What Now For the Legal AI Market After the DocuSign/Seal Deal?

Last night Artificial Lawyer shared the news, and analysed the background, to the DocuSign/Seal Software deal that will see the pioneering legal AI company – founded in 2010 – join the $700m electronic signature business in a $188m cash deal.

But, what does this mean for the rest of the legal AI market, i.e. those legal tech companies with a central focus on the use of NLP to review and analyse contracts? Here’s some thoughts.

The Big Names Are Being Acquired

Today there are an ever-growing number of legal tech companies focused on some aspect of using NLP to turn unstructured data into knowledge and valuable insights, from contract negotiation, to the mainstay of event driven review, to client-focused large-scale review covering everything from procurement contracts to LIBOR (which is where Seal was mostly focused), to improved KM search, to creating dashboards to show business information. But that was not always the case.

If we just scroll back a few years, the early pioneers of this space were companies such as Seal, Kira Systems, eBrevia and RAVN – plus Leverton, which straddled property and law, as well as some others that have had less impact. Another early starter was LawGeex, but they operated in a very different space – effectively working as a pre-signature contract checker.

eBrevia was bought by Donelley Financial back in December 2018, and RAVN was sold to iManage in mid-2017. Leverton was acquired by real estate company MRI in July 2019.

And of course, Seal will soon be part of a global corporation. Another early starter was Beagle – but as the recent investigation piece by AL showed, the company is effectively non-operational.

Kira has kept on trucking as an independent company and if AL’s instinct is right, plans to keep growing for a long time to come before selling. Plus, there is no absolute rule that you have to sell to a much larger company. If you grow enough you can list publicly, get more cash, and then you become the company that goes around buying others up to extend your offering.

Either way, Kira is one of the few very big names left from the ‘early days’. And for legal AI geeks, Kira lists 2011 as its start date. Just a little after Seal.

But, will this really matter?

Since those early days of pioneering, often in the event-driven review segment of the market, there has been a proliferation of companies. Some are startups, some are older companies that have moved into the legal AI space, others are tech companies from outside the legal tech world that now want to play here as well.

One of the first of what we can call the second wave of legal AI companies is Luminance, which has done a good job of picking up law firms around the planet, although no doubt would like more global law firms as clients. Will it sell too? It shouldn’t be ruled out, though perhaps it has some way to grow in terms of revenue before that happens. (And also for legal AI geeks, Luminance lists 2015 as its foundation date, and went to market in Sept 2016.)

And then we have a steady expansion in companies and the type of services they are providing, from ThoughtRiver which pioneered risk analysis in contracts, to Diligen (which was founded in 2015), ContractPodAi, LinkSquares, Eigen (which focuses a bit more on banking/financial services), Ayfie (which has been around for a while – but was focused elsewhere initially), to Evisort, BlackBoiler, Scissero, Heretik (which works closely with Relativity), and even more recently to Della AI and TermScout, and now we see that Imprima, the VDR company, is also launching a legal AI doc review capability, while Knowable is in a JV with LexisNexis after leaving Axiom and is focused on on-going contract analysis. And there are others. The list grows every month or so. So does the list of use cases and approaches. In short, this is a busy market segment full of life and space to grow still.

So, as you can see, the market is not short of legal AI companies. In fact, the market – which is widening and showing increasing diversity of use case – is in great health. What seemed like fringe technology (and probably is for many smaller firms) is not strange at all now for the large commercial firms today, nor the major ALSPs, nor some of the larger corporates who run this tech inhouse.

Moreover, Seal joining DocuSign is not the end of Seal. There will be a lot of focus on tech integration – naturally – but Seal will still have clients, it will still do the work it has done before as well. The same went for eBrevia, which if anything is now a larger business, still doing the same work as before.

In short, an acquisition can simply empower a business and provide support for new growth.

Conclusion:

While it’s inevitable that there will be a discussion about consolidation, in many ways this doesn’t change things that much. As long as Seal and its respected NLP capabilities are still being used by a number of the world’s largest corporations, then the merger’s impact on legal AI market share will be muted. And, as noted, it could potentially increase Seal’s client base.

The only thing that might change the equation is if DocuSign decided to end Seal’s work with its long-standing clients and simply tap its tech to improve some of its own platform’s capabilities. That doesn’t seem likely.

As noted in last night’s article:

Scott Olrich, DocuSign’s chief operating officer, said: ‘We believe that AI will play a vital role in [our products’] transformation. And by integrating Seal into DocuSign, we can benefit from its deep technology expertise and its broad experience applying AI to agreements.’

The company added that: ‘Once the acquisition has closed, DocuSign will continue to sell Seal’s analytics application. It will also integrate and leverage Seal’s AI technology to augment DocuSign CLM, one of the market’s leading contract lifecycle management solutions.’

So, all is well.

To round things off, the legal AI market has never been larger, more active, more healthy, more diverse in terms of use cases, and perhaps more in demand from investors. All in all, a sign that those early pioneers and in particular Seal Software, which started in 2010, were absolutely right about what could be done and the market’s eventual appetite for this.

P.S. congrats again to everyone at Seal, a company that Artificial Lawyer has known since the start of this publication.

P.P.S. Jim Wagner, President of Seal, also kindly sent over an additional comment to AL, which says:

‘Firstly, we are delighted to be joining DocuSign. As is evident from our partnership to date, we have a natural synergy with the company, and we bring AI to bear on agreements in ways that create great opportunities for customers and partners.

‘More broadly, DocuSign has an expansive vision for the Agreement Cloud, and Seal Software can serve as the AI and analytics cornerstone not just for e-signature or CLM, but the entire solution suite. And that’s incredibly exciting for all of us.’


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2 Comments

  1. Thanks for the article Richard. Many good things are indeed to come, that I can guarantee. We created this space, and have driven it independently for 10 years. But now we have one of the largest data driven companies helping us continue to drive. Exciting times for all in growth and advances in the ML/ NLP space.
    Thanks
    Kevin.
    Founder and CTO Seal Software.

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