Legal tech firms received over $1 billion in first three quarters of 2019: Bloomberg Law
According to figures compiled by Bloomberg Law, investments in legal tech companies stood at US$408 million in the first quarter and at US$122 million in the second quarter of 2019.
This takes the total investment made in the legal tech sector in 2019 so far to over $1.2 billion. US-based companies outperformed other legal tech firms on investment for a third consecutive quarter, the report noted.
The report points out that last year was a record year, with legal tech investment hitting $1 billion. As Massachusetts lawyer Bob Ambrogi pointed out in December 2018, half of that US$1 billion investments was attributable to a US$500 million investment in Legal Zoom.
This year, however, given the Q3 scenario, “ it’s clear that this year is seeing large-dollar investment in a wider diversity of legal tech firms,” Meg McEvoy, Legal Analyst at Bloomberg Law noted in the report.
The top funding rounds in the third quarter include investments of US$250 million in legal practice management Clio (Canada), US$115 million in contract automation and management firm Icertis (US), US$100 million in litigation finance firm Legalist (US), US$55 million in UK-based contract lifecycle management firm ContractPodAi, US$50 million in contract automation and management platform Ironclad (US) and private equity infusion of US$50 million in Validity Finance (US).
The other investments include US$36.9 million in e-notary application Notarize (US), US$5.68 million in Spanish IP infringement detection platform SmartProtection, US$5 million in the US privacy compliance platform DataGrail (US) and US$4.6 millions in UK based parking ticket appeals and small claims filings DoNotPay.
Analysts note the high number of high ticket investments at US$50 million or more while last quarter, there was only one investment of US$50 million.
In addition, three deals in Q3 crossed the US$100 million mark, reflecting an increased comfort level among investors with putting big dollars into this sector, the report said. The largest investment of US$250 million in legal practice management software firm Clio helped cement Q3’s soaring investment numbers.
The number of investments made in contract lifecycle management and analytics companies has also grown, the report noted. These investments include funding rounds of Icertis, ContractPodAi and Ironclad that are in the top 10 as well as three other investments (in Lexion, ThoughtRiver, Genie AI) totalling US$230.7 million.
in the contracts review, automation, and management segment in the contracts space received investments in Q3, for. This includes a nearly $1 million grant to Genie AI from UK Research and Innovation, a UK innovation NGO.
Bloomberg’s research is based on an analysis of Crunchbase data and other reports on the sector. The report notes the figures could be slightly understated as dome companies with applications in legal (such as artificial intelligence or SaaS companies) are not designated as “legal” by Crunchbase, and hence could have been missed in the roundup.
Also, nine funding rounds, including in Axiom (US), a360inc (US), CodeLex (Singapore), digitalCounsels (Switzerland), iCONECT Development (US), Legal Utopia (UK), LexFox (Germany), orthodox.ai (US), and Usercentrics (Germany), were for undisclosed amounts and hence are not figuring in the report.