Legal tech platform, Onit, which has a focus on enterprise workflow solutions and CLM, has bought legal AI company McCarthyFinch, as it embarks on a major expansion drive into the doc review market.
The move follows the purchase of legal operations management software company SimpleLegal in 2019 and underlines not only a serious expansion of its platform, but a clear statement of strategic intent in terms of taking market share in the doc review space. It also follows a $200m investment from private equity group K1 in January last year.
McCarthyFinch’s tech stack, such as its flagship product ‘Author’, will now become an integral component of Onit’s new NLP platform Precedent, and the company’s first release on the platform will be ReviewAI – which as the name suggests is there to help clients with contract review.
The company explained that this will ‘focus on pre-signature contract review. Using ReviewAI, lawyers can streamline intelligent activities like contract creation, redlining, complex negotiations and risk rating contracts on their terms. Through Precedent, ReviewAI learns from the vast inventory of a company’s contracts, leverages the company’s playbook and presents the results in a Microsoft Word plug-in so the legal team can work where it is accustomed to operating.’
This is clearly a big deal, and one wonders how many other NLP-focused doc analysis companies Onit talked to before the deal with McCarthyFinch went ahead, which is a company that is based in New Zealand, but also has offices in the US. Also, according to LinkedIn, the AI company has 22 staff across its offices. It launched back in 2017.
The Kiwi company has been doing some pioneering work (see AL story about previous product launches) and gained renown in the Asia-Pacific region, but it perhaps has not had the same impact globally as other well-known brands, especially in key markets such as the US and UK.
In any case, that is the past. The future is all about adding to Onit’s already considerable array of CLM-connected capabilities. It’s also one of the few legal tech M&A deals where the target has been primarily focused on NLP doc review and analysis. There have been previous deals with NLP companies, e.g. iManage/RAVN and Donnelley Financial/eBrevia. The most recent similar deal was DocuSign buying Seal Software.
We have seen a number of companies with CLM capabilities build their own NLP functions, from ContractPodAi to Parley Pro, to more recently Agiloft. Meanwhile companies that started out mostly on the NLP side have been building out their CLM capabilities, such as LinkSquares. We have also seen Knowable, which is in a JV with LexisNexis, build out an NLP capability to help corporates to create contract data dashboards.
In short, while there is still a bright and burgeoning future for the transactionally-driven NLP companies that pioneered the legal AI field and mostly work with law firms, the area of directly providing corporates with doc review applications is also rapidly expanding – often driven by companies that started out with a more ‘traditional’ approach to CLM.
Eric Elfman, Onit CEO and co-founder, said: ‘Our vision is to build AI into our workflow platform and every product across the Onit and SimpleLegal product portfolios.
‘AI will have an active role in everything from enterprise legal management to legal spend management and contract lifecycle management, resulting in continuous efficiencies and cost savings for corporate legal departments. Historically, legal departments have been thought of as black boxes where requests go in and information, decisions or contracts come out with no real transparency.
‘AI has the potential to enhance transparency and contribute to stronger enterprise-wide business collaboration in a way that conserves a lawyer’s valuable time.’
Nick Whitehouse, McCarthyFinch’s CEO and co-founder, who is now the general manager of the newly rebranded Onit AI Center of Excellence, concluded: ‘With AI, we’ve dramatically changed the contract management lifecycle and enabled businesses to move faster, provide higher-quality services and lower the cost of legal services. We are excited to join the Onit team and apply AI to Onit’s contract lifecycle management solution and expansive product offerings.’