- Investments in and acquisitions of legal tech startups are on the rise as law firms, in-house general counsel, and clients seek more efficient ways to do business.
- Also fueling the growth of the legal tech market is the mounting competition from professional services firms like the Big Four accounting firms.
- VC investors have been focusing on legal tech for years, but as companies move into the later stages, a successful startup might be snapped up by “strategics,” larger companies like DocuSign, Mitratech, or Clio, that are looking to get in on the action.
- Here’s a list of 21 successful legal tech startups that were acquired by or received investments from these strategic investors.
- Visit Business Insider’s homepage for more stories.
Venture capitalists have long been investing in promising legal tech startups: There were 124 deals valued at around $1 billion in the space globally, up from 84 deals valued at $500 million in 2018, according to data from PitchBook.
But VCs aren’t the only ones paying attention. As some of these startups move beyond the early stage big-league legal tech players like Clio and DocuSign have made strategic investments and acquisitions in the space, while others, like the Big Four accounting firms, may also be poised to get in on the action in the future.
Scott Mozarsky, who focuses on legal and compliance markets as a managing director at investment bank JEGI calls these types of investors “strategics.” He explained that the commoditization of legal services and increasing competition from the Big Four accounting firms, which have been expanding their legal arms, are two factors behind legal tech’s surging popularity among investors.
As much of the country’s workforce remains remote due the ongoing coronavirus pandemic, law firms have had to digitize all aspects of their business process, creating even more opportunities for startups that offer tech-fueled ways to streamline workflow and shed unnecessary costs.
Also fueling competition in the legal tech market are professional services firms that are introducing their own legal services to clients, like Deloitte Legal, which offers legal management consulting and legal managed services to clients, and KPMG’s Global Legal Services, which describes itself as a “strategic advisor” to in-house counsel.
Ownership rules currently prevent non-lawyers from owning law firms — rules that are starting to change, beginning with Arizona in 2021 — so for now, companies are competing with law firms to offer some legal services with a focus on digital and automated innovation.
As more companies are vying to dip their toes in the legal market, Business Insider compiled a list of 21 successful legal tech startups that these strategic investors have acquired or invested in since 2018.
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