🔥 Legal Tech: Tracking 12 Months of IPOs and Funding Rounds

A post by Artificial Lawyer provides a clear summary of the trend in the first half of 2021, “Legal Tech Funding Hits $1.4BN, While M&A Soars.” Here, James Goodnow writes about “The Insider’s View On Legaltech VC Funding,” with some salient funding insights from Kira CEO and co-founder, Noah Waisberg. Kira was recently acquired by Litera.

But the reality is that investments are clipping along at fast pace. It’s hard to keep up. I could not find a post which captured the current rounds, so I created a spreadsheet of the past 12 months of legal tech IPOs and funding rounds (Series A and higher). I’m not claiming that it is comprehensive. I’m sure that I’ve missed a few. If you have any to add or any corrections to offer, please let me know via: contact at mobilehelix dot com.

Legal Tech iPOs and Funding Rounds - 12 Months, 2021-November

On November 23, 2021, transcription company Verbit announced that they had closed $250 million in a Series E round that values the company at $2 billion. That’s after raising $157 million in a Series D in June 2021 at over $1 billion valuation, making it one of the first unicorns in legal tech. (To be accurate, Verbit serves more than the legal tech market.)

Also in November, Grammarly, another company with business in legal and beyond, raised $400 million at a valuation of $13 billion. I had to double-check that. Wow. Grammarly has a tool which corrects and improves writing.

Here’s my earlier post on unicorns in legal tech, “We have FOMO in legal tech!”

-Maureen

We have FOMO in legal tech! 🦄

What is FOMO?

Fear Of Missing Out

Today’s legal tech headline:

“Litera secures further investment from Hg”

Terms of the deal were not disclosed. But we know that:

  • May 2019: Hg purchased Litera investment firm K1 Investment Management. At the time Hg Capital Trust stated that as part of the acquisition, it would lead an investment of $39M in Litera.
  • Litera has trebled in size, per CEO, Avaneesh Marwaha.
  • And from the same press release:
  • Litera is approaching more than 1,000 employees across 17 different countries
  • Litera also has gained over 10 times the number of users since Hg first invested, now serving over 15,000 customers
  • Since 2019, Litera has acquired twelve companies.

And there are 🦄 unicorns in legal tech!

November 2021: Everlaw raised a $202M Series D round at a valuation over $2B.

June 2021: Verbit raised $157 million in Series D funding at a valuation of over $1B.

April 2021: Clio raised a $110M Series E round at a valuation of $1.6B.

December 2020: Ironclad raised $100M in Series D funding at more than $950M valuation.

Ah, FOMO…

To quote investor Kjartan Rist on FOMO, “The fear of missing out on the next billion-dollar opportunity is one feeling that never really goes away.

FOMO is nothing new in Silicon Valley VC-land. But it’s new and exciting in the world of what is broadly referred to as “legal tech.” Legal tech has been known for slow adoption and conservative processes, including mainly using software which is deployed on-premises at the law firm or business entity. In many cases this changed with the pandemic. The overnight necessity to support attorneys and staff working from home catalyzed adoption of cloud-hosted software throughout legal.

My short summary of the phenomenon in legal tech:

☁️ Cloud scales = hyper growth potential

💉 Accelerated by the pandemic

⚖️ Legal (law firms, corporate legal) finally accepts Cloud/SaaS

💰 Capital wants in

🙌 Win / Win / Win

There’s more to this story. For example, FOMO leads to frothy valuations.

But for today…

🥳 Congratulations to the unicorns, the parties to M & A, the newly funded, and the rapidly growing companies in #legaltech! It’s an exciting time to be in legal tech.

-Maureen

Clio 2021 Legal Trends Report

Yesterday was the first day of the Clio Cloud Conference 2021. Clio does a fantastic job of wowing the attendees and creating a community of loyal followers.

Every year the don’t-miss speaker is CEO and Founder, Jack Newton. Jack has big visions. And his execution with Clio has been huge. In April of this year, Clio raised a $110M dollar Series E funding with a $1.6B valuation. When Jack speaks, people are eager to hear what Jack is planning next.

Of the many announcements from Clio today, three are:

  1. Clio Payments: Jack Newton says, “…the most frequent point of friction in attorney-client relationships is collections.” Clio Payments is integrated with the Clio cloud-based practice management platform and syncs with accounting platforms, such as Quicken and Xero.
  2. Clio Ventures: Clio will invest in “promising early stage companies and diverse founders” developing for the Clio platform. Clio has acquired a few companies, most recently Lawyaw, a YC-backed legal document automation company, which had been a Clio partner.
  3. Clio 2021 Legal Trends Report: I look forward to this annual report, full of timely data. The PDF is a free download with registration. I highly recommend that you take a look at it.

I’m highlighting a few points which interested me. There is much more in the report.

First Key Take-away: Client expectations have changed

As we saw in the 2020 Legal Trends Report, the pandemic understandably accelerated clients’ willingness to work with a lawyer remotely. With Clio’s annual data collection, they were able to illustrate the change from 2018 to 2021.

The report further digs into this data by stage of engagement and type of remote communication medium.

Second Key Take-away: Remote services are only part of the picture

I’ve yet to see any survey of criteria on choosing a lawyer in which responsiveness was not the top criteria. Here, “Responsiveness to questions” leads “Price transparency” by a hair. No technology, no remote or in-person meeting capability, is likely to surpass the importance of responsiveness.

Third Key Take-away: Growing firms are really growing.

This data mirrors the data which we saw in early 2021 with respect to the blockbuster year that Big Law had in 2020. See the report for a deeper dive, for example, that growing firms are more likely to be using on-line payments, client portals, and CRM.

And there is more fun stuff!

Vicariously, I like to study the hourly rates by state and by practice.

Also, the KPI data on utilization, realization, and collection rates is eye-opening.

You can download the report from Clio here.

I’d like to thank Clio for widely sharing this fascinating data about the legal market each year. They are committed to the legal community.

-Maureen