Legal Tech — Where’s all the VC money?

Source: Crunchbase

We recently hosted a legal tech roundtable together with our friends at Draper Esprit to discuss some of the big topics related to the sector. It was a lively discussion between founders, investors and industry experts and it got me thinking to the size of the market opportunity in legal tech and why more VC money hasn’t been invested in the space. This was also a topic that came up a lot at the recent excellent Legal Geek conference in London so I thought I’d dive in to take a bit more of a look.

Big numbers are often thrown around regarding the size of the legal tech market. I’ve seen pitch decks with numbers ranging from over £26bn for the UK market to $400bn for the US. However, as indicated by the chart above, investment in the legal tech sector isn’t anything to write home about. Total VC funding globally for 2016 was less than $250m, which given the size of the global VC market is not a huge number. 2017 seems to be tracking at a similar rate and the spike for 2015 was largely driven by two large financings (Relativity and Avvo).

To add to this, the recent legal tech report produced by Legal Geek and Thomson Reuters (Movers and Shakers: UK Lawtech Start-ups, 2017) had the amount invested into UK Seed stage startups (those who had raised <$5m) for 2017 (to June) at a mere £6.7m.

This poses the question, why isn’t more VC funding flowing into Legal Tech? I wanted to unpack 3 of the headline reasons I often hear and explain why I remain very bullish on the potential for the sector.

  1. “The market isn’t actually that big”

Whilst the headline numbers are impressive (£26bn, $400bn etc.), when you actually look at the market size for some of the legal tech solutions the addressable market could be seen as much smaller. For example, ML contract review is an exciting space that many legal tech startups are focussed on (BeagleLuminanceKira to name some of the more established players). However, on the face of it, the universe of potential purchasers of such solutions is a lot smaller than the large market numbers would suggest. Such startups that sell into law firms (to note, not all are focused on this segment) are only likely to find appetite amongst the larger more technologically savvy firms who, whilst significant, represent a smaller sub-set of the overall market.

Whilst the market size concern is valid and I’m not a fan of startups solely pitching the massive headline numbers. I believe it’s short sighted to see this as a substantial issue. There’s no doubt that the legal services market is becoming more sophisticated and technology adopted at the more tech forward law firms will filter down to the smaller firms (or arguably such smaller firms will cease to exist). We just have to look at the adoption of tech solutions across the larger firms and even the steps by certain large firms to set up accelerators (MDR Labs), investment arms (Next Law Labs), work spaces (Fuse) etc. as evidence of an increased appetite.

Also, law firms themselves are only one aspect of the market. Selling into the in-house legal, business or compliance teams is another lucrative market segment (JuroLegit and Libryo are some examples from our portfolio of startups addressing such respective segments). Such in-house teams are often more astute purchasers of software and as such a potentially better route to market.

Additionally, one could argue, there is an untapped latent legal market that could present an even larger market opportunity. For example, we’ve only began to scratch the surface of democratising access on a B2C level to legal services (e.g. WillingFarewillDoNotPayCrowdJusticeAbsolute Barrister). p.s. I’d love to meet founders building Legal Tech companies focusing on the B2C space – I think there’s some big opportunities here!

2. “The incentives aren’t aligned”

Law is an odd industry where many law firms (not all) still bill clients by the hour. Therefore tech solutions that make them more efficient may not be positively received and hard for legal tech startups to sell in.

Whilst this has traditionally been an issue, I think the market is finally turning on this point. For one, a large proportion of the consumers of legal services are themselves sophisticated users and purchasers of software across different business areas (Accounting, CRM etc.). Therefore, there is an expectation that their legal service providers utilise tech solutions to provide the best service. Clients / consumers expect more transparency around how much they are paying and startups are helping provide more transparency here (ApperioSeedLegals and Lexoo are some taking advantage of this trend). Furthermore, the emergence of startups such as Atrium is further evidence that startups are seeing the move away from the billable hour as an opportunity to provide tech to leverage efficiency gains across the market.

We’re also seeing law firms look to tech solutions as a way to differentiate versus competitive firms. Adopting the latest advancements in technology ahead of their competitors such as smart contract technology (Clause are a startup in our portfolio doing some exciting stuff in this space) or ML contract review (see companies listed above) is an additional way for firms to stand out in a crowded market.

To add to this, as per above, law firms is only one potential customer segment and for other segments (e.g. in-house etc.) the incentives to keep legal cost and time spent down are very much aligned.

3. “The sales cycle is too long”

Lawyers and law firms are notoriously tough to sell to. Law firms are usually structured as partnerships requiring multiple sign offs to get to a sale. Add this to the inherent risk averse nature of the industry and you have a bit of a perfect storm.

I think this one is potentially here to stay for a while but there are signs things are improving. Larger law firms are putting tech on the exec team (partnership board) agenda and we’re even seeing CTOs start to be appointed. All promising signs. Furthermore, looking outside of law firms and more towards in house teams or non-legal businesses and the sales cycle point begins to fall away.

Whether selling in-house, private practice (law firms) or otherwise, the key thing for startups to do is to try to identify the key decision makers to expedite the process. As the spotlight on legal tech increases this should help raise awareness of its potential and reduce the sales cycle.

The future of the funding landscape

I firmly believe there are huge opportunities for startups in the legal tech space. It feels like the sector is at a real tipping point and I see the emergence of major startup success stories as an inevitability. I think we’re going to see more VC funding looking to back the standout startups scaling up. I’m excited about seeing what talented founders build to tackle some of the biggest problems and take advantage of such massive opportunities.

Originally posted on Medium.

Legal Tech – Mapping Disruption

We (Seedcamp) recently hosted a Legal Tech focused event in partnership with Next Law Labs to bring together influencers in the Legal Tech community and those interested in finding out more. The turnout for the event was great and speaking to the founders who came along it really feels like the space is at a tipping point. Being an ex-lawyer this has always been a space that has really interested me, I wanted to share the below map and some market insights on why I think now is a great time for Legal Tech.

Market Map

The aim of the map is to provide an overview of many of the different startups within the Legal Tech space. It’s not designed to be all encompassing or fully comprehensive. I’ve included a full list of all the companies on the map and how much they’ve raised to date at the end of this post. If I am missing something, tweet me @tom_wils

What is Legal Tech?

Firstly, what is Legal Tech? Broadly speaking, the Legal Tech market covers companies (mostly startups) utilising technology to build products solving problems faced both by industry (i.e. law firms, corporates etc.) and consumers related to legal services.

Why now?

Whilst the space has been slow to take off (i.e. in comparison to Fin Tech), a combination of factors are coming together to make now a great time to build a startup focused on the Legal Tech space:

  1. Maturing ecosystem – as the map shows we are seeing increasing numbers of well funded startups. This in turn raises the profile of the industry and provides further validation for startups looking to get those first customers in a notoriously risk-averse market.
  2. Increased transparency – the legal services market has historically been viewed as one that is opaque when it comes to knowledge and therefore costs. The introduction of marketplace models and startups focused on document services (see the Map above) are improving this information asymmetry. This increased transparency is presenting opportunities for startups to compete with the more well-established players.
  3. Automation – advances in natural language processing have enabled people to build solutions addressing various verticals within the overall legal tech market (see eDiscovery, IP Management, Contract Review). In particular, such solutions are taking advantage of large data sets to assist with the automation of certain low level repeatable tasks. The opportunities here to reduce the time taken and therefore costs are significant (law firms still tend to bill by the hour). As this technology improves and the data sets they work on are scaled up it could be possible for solutions to be built to automate more advanced work.
  4. Innovation – we are seeing the emergence of startups that are aiming to go beyond the automation and provide additional insights (see Legal Research). Whilst this space is still in its infancy, this arguably could lead to the removal of the need to instruct lawyers for certain tasks.
  5. Generational shift – there is an increasing interest in the space both from those within the law (particularly towards the junior level) and those building solutions from outside the law aimed at the sector. Furthermore, law students and future practitioners will start and grow their careers utilising advances in technology.

— –

Map: Breakdown by sub-sector

I’ve taken the following as sub-sections of the overall market:

  1. eDiscovery – solutions to manage emails, documents and other files specific to the litigation process.
  2. IP Management – tools to help track and analyse trademarks, copyrights, patents and other IP assets.
  3. Marketplace – tools to help people find lawyers for specific matters.
  4. Research – tools to help lawyers with legal research and / or make more data-driven decisions.
  5. Practice Management – tools to help law firms with issues around on-boarding clients, tracking matters, billing, invoicing, time-tracking etc.
  6. Document Services – providing legal documents or forms and (in some cases) legal advice. i.e. covers contract creation, management and / or legal services.
  7. Contract Management – helping companies keep track and manage contracts throughout the contract lifecycle.
  8. Contract Review – technology solutions (e.g. natural language processing and machine learning) for automatically abstracting contract terms to help with contract review.

Map: Breakdown by company


Kcura — raised $125m, developers of e-discovery software.

CS Disco — raised $12.4m, e-discovery platform.

Everlaw — raised $9.6m, litigation platform beginning with e-discovery.

AccessData — raised $45m, digital forensic, e-discovery and incident response solutions.

RenewData — raised $41m, e-discovery, e-storage risk management solutions, and forensic.

Lighthouse eDiscovery — raised $34.5m, e-discovery litigation services.

Guidance Software — raised $7.54m, e-discovery, data discovery and computer forensics.

Catalysy Repository Systems — raised $31m, provides litigation support software and hosted document repositories.

PSS Systems — raised $18m, provides solutions for legal holds and retention problem.

StoredIQ — raised $41.84m, analysis and governance of unstructured data (acquired 2012).

Recommind — raised $22.5m, enterprise search and categorisation platform automatically organises, manages and distributes large volumes of information from multiple sources.

X1 Technologies — raised $12.2m, enterprise wide collection and processing as well as review and analysis platform for litigators.

Modus eDiscovery — raised $10m, data management firm that helps organisations leverage eDiscovery intelligence.

Cicayda — raised $6.8m, Saas based e-discovery software.

Zapproved — raised $17.24m, e-discovery for corporate legal teams.

Mimecast — raised $90m, amongst other features, e-discovery (went public in 2015).

Logikcull — raised $4m, e-discovery platform.

Cloud Nine — e-discovery platform.

IP Management

Trademarknow — raised $3.5m, trademark search and watch results.

Anaqua — raised $125m, provides a range of IP management software solutions.

Lecorpio — raised $25m, provides IP management software to automate intellectual property processes.

PatSnap — raised $13.6m, search platform for patents.

Zhiguoguo — raised $3.7m, IP management software including registration and legal services.

Naming Matters — IP visual search and related naming tools.

RPX Corporation — raised $undisclosed, provides patent risk litigation solutions (went public in 2011).

Innography — raised $13.02m, patent management software.

P Street — raised $6.96m, IP and patent search tool.

Turbopatent — raised $2m, patent application and prosecution solution.

Deltasight — raised $400k, IP analysis and visualisation.

IPlytics — raised $undisclosed, monitors and analyses company’s competitive position for patenting.


Ravel — raised $9.2m, legal search, analytics, and collaboration platform for lawyers. (Acquired 2012).

Judicata — raised $7.8m, turning unstructured court opinions into structured data.

ROSS Intelligence — raised $undisclosed, using IBM Watson to provide answers to legal research questions.

vLex — raised $5.2m, multilingual database of legal content.

LexMachina — raised $10m, IP, litigation data and predictive analytics to law firms. (Acquired 2015).

Casetext — raised $8.8m, community site for lawyers to share knowledge.

Juristat — raised $3m, big data analytics and research tool focused on patent prosecution.

Practice Management

Clio — raised $26m, practice management suite that is designed for sole practitioners and small law firms.

Apperio — raised $2.4m, enables firms to track legal spend at an overall or matter level, in real time. (Seedcamp is an investor).

Peppermint — raised $15m, platform that delivers application services across accounts, practice, case document, risk management.

Total Attorneys — raised $15m, practice management software and customer acquisition for attorneys.

Viewabill — raised $1.1m, real time access to time entries and billing practices.


Avvo — raised $132m, legal marketplace, directory, and question and answer forum that connects individuals with lawyers.

Lexoo — raised $1.7m, lawyer comparison marketplace for businesses.

UpCounsel — raised $14m, marketplace for legal services.

LawDingo — raised $790k, marketplace for virtual legal consultations.

Lexdir — raised $420k, legal marketplace and directory.

Zhuanjiabao — raised $692k, legal marketplace plus virtual legal consultations.

Priori Legal — raised $undisclosed, lawyer comparison marketplace for businesses.

Legal Reach — raised $900k, legal directory.

LawAdvisor — raised $590k, marketplace for virtual legal consultations.

Lvgou — raised $1.9m, legal marketplace.

Legal Hero — raised $750k, legal marketplace focused on fixed fees.

On Legal — legal case management platform with marketplace.

LinkiLaw — legal marketplace.

Access Solicitor — legal marketplace.

Lexstep — legal recruitment marketplace.

Document Services

LegalZoom — raised $266m ($200m of secondary), contract creation and legal services.

Rocket Lawyer — raised $53.3m, contract creation and legal services.

DocStoc — raised $4m, contract creation and sharing platform.

LawPath — raised $1.9m, contract creation and legal services.

Docracy — raised $850k, contract creation and signing.

Juro — raised $80k, contract creation and management. (Seedcamp is an investor).

Dragon Law — raised $410k, contract creation and legal services.

LawBite — raised $170k, contract creation and legal services.

Clerky — raised $120k, contract creation and management.

IronClad — raised $undisclosed, contract creation and management.

Shake — raised $4m, mobile-first contract creation. (acquired 2015)

Intelligize — raised $3.59m, legal form (i.e. SEC filings) creation and management.

Brightleaf — raised $3m, contract creation and management.

Iubenda — raised $100k, privacy policy generator.

Contract Management

Icertis — raised $21.4m, contract creation and management, focused on enterprise.

Contract Live — raised $1.4m, contract creation and management.

Avvoka — contract management.

SpringCM — raised $85m, work flow automation and contract management.

Selectica — raised $23.3m, work flow automation and contract management. (went public in 2010)

Exari Systems — raised $10m, contract creation and management.

Pekama – raised $undisclosed, contract management and collaboration tool.

Clausematch – raised $600k, contract management and collaboration tool.

Contract Room — raised $850k, contract management and collaboration tool.

Seal — raised $13m, contract management and analytics.

Contract Review

eBrevia — raised $500k, natural language processing and machine learning to understand legal language.

Legal Robot — natural language processing and machine learning to understand legal language. Focused on both B2B and B2C.

Beagle — natural language processing and machine learning to understand legal language. Focused on B2B.

LegalSifter — raised $1.6m, natural language processing for contracts.

Kira Inc — natural language processing and machine learning to understand legal language.

LawGeex — raised $2.5m, natural language processing for contracts.

Cognitiv plus — natural language processing for contracts.

Originally posted on Medium.