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Exhibit 10.4

        EXECUTION COPY

STOCK OPTION AGREEMENT

        THIS STOCK OPTION AGREEMENT ("Agreement") is made as of this 31st day of
January, 2003, by and among EPIQ SYSTEMS, INC., a Missouri corporation (the
"Company"), BANKRUPTCY SERVICES, LLC, a New York limited liability company (the
"Employer"), and RON JACOBS (the "Employee").

WITNESSETH:

        WHEREAS, the Employer is a limited liability company which is
wholly-owned by EPIQ Systems Acquisition, Inc. which is a wholly-owned
subsidiary of the Company;

        WHEREAS, as of January 31, 2003, the Employee has executed an employment
agreement by and among Employee, the Company and the Employer (the "Employment
Agreement") pursuant to which the Employee will be employed by the Employer;

        WHEREAS, as an inducement for the Employee to enter into the Employment
Agreement, the Company has agreed to grant to the Employee the right and option
to purchase up to One Hundred Thousand (100,000) shares of common stock, one
cent ($.01) par value of the Company (the "Stock"); and

        WHEREAS, the Employee desires to accept the aforementioned option to
purchase the Stock in accordance with the provisions of the terms and conditions
of this Agreement as set forth herein.

        NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties agree as
follows:

SECTION 1. GRANT OF OPTION

        The Company hereby grants as of the date hereof (the "Grant Date") to
the Employee the right and option (the "Option") to purchase all or any part of
an aggregate of One Hundred Thousand (100,000) shares of the Stock (the "Option
Shares") (such number being subject to adjustment as provided in Section 11
hereof) on the terms and conditions set forth herein. The parties acknowledge
and agree that this Option is intended to qualify as a nonstatutory or
nonqualified stock option ("NSO") and not as an incentive stock option under
Section 422 of Internal Revenue Codes of 1986, as amended (the "Code").

SECTION 2. PURCHASE PRICE

        The per share purchase or exercise price of the Option Shares shall be
the closing bid price of one (1) share of Stock as reported on the NASDAQ
National Market as of the close of trading on the last business day prior to the
Grant Date. The purchase price is subject to adjustment as provided in
Section 11 hereof.

SECTION 3. MEDIUM OF PAYMENT

        The parties agree that full payment of the purchase price for the Option
Shares shall be payable in either (a) United States Dollars by cash, certified
or cashier's check, personal check, money order or wire transfer; or (b) in any
combination of cash or check as described in subsection (a) and/or shares of
Stock already owned by the Employee which are surrendered in good form for
transfer. Such shares of Stock shall be valued at their fair market value on the
date the Option is exercised in accordance with the terms of this Agreement.

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SECTION 4. OPTION TERM AND TERMINATION

(a)No part of the Option shall be exercised after ten (10) years from the date
hereof.

(b)All rights to exercise the Option hereunder shall be terminated in accordance
with the following provisions:

(i)If the Employee's employment with the Employer, the Company or an Affiliate
of the Company terminates for any reason other than death, disability, or for
cause (as defined in the Employment Agreement), the Employee shall be entitled
to exercise the Option, to the extent it is exercisable, in whole or in part,
within thirty (30) days after the date Employee's employment terminates, but in
no event later than the date on which the Option would have expired if
Employee's employment had not terminated.

(ii)If the Employee's employment with the Employer, the Company or an Affiliate
of the Company terminates on account of disability, consistent with
Section 3(b)i of the Employment Agreement, as determined by the Board of
Directors of the Company, which determination shall be conclusive, the Employee
may exercise the Option, to the extent it is exercisable, in whole or in part,
within one (1) year after the date on which the Employee's employment
terminates, but in no event later than the date on which the Option would have
expired if the Employee had not become disabled.

(iii)If the Employee's employment with the Employer, the Company or an Affiliate
of the Company terminates on account of death, the estate of the Employee or any
person who acquires the right to exercise the Option by will or the laws of
descent or distribution or by reason of the Employee's death may exercise the
Option, to the extent it is exercisable, in whole or in part, within one
(1) year after the Employee's date of death, but in no event later than the date
on which the Option would have expired if the Employee had not died.

(iv)If the Employee's employment with the Employer, the Company or an Affiliate
of the Company terminates for cause (as defined in the Employment Agreement), he
shall forfeit any and all outstanding rights under the Option and such rights
shall be deemed to have lapsed for purposes hereof as of the date of such
termination of employment for cause. (c)For purposes of this Agreement, an
"Affiliate of the Company" shall mean any business entity directly or indirectly
controlling, controlled by or under common control with the Company. For
purposes of this definition, "controlling", "controlled by" or "under common
control with" means a more than fifty percent (50%) voting, equity and profits
interest.

SECTION 5. TIME OF EXERCISE

(a) (i)On the Grant Date (i.e., January 31, 2003) through January 30, 2004, the
Option may be exercised with respect to twenty percent (20%) of the total number
of Option Shares.

(ii)On the first anniversary of the Grant Date (i.e., January 31, 2004) through
January 30, 2005, the Option may be exercised as to an additional twenty percent
(20%) but not more than forty percent (40%) of the total number of Option
Shares.

(iii)On the second anniversary of the Grant Date (i.e., January 31, 2005)
through January 30, 2006, the Option may be exercised as to an additional twenty
percent (20%) but not more than sixty percent (60%) of the total number of
Option Shares.

(iv)On the third anniversary of the Grant Date (i.e., January 31, 2006) through
January 30, 2007, the Option may be exercised as to an additional twenty percent
(20%) but not more than eighty percent (80%) of the total number of Option
Shares.

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(v)On the fourth anniversary of the Grant Date (i.e., January 31, 2007) and
until the Option expires or otherwise terminates in accordance with the terms of
this Agreement, the Option may be exercised up to one hundred percent (100%) of
the total number of Option Shares.

(b)The Option or any installment of the Option, as described in subsection 5(a)
above, which has become exercisable, may be exercised at any time and from time
to time (so long as the term of the Option or such installment thereof has not
expired), as to all or any part of any installment thereof; provided, that the
Option may not be exercised for a fractional share of Stock.

SECTION 6. METHOD OF EXERCISE AND ISSUANCE OF SHARES

(a)Each exercise of the Option, or all or any portion of an installment thereof,
in accordance with the provision of Section 5 of this Agreement, shall be by
written notice of exercise delivered to the Chief Executive Officer or Chief
Financial Officer of the Company at the Company's principal place of business
specifying the number of shares of Stock to be purchased and accompanied by
payment in the manner elected in Section 3 hereof.

(b)As soon as practicable after any such exercise in accordance with the
foregoing provisions, the Company shall deliver certificate(s) to the Employee
representing the Stock which relates to such exercise.

SECTION 7. NONTRANSFERABILITY

        The Option, and all rights and privileges hereunder, shall be
nonassignable and nontransferable by the Employee, either voluntarily or by
operation of law (except by will or by operation of the laws of descent and
distribution), nor shall they be pledged or hypothecated in any way, and shall
be exercisable only by the Employee during his lifetime, except as provided in
Section 4(b)(iii) of this Agreement.

SECTION 8. SHARE AUTHORIZATIONS, CONSENTS, ETC.

        The Company, during the term of the Option, will have a sufficient
number of shares of Stock authorized to satisfy this Option. The Company will
seek to obtain from each regulatory commission or agency having jurisdiction,
such authority as may be required to issue and sell Stock to satisfy the Option.
The inability of the Company to obtain from any such regulatory commission or
agency authority, which counsel for the Company deems necessary for the lawful
issuance and sale of the Stock to satisfy the Option, shall relieve the Company
from any liability for failure to issue and sell Stock to satisfy the Option
until such time as such authority is obtained.

SECTION 9. INVESTMENT REPRESENTATIONS

        The Employee may be required, if it is deemed necessary in the opinion
of counsel of the Company, to represent to the Company at the time of exercise
that it is his intention to acquire the Stock for his private investment only
and not for resale or distribution to the public. The Company may stamp any
certificate representing such Stock with a legend to the effect that such Stock
has not been registered under the Securities Act of 1933, as amended, and that
it may not be sold or transferred until so registered, or until an opinion of
counsel satisfactory to the Company is received to the effect that such
registration is not necessary. In the event any Stock issued pursuant to this
Agreement is registered under the Securities Act of 1933, as amended, then the
investment representations and restrictions imposed pursuant to federal
securities law shall automatically be inoperative with respect to such Stock.
Whenever the Company next files a registration statement on Form S-8, Company
will include in that registration statement all of the Option Shares.

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SECTION 10. RIGHTS AS STOCKHOLDER

        The Employee shall have no rights as a shareholder with respect to any
Stock issuable pursuant to this Option until the certificate(s) representing
such Stock shall have been issued and delivered to him. No adjustment shall be
made for dividends or other rights for which the record date is prior to the
date such Stock certificate(s) is delivered to the Employee.

SECTION 11. CHANGES IN CAPITAL STRUCTURE

(a)The Option granted hereunder shall be subject to adjustment by the Board of
Directors of the Company as to the number and price of shares subject to such
Option in the event of changes in the outstanding shares of Stock by reason of
stock dividends, stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Grant Date of the Option. In the event of any
such change in the outstanding shares of Stock, the aggregate number of Option
Shares, which remain outstanding, and the exercise price thereof, under this
Agreement shall be approximately adjusted by the Board of Directors of the
Company, whose determination shall be conclusive.

(b)Except as otherwise expressly provided herein, the issuance by the Company of
shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with a direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or exercise price of the Option Shares which remain
outstanding.

(c)Without limiting the generality of the foregoing, the Option granted
hereunder shall not affect in any manner the right or power of the Company to
make, authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; (ii) any merger or consolidation of the Company; (iii) any issue by
the Company of debt securities, or preferred or preference stock that would rank
above the shares of Stock subject to Option; (iv) the dissolution or liquidation
of the Company; (v) any sale, transfer or assignment of all or any part of the
assets or business of the Company; or (vi) any other corporate act or
proceedings, whether of a similar character or otherwise.

SECTION 12. CONTINUATION OF EMPLOYMENT

        Nothing herein shall confer upon the Employee any right to continued
employment, or interfere with the right of the Employer, the Company or an
Affiliate of the Company, whichever is serving as the employer of the Employee,
to terminate his employment at any time, for any reason.

SECTION 13. TAX TREATMENT AND WITHHOLDING TAXES

        The Company intends that the Option will be considered a nonstatutory or
nonqualified stock option under the Code. The Employee, the Company or an
Affiliate of the Company, whichever is serving as the employer of the Employee,
has the right to require the Employee or Employee's permitted successor in
interest to pay to the Employer, the Company or an Affiliate of the Company,
whichever is serving as the employer of the Employee, the amount of any taxes
which said employer may be required to withhold with respect to such Option
Shares. If permitted by law, the Company has the right to issue or transfer
Option Shares net of the number of shares of Stock sufficient to satisfy tax
withholding requirements. For withholding tax purposes, the Option Shares to be
withheld shall be the fair market value on the date of the withholding
obligation.

        The foregoing is not intended as tax advice to Employee. Furthermore,
neither the Company nor the Employer make any representation or warranty
concerning the tax consequences to the Employee

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upon grant or exercise of the Option, the receipt of the Option Shares upon the
exercise in whole or in part of the Option, or the subsequent sale of the Option
Shares acquired pursuant to the exercise, in whole or in part, of the Option.
The Employee should consult his or her own tax advisor.

SECTION 14. FAIR MARKET VALUE

        As used herein, except with respect to the exercise price set forth in
Section 2, the fair market value shall be the closing price at which the Stock
is traded on the applicable date. For this purpose, the closing price of the
Stock on any business day shall be (i) if such Stock is listed or admitted for
trading on any United States national securities exchange, or if actual
transactions are otherwise reported on a consolidated transaction reporting
system, the last reported sale price of the Stock on such exchange or reporting
system, as reported in any newspaper of general circulation, (ii) if the Stock
is quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the closing bid quotation for
such day of the Stock on such system, or (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low ask quotations for the Stock
as reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and ask quotations for the Stock on at
least 5 of the 10 preceding days.

SECTION 15. GOVERNING LAW

        This Agreement shall be subject to, and governed by, the Laws of the
State of Missouri irrespective of the fact that one or more of the parties now
is, or may become, a resident of a different state.

SECTION 16. MISCELLANEOUS

        The Option shall be administered by the Board of Directors of the
Company or a Committee of the Board of Directors of the Company (the Board of
Directors or Committee of the Board of Directors shall hereinafter be referred
to as the "Administrator"). The parties hereby acknowledge and agree that the
Administrator shall have the authority, consistent with this Agreement, to
interpret this Agreement, to promulgate such rules, policies and procedures to
administer the Option and the exercise thereof, to delegate ministerial
responsibilities relating to the Option to appropriate persons and to make all
other determinations necessary or desirable for the administration of this
Agreement. All decisions, determinations and interpretations of the
Administrator shall be binding on the parties. Neither the Company, the
Employer, nor any Affiliate of the Company is under any obligation to repurchase
the Option Shares acquired pursuant to the exercise of the Option. The proceeds
received by the Company from the exercise of this Option shall be used for any
purposes as the Company shall determine in its sole and absolute discretion. If
any provision of this Agreement shall be held to be invalid, unenforceable or
illegal for any reason, such a determination shall not affect the validity,
enforceability, or legality of the remaining provisions hereof. In the event
that any provision of this Agreement is determined to be vague or ambiguous, the
parties agree that such provision should not be disregarded or eliminated, but
construed in accordance with the intent of the parties. To the extent applicable
and without limiting the generality of the foregoing, the transactions
contemplated under this Agreement are intended to comply with all applicable
conditions of Rule 16b-3 or its successors promulgated under the Securities
Exchange Act of 1934, as amended, and to the extent any provision of this
Agreement or action by any party hereunder is inconsistent with the foregoing
requirements, it shall be deemed null and void, to the extent required by law
The failure of any party to enforce any of the provisions of this Agreement in
any single instance, shall not prevent the enforcement thereof in any other
instance, and no provision of this Agreement shall be deemed to have been waived
or modified unless such waiver or modification shall be in writing and signed by
the parties hereto. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard

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to the matters contained herein and supersedes all prior agreements and
understandings, whether or not in writing, between the parties with respect to
these matters. This Agreement may be amended or modified only by the written
agreement of the parties hereto. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, executors, administrators, successors and assigns.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

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        IN WITNESS WHEREOF, the Company and the Employer have caused this Stock
Option Agreement to be duly executed by its duly authorized officers or members,
as the case may be, and the Employee has executed this instrument, all as of the
day and year first above written.

EPIQ SYSTEMS, INC.    
"Company"
 
"Employee"
By:
/s/  CHRISTOPHER E. OLOFSON      

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/s/  RON JACOBS      

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Name: Christopher E. Olofson   Ron Jacobs Title: President and Chief Operating
Officer    
BANKRUPTCY SERVICES, LLC
 
 
"Employee"
 
 
By:
/s/  CHRISTOPHER E. OLOFSON      

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  Name: Christopher E. Olofson     Title: President and Chief Operating Officer
   

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Exhibit 10.4

STOCK OPTION AGREEMENT