Legal Tech Pac-Man Litera Reactivates, Gobbles Up BigSquare

Legal tech Pac-Man, Litera, seems to have got its M&A groove back with the purchase of BI data provider BigSquare, after six months of rest to digest its previous horde of acquisitions.

The last major deal they did was with Prosperoware, in January this year after a period of frenetic M&A activity. It’s also the first acquisition since Sheryl Hoskins joined the company as Litera’s new CEO.

So… this a big deal? BigSquare is based in the US and has over 50 staff, so this would not have been a massive purchase in terms of money spent – especially perhaps not in the current climate where SaaS software company valuations have collapsed since the start of 2022.

As to what it does, ‘BigSquare’s BI software retrieves, analyzes, and visualizes financial data onto an elegant, highly configurable financial intelligence dashboard that is easy to digest and understand. Lawyers and management teams can leverage the practical insights themselves, reducing the need to hire or rely on specialists to interpret the data’.

It will fit nicely together with Clocktimizer, Concep, and Foundation Software – which were also previously bought by Litera and contribute to a deeper picture of what’s happening inside a law firm from a business activity perspective.

Artificial Lawyer asked Pieter van der Hoeven, CEO of Clocktimizer, some more about the deal.

  • Why do this deal? Why this company in particular?

We have been looking to fill a gap in financial intelligence, (think along the lines of invoice-related, payments-related information), for a long time.

While Clocktimizer provides pricing and budget intelligence, leveraging the processing of the free text in time card descriptions, it doesn’t provide tools to calculate profitability or bring up the outstanding payments.

BigSquare is also built as a true SaaS solution where you can change KPIs and dashboards as a uservwithout the need for a vendor’s engineers to make those changes, which is a real competitive advantage.

  • It looked like Litera had paused its M&A activity, has it started again now on a new series of deals, and will there be more deals in 2022?

I can’t comment on the future pipeline, of course. With any M&A there will be some quieter months and more busy months.

Don’t worry, we certainly didn’t pause our M&A activity!

  • How is the integration going with your company and the others in Litera that focus on operational data?

Actually we are making great progress there. From a product perspective, Clocktimizer and Foundation have a number of integrations available today: 1) seamless navigation between both products, 2) matter metadata flowing from Foundation into Clocktimizer to further improve similar matter search, and 3) get Clocktimizer classified activities visible in Foundation.

Also commenting on the deal, Hoskins, Litera’s new CEO, added in a statement: ‘Law firms continue to seek and move to cloud-based solutions, including financial BI. We view BigSquare as a valuable, strategic addition to Litera’s Firm Intelligence portfolio to deliver what customers seek regarding data and insights accessible anywhere.’

The Bigger Picture

As mentioned this morning in relation to Aderant and its purchase of viGlobal, are we about to see a wave of legal tech and legal tech-adjacent M&A deals?

The challenge is that this is not an optimal time in the market to sell if you want to go for a great price, given the weak valuations for SaaS companies right now. But, if you cannot get a solid guarantee of future funding (which doesn’t include a painful down-round), or you are worried about recessionary impacts on the business in the near-term, then now may be a good time to sell in any case.

Some companies may also simply want to sell up now regardless of the market conditions, e.g. they have just reached that point in their history where they want to be part of a larger platform, and in the case of Litera, the BigSquare combo certainly makes a lot of sense for both parties.

More generally, it is also of course a great time to be a buyer, if you have the spare cash. Turbulent markets where venture capital is shrinking back from risk means more companies looking for inorganic solutions to the question: what next and how do we fund growth?

Also, after a mass of deals in 2020 and 2021 it looked like Litera was Pac-Manned out for a while, but perhaps these market conditions will drive a new wave of deals….? We shall see. Much depends on how much Hg (their private equity backers) want to keep playing the mega-platform strategy – and how much they want to bankroll it before heading to the exit door themselves. What is on offer may also change things, with perhaps more companies going up for sale at good prices over the next 12 months than we have seen before?

P.S. As noted, Hg has to exit eventually as well, as there is no way they are holding onto this forever. But, in November last year the fund injected fresh capital into Litera, which suggests that any sale of Litera is a long way off yet. At the time they said: ‘Following this new investment, Litera will be well-positioned to continue on its long-term growth trajectory, receiving funding for further expansion into new areas and geographies, as well as continued investment into innovation to empower more legal teams, for more aspects of their daily workflow, with simplified technology.’

So, no rush for Hg and perhaps there’s plenty more Pac-Manning to come…..