There are some interesting strategic differences emerging between the big two legal tech giants, LexisNexis and Thomson Reuters, and the pivot is on how to approach what we may as well call legal AI doc review/analytics.
Last night, Artificial Lawyer covered the news that LexisNexis has formed a joint venture with Knowable, which in effect is an NLP/ML doc analysis company, with what appears to be an important supporting human element for quality control – and which was spun out of ALSP Axiom ahead of its public listing. The JV gives Lexis a new offering to provide primarily corporates with a contract insight capability, especially when it comes to larger doc stack analysis and ongoing visibility of risk and legal obligations.
And let’s just look again at what Knowable is:
‘Knowable gives corporate clients … visibility into the contracts that govern their businesses. By combining proprietary machine learning with purpose-built tooling and scalable facilities for human QC (quality control), Knowable enables a full contracts intelligence solution for the enterprise.’
Its LinkedIn profile also notes that at present it has between 50 and 200 employees.
But, what seems to be really interesting here is that its big rival, Thomson Reuters, has gone in exactly the opposite direction. In April, TR sold off its managed legal services arm to EY. It just didn’t fit the company’s strategy any longer. Also, as far as Artificial Lawyer could see it was getting too close to competing with law firms, as that review/analysis work was potentially billable work some of its law firm customers could have been doing.
LexisNexis is moving now into an area where, although a little different in exact application – as this is not transaction-led – Knowable also analyses document stacks and pulls out key clauses and other data that gives companies better insight into their risks, obligations and overall legal and business position.
Although, after a quick chat with Lexis, Ritu Khanna, Exec VP Strategy and BD at LexisNexis, confirmed that Knowable will provide contractual analytics ‘around transactional events’, such as M&As, divestitures and other similar use-cases.
That Knowable has come out of an innovative ALSP like Axiom also tells us something. I.e. it’s not a million miles away from TR’s tech-backed LPO, even if smaller. It’s also not a million miles away from other NLP/ML-powered offerings in the market.
So, is there a difference in strategy?
TR seems to have decided the way forward is to enmesh itself with the data layer of what lawyers do, especially following the purchase of HighQ yesterday. TR is focusing on leveraging tech to help lawyers better analyse and gather, and now store and move data, and to produce market standard contracts more efficiently and quickly.
To some extent Lexis has also had some of that strategy. They’re also a massive legal data publisher. They’ve bought up and developed AI driven litigation analysis and research tools. They have a host of other tools that help with the day to day running of a law firm, or legal team. But, this is a little different, this move into doc analysis, albeit via a JV.
Isn’t what Knowable is doing also work that law firms provide to corporates from time to time? To some extent, yes. Ongoing analysis of corporate doc stacks is not the bread and butter of law firms, but, they do get asked to come in to do major risk reviews and compliance checks, analysing legal positions and obligations. So, the short answer is: this could be seen as taking some dollars out of the pockets of law firms.
Could Knowable be used for transaction-driven review as well…? Artificial Lawyer has not seen a demo of how their NLP works yet, but if it can extract key data points and spot legal obligations in unstructured data (i.e. text), then it likely could be used for event-driven needs as well, not just an ongoing top-down dashboard view into a corporate doc stack.
But, as noted, Lexis does not see Knowable working that way, even if it could go that way if it wanted to.
Khanna told Artificial Lawyer: ‘This is all about analytics. We have embraced this and we are building leading analytics products in the law, from litigation to transactional work. This is just one type of analytics tool we can add to our portfolio.’
She added that they wanted to offer this capability to all their enterprise customers.
In short, the Lexis play is therefore all about the analytics part. This isn’t a move into the world of the main transactional legal AI doc review companies. That said, several of those are moving into working with corporates to do just what Knowable is doing, even if not on the same ongoing basis.
Are we looking then at a strategic split between TR and Lexis? From where Artificial Lawyer is sitting, that certainly looks to be the case. Not a massive one yet, as they both have largely overlapping and directly competing offerings, especially around legal research/case law.
Of course, this also isn’t a merger. Such a JV allows Lexis not to have to worry about owning such a business. But, as history shows, formal JVs and alliances rarely last that long. Usually either the two parties go their own ways, or they combine. Business relationships just have a gravity of their own, and things eventually either move together, or get spun apart. It’s really hard to stay at arm’s length and work very closely together for the long term.
Also, there is little point doing this JV if Lexis doesn’t market Knowable to all of its corporate clients. So, we can expect Lexis to be out there, selling this JV capability.
Is either strategy better than the other? Nope. Just different. TR clearly felt it didn’t want to take its journey into LPO-land, whether AI-led or not, any further. Lexis now seems to be starting down a path that embraces at least some of what TR was trying to in relation to doc stack analytics.
Final point: how good is Knowable’s NLP/ML analysis? As mentioned, this site has not seen a demo. But, it’s in a market where it’s up against some very experienced AI doc review/analytics companies, with an increasing number also focused on the corporate sector.
With Lexis to lend support, and over time, it will no doubt improve its NLP capabilities, whatever stage it is at. Also, who knows where the Knowable/Lexis JV may lead to in the future in terms of tech capabilities?
And then perhaps the other big strategic question is: how will this impact those legal AI companies working with corporates, whether this starts with a CLM perspective, such as ContractPodAi, or those who have started with a pure-play NLP analysis strategy, such as Seal Software? And then we have the companies such as Kira Systems, Luminance and Eigen Technologies and others that are also increasingly focused on the contract intelligence/analysis space for corporates.
The thing with this NLP/ML approach to text analytics is that you may start off on M&A due diligence, but the same tech can be applied to doing exactly what Knowable is doing. It’s more about the way it’s deployed. Though, it’s worth adding that Knowable is using an additional human team to get the end result.
So, while legal AI ‘review’ and what Knowable is doing are not the same use case, the central tech, i.e. NLP/ML on unstructured data to find insights, is basically very similar.
Lexis may call it analytics, rather than review, and technically that is correct, but in many ways it’s really the same thing, it’s just that Knowable is seeking to be an ongoing analysis tool, not just event driven.
Conclusion: the legal tech market is moving very fast now. Strategic decisions are being made and deals are happening that are reshaping the market, and not just via consolidation. Strategy is everything.
Every week seems to bring new important changes, from mergers, to major investments, to JVs like this one. The only thing that is certain is that no CEO of a legal tech company, large, small, or giant-size, can expect anything less than continual market change for the next few years. Where we will all end up after this commotion is over will be fascinating to see.