Relativity Confirms IPO, But Is This A Good Time?

eDiscovery pioneer Relativity has confirmed it will do an IPO, (see official SEC note below), but is this a good time to do so?

First the statement:

‘Relativity, a legal data intelligence company, today (March 19) announced that it has confidentially submitted a draft registration statement on Form S-1 to the Securities and Exchange Commission (the “SEC”) relating to the proposed initial public offering of its Class A common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined. The proposed initial public offering remains subject to the completion of the SEC review process, as well as market and other conditions.’

Legal Tech IPOs

Legal tech companies going public have had a mixed outcome. For example – see this 2022 AL article here – several such companies that went public saw their share price drop after going to the open market.

And more recently, the now infamous Claude Crash, triggered by Anthropic releasing a collection of enterprise plugins, including one for legal, saw multiple companies, including legal tech ones, see hefty declines in their share price. Some have not entirely made up those losses, suggesting legal tech took a real and lasting kick in the pants in the view of some stock pickers.

Third is the possibility of an AI-crash, possibly caused by some of the huge, but seemingly circular, investments between California’s leading tech companies. If one of those dominos falls, will it trigger an avalanche?

Fourth are the growing jitters around private credit, with multiple banks exposed via their co-lending and plenty of people now trying to get out of that sector.

Fifth is the general wildness of the once again inflationary global economy, due to the ongoing conflict in the Middle East.

However, on the plus side is that Relativity is considered to be a very stable and profitable company, with expanding product lines that go now far beyond eDiscovery, and it has a broad and loyal client base.

And that is quite a significant plus side, especially when compared to some other legal tech IPOs in the last decade.

Another positive is that equity markets in the US, despite all of the above, seem to be tremendously resilient and even if there are some short-term dips over the next 12 months, it feels like they may well bounce back quickly. (Although….no-one can really see the future of the Dow Jones…)

After that the main consideration is how solid are Relativity’s fundamentals? And they’re strong after years of steadily building the company and its brand.

So – this is clearly not financial advice, and just AL’s own personal view – but, when you have a solid reputation, perhaps the above headwinds are not so important? We shall see.

The other question is: what will they do with the additional capital after the IPO? Well, one can guess they will expand the offering further beyond their core eDiscovery capabilities even more and perhaps buy up some strategic targets, both rivals and companies in new territory they’d like to be within. So we can expect more consolidation perhaps.

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A Legal Tech Conference For All of Europe

Legal Innovators Europe – Paris – June 24 and 25.

There will be more news about the conference and key speakers as we get closer to June.

Look forward to seeing you there!

Richard Tromans, Founder, Artificial Lawyer and Legal Innovators conference Chair.

Note: the conferences are organised by Cosmonauts – please contact them with any queries. 

If you would like to be a speaker at Legal Innovators Europe, especially if you are at a law firm or inhouse legal team in Europe – whether based in France, Belgium, Spain or Germany, or beyond…..then please contact Phoebe at Cosmonauts:  phoebe@cosmonauts.biz

Note: if you are a legal tech company, please contact Robins: robins@cosmonauts.biz or Anjana anjana@cosmonauts.biz

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And if you’re in the US and looking for the next major event to join after Legal Week, then see you in California this June!

Legal Innovators California, the landmark West Coast legal tech event, will take place on June 10 and 11, in the heart of the Bay Area, the home to many of the world’s leading AI businesses – and plenty of legal tech pioneers as well! More information and tickets here.