Is LawGeex for sale? That is the question, after hearing that CLM company Sirion Labs allegedly got close to buying what is now its enterprise arm, according to legal tech investor Zach Abramowitz. The answer appears to be, as far as this site can see: yes, if the right buyer comes along.
But Noory Bechor, the CEO of doc review pioneer, LawGeex, when asked about the Sirion Labs rumour by this site, said: ‘I obviously cannot comment on any confidential conversations we had or are still having with strategic partners.
‘We are always looking for strategic partnerships to help us scale and move our business forward. On the enterprise side, LawGeex is part of a growing ecosystem of contract technology solutions and will continue to evaluate strategic opportunities as they present themselves.’
Artificial Lawyer then put it to Bechor more directly: ‘Would it be fair to say that LawGeex is for sale to the right buyer at the moment?’
To which Bechor replied: ‘I would say it a bit differently – we are constantly looking at strategic partnership opportunities within the contract technology market. However, LawGeex is strong and now profitable so we are under no pressure.’
So, there you go.
The funny thing is this does remind AL a bit of the Kira deal with Litera, but almost the other way around. In that deal Kira sold its main law firm-focused business to Litera, while Zuva – aimed at enterprises – spun out with founder Noah Waisberg.
And that raises an interesting question: if LawGeex were sold would its founders, CEO Bechor and CTO Ilan Admon, go with it? That seems likely to this site. If you are buying a complex NLP company you want the technical know-how to come over to you. But on the more generic end, which is where Superlegal is, you may not need to have so much of the NLP top expertise.
But, LawGeex could of course – and Bechor stresses this – carry on as it is (see interview below also). And they could also either make alliances to feed their enterprise business, or be bought but remain a separate business unit, e.g. by a large investor, such as a PE fund, or by a tech company that was happy to leave them as they are and not change much.
The reality is that now M&A rumours have started to spiral there will be plenty more approaches – and they may well be entertaining others already.
To conclude, as noted in the article yesterday, the idea of splitting the business into two, with two customer groups, makes sense and is sustainable. The question is whether Bechor and team are in a hurry to sell. And he appears not to be…..but then, if you want to sell you don’t go into town and tell everyone you are looking to sell fast. Basic business sense means you have to ‘hang tough’ and make sure the message is that life can continue as it is – which in this case is true: they can continue and in fact do well with this new model.
Either way, LawGeex has hit a bit of a turbulence. The strategic split may well work – and it can work – this site believes. But, events may overtake that logic and end with a sale regardless.
We shall see.
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The interview from yesterday with Noory Bechor:
Where have you downsized? Why?
As you know last year, LawGeex became the first AI company in the world to receive a licence to practice law from the Supreme Court in the State of Utah. This tectonic change in the legislative environment created an amazing opportunity for us to bring the Lawgeex award winning AI technology to a much bigger market and transition from only selling to enterprise in-house legal teams to helping essentially all companies with legal needs.
Given the dozens of customers that have already signed-up and are actively using Superlegal in the few months since it has emerged from stealth mode, it is quite clear that the platform has found the ideal product market shift which has warranted a shift in resources on the part of the company to support this hyper growth offering.
As a result of the restructure, we will now have two independent business units – LawGeex which focuses on enterprise in-house legal teams and Superlegal which focuses on smaller companies without an in-house team.
Like everyone else we have been following what’s happening in the public and private markets over the last months and reached the conclusion that we need to prepare our company for the future. We are fortunate to have a mature product and a large book of business of enterprise customers. These allowed us to move the enterprise business into profitability so it will no longer be dependent on external capital fundraising.
As opposed to the enterprise business unit, Superlegal is a young startup and we definitely expect to raise additional capital for it in the future and are already seeing very strong demand from investors. In the meantime, we need to operate it in a capital efficient way since currently investors pay special attention to financial metrics, even from an early stage in the company’s lifecycle.
The reductions have been across the company and in all locations. Our guiding principle was to ensure that we continue to deliver the high quality solutions which LawGeex is known for while running the business in a more capital efficient way.
–How many people are leaving?
We are still in the process so I can’t provide exact numbers at this point, we estimate it will be about a third of the team. (LinkedIn shows around 105 staff at present.)
– What will happen to the Utah office? And also your special legal licence there?
We are keeping the Utah office to support both our enterprise clients and Superlegal clients and plan to continue expanding it as demand for our solutions continues to grow.
– Will you still do playbooks for clients?
Of course. Our enterprise offering is not going to change.
– Is this about getting rid of your ‘consultancy’ approach so you can be a pure software company that is more scaleable? (And if so, isn’t this like a return to your original model?)
Same as above. We have a lot of happy customers who rely on our solution as a mission critical piece of their legal and business operation. We will continue offering the same level of high quality enterprise-grade solution without any change to the delivery model.
– Did the investors put pressure on you to do this?
Our investors are highly engaged and help us with our strategic planning. Given the huge opportunity with Superlegal and the changing macro environment, it was clear that this is the right decision.