over the years.

This article appeared originally in the February 2009 ALSP Update, the monthly publication of the Association of Litigation Support Professionals and is reprinted with permission. Read more about this nonprofit membership organization at www.alsponline.org.