Lexion, an AI-powered CLM system, has announced an oversubscribed $11m Series A round led by Khosla Ventures, with participation from existing investors Madrona Venture Group and Wilson Sonsini, bringing the total invested to $15.2m.
David Wang, Chief Innovation Officer at Wilson Sonsini, told Artificial Lawyer: ‘We’re actively working with the company both as a customer and as an investor. I’m also on the board along with representatives from Khosla and Madrona.’
When asked about how the CLM sector is changing, he commented: ‘We’ve recognised the importance of CLM since we invested in the Seed a few years ago. There’s a lot of options out there, but Lexion stood out to us based on our own proprietary NLP testing of their technology.
‘We think an easy to use, high ROI solution like Lexion that can understand the underlying structured information in contracts could be a huge value add for all our clients, and that the underlying technology has important implications for law firms as well. For example, we use Lexion’s technology to automate deal reporting for our Entrepreneurs Report, which has dramatically increased both the speed and efficiency of the process.’
Artificial Lawyer also spoke to Gaurav Oberoi, co-founder and CEO of Lexion (pictured above) about how the company will grow in what is an ever-expanding – but also very competitive market, with several CLM companies making top hires and/or gaining major funding, including – among others – ContractPodAi, Ironclad, Evisort and Agiloft.
‘CLM is a huge market, and there is so much investment now because legal is one of those functions that has no go-to SaaS product, like you have for sales, such as Salesforce,’ Oberoi explained.
‘Sales, marketing and HR all have a big SaaS platform to use. But in legal they have cobbled together tools and [inhouse lawyers] are using email to manage workflows,’ he added.
Oberoi sees a market with several levels, not just one or two CLMs winning all the market, but with vendors operating from the small to medium size, to large, to global giant company sectors.
And he noted that Lexion would be very useful for companies with small legal teams that were grappling with contracting.
‘These companies want to spend less, but also want to remove the menial work [around contracting],’ he said. ‘People want automation that works and has fast time to value.’
He also noted that many CLMs were not easy to use and involved a lot of ‘heavy lifting’ to get value from. They aimed to be easy to use and to implement.
He added that they are rapidly building out Lexion’s capabilities, but some of its core features now include:
- Centralised document repository.
- NLP-driven search and reporting.
- Reminders and contract alerts.
- and, Permission controls.
They’re also working on improving their machine learning, with their NLP getting better as it is used, but also they are exploring computer vision to help identify aspects of a contract more easily, as most legal documents are heavily stylised with headings and sections.
There will be more on workflows to come, as well as drafting capabilities – all things that the huge funding is going to help with.
One last thing is this fascinating observation from Oberoi, in that he said he is aware of companies that have as many as three different CLM systems – although all operating in silos. Meanwhile, others just use email to manage everything, or an Excel sheet. And then there are the companies that have a CLM, but don’t really use it because the software is clunky and hard to operate.
Clearly there is much to play for in the CLM sector.