Better get ready: the world of legal technology is about to get a lot bigger.
Actually, it’s exploding.
As recently as five years ago, legal tech was not seen as a high-growth sector. Investors weren’t interested. Venture capitalists were skeptical. All that has changed.
But as law firms pivoted to cloud technology, online conferencing and remote work, investors began looking more closely at law tech, seeking the next PayPal.
“Legal tech companies have already seen more than $1 billion in venture capital investments so far this calendar year,” writes Chris Metinko for Crunchbase. “That number smashes the $510 million invested last year and the all-time high of $989 million in 2019.”
The tailwind for this unprecedented growth comes from COVID.
“Industry insiders say the increased investment is due to challenges brought about by the COVID-19 pandemic and what was already a plodding, but steady, change in the legal world to accept cloud and other technologies,” according to Metinko.
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Hot Legal Tech Investments
Here are some of the legal tech companies that are drawing the most investment dollars.
- LegalZoom. What it is: alternative legal service provider. Level of interest: IPO share price spiked almost 40 percent on the first day of trading
- DISCO. What it is: AI and cloud computing. Level of interest: Its IPO numbers soared 28 percent on day one
- Relativity. What it is: e-discovery software. Level of interest: Slack-like
- Ironclad. What it is: Enterprise software for contract management. Level of interest: $100 million from big investors eyeing SaaS-like returns.
- Checkr. What it is: job screening platform. Level of interest: $4.6 billion valuation; raised $250 million in Series E offering
- Rocket Lawyer. What it is: alternative legal service provider. Level of interest: $223 million venture round in April 2021
- Notarize. What it is: on-demand remote electronic notary service. Level of interest: reported $760 million valuation
- Clio. What it is: law practice management tools. Level of interest: raised a $110 million Series E at a $1.6 billion valuation
- LinkSquares. What it is: management tool software. Level of interest: raised a $40 million Series B in July 2021.
“Just as in many industries, the cloud and other new tech had been slowly changing the legal world for more than a decade,” according to Crunchbase. “However, after COVID caused offices to close and legal processes and documents to go virtual, adoption of those technologies skyrocketed. With those changes, investors started to eye technologies that took many firms’ in-house processes and moved them to the cloud—many involving documentations and filings as well as tools to help better communicate with clients.”
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