We are only midway through September, with three-and-a-half months to go in 2019. But already the year has set the record for investment in legal technology companies, surpassing last year’s record of $1 billion.
So far this year, the total investment in legal tech is at least $1.2 billion. The actual number is higher, because other announced investments did not disclose their dollar amounts. Last year, the total investment was $1 billion — of which half went to a single company — and the year before, in 2017, the total was a relatively paltry $233 million.
Over at my LawSites blog, I have posted the full data on investments to date in 2019, providing details on the companies, amounts, investment types, and dates. The list includes 41 companies, plus two others that did not disclose their investment amounts.
The year so far has been bookended by the two largest investments. We were only a few days into January when Onit, a Houston company that provides enterprise workflow products for legal management, contract management, and business process automation, announced a $200 million strategic investment by K1 Investment Management, a Los Angeles private equity firm that specializes in high-growth enterprise software companies.
Until two weeks ago, that stood as the year’s largest investment. Then, on Sept. 4, the cloud law practice management company Clio announced a jaw-dropping $250 million Series D funding round. It is one of the largest investments ever in a legal tech company and the largest ever in a Canadian technology company. (Clio is headquartered in Burnaby, B.C., just outside Vancouver.)
After those two, the other investments that ranked in the year’s top six to date are:
- $115 million for Icertis, a cloud-based contract lifecycle management company;
- $83 million for DISCO, an eDiscovery company;
- $55 million for ContractPodAI, a U.K. contract management company; and
- $55 million for Fadada, a Chinese electronic signature and contracts company.
Of the 41 companies where the investments are known, at least 12 are focused on some aspect of contracts and contracting — including contract management, contract review, and contract automation. These include four of the top six — Onit, Icertis, ContractPodAI, and Fadada.
But other companies span a range of law-related functions. Notarize, an online notary public service, raised $37 million. Farewill, a U.K. platform for creating wills, raised $9.4 million. Boundless, an immigration platform, raised $7.8 million. DoNotPay, which creates legal apps for consumers, raised $4.6 million.
As I noted a year ago in this column, the conventional wisdom long held that major Silicon Valley and New York investors had no interest in legal technology. Last year’s $1 billion in investments suggested that is no longer true. This year’s investment pace appears to prove that last year was not just an anomaly.
To put this year’s $1.1 billion-plus in perspective, consider that, for the seven years from 2010 to 2017, the total investment in legal technology startups — as charted by Holden Page at Crunchbase — was $1.5 billion. That included the “fluke” year of 2015, in which over $426 million was invested — a number skewed by two major investments that year, $125 million in eDiscovery company Relativity and $71.5 million in legal directory Avvo. In both 2016 and 2017, funding dropped precipitously from that 2015 high.
Will this investment trend continue? At this point, there is no turning back. The legal industry has turned a corner on its use and adoption of technology. Law firms are becoming innovators, legal departments are demanding efficiencies and process improvements, a cavernous justice gap cries out for better delivery systems, and regulatory reform efforts foretell a new era of private-sector involvement in the delivery of legal services.
It remains to be seen how this year will end up, as more investment news is certain to drop by the end of December. Whatever the final tally this year, I am willing to bet it will be even higher in the coming year.
Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at [email protected], and you can follow him on Twitter (@BobAmbrogi).
