Legal Tech Comes of Age: IPOs, Unicorns + M&A

Legal tech in the last year or so seems to have reached a new stage of development, with companies valued at over $1 billion, major corporations buying pioneering ventures, and now a pair of IPOs in the shape of LegalZoom and Intapp. Has legal tech now come of age?

Clearly the last couple of years have seen a step change in the business side of legal tech. After the surge in startups in the 2015 to 2017 ‘New Wave’ period, there has been a new perception more recently that legal tech is breaking out of its confines and starting to be noticed across the economy. It is fair to say that it is truly taking its place among the other ‘-techs’ in the market, such as fintech.

Although, that said, the fintech market still dwarfs legal tech by a massive margin, with total revenues for that area expected to reach over $300 billion. While one estimate suggests the legal tech market is worth just $17 billion, although that analysis excluded software for purely archiving/searching legal documents or contracts. But, even if we add the latter, it would still be a fraction of fintech.

And yet, as mentioned, things are changing and legal tech is clearly being taken far more seriously than before, and appealing to the broader investment world.

Here are four indicators that to Artificial Lawyer signal a coming of age:

Major Corporations Buying Legal Tech

An example here is the purchase by DocuSign of both Seal Software, a pioneer in the use of NLP software for reading legal docs, and most recently the acquisition of Clause, another pioneer, this time in smart contracts.

DocuSign has revenues of around $0.97 billion. Yet it clearly sees real value in ‘small’ legal tech companies and wants to lead in this field, albeit at an enterprise level via its Agreement Cloud.

We have also seen Thomson Reuters buy HighQ, although in that case the giant legal publisher was already heavily focused on legal tech. So, it’s really the former buyer that is more significant in that it shows that corporations that are not ‘legal tech’ and are many times larger than the pioneers in this sector, are now looking at legal tech in broad, strategic terms. I.e. some big corporates are taking legal tech to the wider market.

And we have also seen a rush of ‘platformisation’, such as via Litera’s many M&A deals building a platform that is enterprise scale in scope. Although, again, Litera was already in the legal tech space before it went on its more recent growth surge.

Huge Valuations and Massive Funding Rounds

We have seen a surge of capital flowing into startups, scaleups and well-established companies from an ever-widening collection of funds. In turn this has led to billion dollar valuations, or so-called unicorns, such as Clio, which recently raised $110m and was valued at $1.6bn.

It’s worth remembering that many legal tech companies, at least on the startup/scaleup side of the market are quite small still, even after several years of operating. Yet, some are breaking through and reaching significant scale. Part of this is because companies such as Clio have had time to grow – it started back in 2008. But, that’s not everything. It’s also about scalability.

The interesting thing here is the scale is not being achieved just because of the SME or B2C effect, i.e. Clio services smaller to medium-size firms and there are a lot of them. Intapp, (also see below) has reached revenues of around $190m, and it very much services major law firms and other large businesses. So, the interest in legal tech isn’t totally a ‘small law’ feature. Also, while DocuSign has many SME users, it also serves the world’s largest companies.

The Growth of an Enterprise Mindset

As explored in a recent interview with Agiloft’s CEO, Eric Laughlin, the next step is for legal tech companies to have more of an ‘enterprise mindset‘, i.e. to stop thinking in terms of just serving law firms, or a legal function, but instead the wider business, and business in general.

This tends to favour companies focused on that key business asset – the contract. Hence it also favours CLM companies – a fact not lost on DocuSign either. By thinking more in terms of an enterprise viewpoint then legal tech opens up its potential use cases, and its potential market.


And of course, there is the latest IPO news about LegalZoom and Intapp. In both cases the IPOs will mean a surge of new capital, with potentially big institutional investors getting involved, and a new world of operating in a heavily regulated market becoming part of their new reality. No doubt that will change things. It doesn’t get much more ‘big time’ and serious than this for a company.

One factor it may change is growth rates. Big investors want big returns and they will expect a healthy expansion of revenues, as well as regular dividends. So, by doing an IPO the management teams have effectively committed to really significant growth for many years to come – (and both companies were growing very well already). This may drive acquisitions of other companies, for example, to help provide this growth, and new investment in tech and products. All in all it should turbo-charge what are already successful companies.

And here’s what some market experts said of the IPOs and what they mean for the wider market:

Stuart Barr, most recently Chief Product and Strategy Officer at HighQ/Thomson Reuters, said: ‘I think it’s an incredibly exciting time for legal technology and service providers. I hope both IPOs are successful because it will give the whole market confidence in the potential of the industry and show other companies in the space that there is a route to growth and realising their value other than simply being acquired by one of the traditional big vendors.’

Michael Grupp, CEO, BRYTER, said: ‘It is the category of enterprise software as a whole that is becoming an increasingly interesting asset class. Most IPOs in the last 12 months have seen private valuations validated in the public markets. That is a great sign for SaaS – and the legal and compliance providers in that area will benefit from this, too.’

Andy Wishart, Agiloft’s Chief Product Officer, also commented: ‘It has been incredible to see Intapp’s growth over the past 10 years. They timed the pivot from on-prem to cloud perfectly, made smart acquisitions, and expanded beyond legal into banking, accounting, and consulting to drive additional growth. They are a great example of a solution evolving beyond legal to become part of the enterprise information architecture, and it will be interesting to see how they utilize the additional funds raised via the IPO.’

And, Pieter van der Hoeven, CEO of Clocktimizer (now part of Litera), added: ‘This is really ground breaking news for the industry. We have heard a lot of negative comments about how legal tech startups have no viable path to success, but this proves that there is a path. It takes two things: (1) time and (2) a problem that is in search of a solution, instead of the other way around. Most exciting about this development is that this will help legal tech startups and scale-ups in securing funding, now that IPOs are a proven viable exit option. Well, we have to see valuations of course.’

And this last bit is a great point: when investors can see a very profitable exit, i.e. an IPO, this may encourage even more money to flow into legal tech.


All of this indicates that we are entering a new phase for legal tech that very much signals more growth and market expansion. All of this is good news. Legal tech may never be as large as fintech, but it’s certainly on the map now like never before.

We can only expect more investment into legal tech, more strategic M&A, and more IPOs.

And finally, some may ask: how is this important to me? It means more growth and hence more jobs in legal tech, and it means more opportunities for those in legal tech companies to have careers that could begin in a startup and eventually mean you get to be a CTO in a massive corporate. And it means that the entire industry is better funded and more able to engage with the market – both in terms of law firms and inhouse teams, and far beyond that.

Interesting times!