Yesterday, BigHand bought legal AI pricing startup Ayora; Anaqua bagged Unified Patents; and last week Legora picked up litigation intelligence newbie, Wexler – its fifth purchase this year. Is this the beginning of the long-awaited legal tech consolidation?
Plus, let’s consider that LexisNexis recently bought France’s leading legal AI company, Doctrine – which covers legal data; and that Harvey has also been buying companies, such as: Hexus – which did product demos; Lume – mainly for its engineering team; and Benchmark – that handles PE deals and asset management.
Also: Relativity bought Gavel, which covers doc review; CLM Summize bought parts of the InnoLaw Group; in addition Legora bought Walter AI – also focused on legal intelligence; and Clio bought Jurisage – a Canadian legal data company. And there were others.
So, quite a lot of deals happening. But, is this it? Is this the start of something systemic that will see a domino effect across the market? Or is this just the seasonal turnover of smaller companies getting Hoovered up, which happens every year?
What is the rationale for these deals?
Well, let’s hear from one of the companies that was just bought: Ayora. Stefan Ciesla-Grain, Co-Founder of Ayora, said of the reasoning to sell: ‘From day one, our ambition has been to help law firms navigate the fast-evolving commercial landscape with deeper understanding of their matter economics and competitive position.
‘Following our [earlier] partnership announcement [with BigHand], it became clear that by joining forces with BigHand we will be able to accelerate that vision far faster than we could independently.’
Plus, Ayora was around 10 people, while BigHand is a giant in comparison with a well-developed capability around pricing. Ayora was a small, but perfect fit. BigHand could also quite easily afford it. The deal made sense for all involved.
If you look at Wexler, it’s a handy add-on, but Legora also gained more staff, who will form ‘the founding team of Legora’s London engineering hub’. Plus, Wexler was also small, and no doubt its founders were very happy to make a nice, profitable exit.
Then look at some of the other Legora and also Harvey deals, some of which are very much acquihires, i.e. you’re paying for the team as much, if not more, than for any product that startup created. So, don’t ignore the recruitment of quality talent here, rather than product consolidation.
After all, couldn’t a large software company – at least from a technical point of view – build anything they wanted with AI tools these days?
For Lexis, the Doctrine deal – which is still closing – was not an acquihire – but follows a clear strategy to expand its legal data reach, in this case in Western Europe. The Clio deal with Jurisage to expand Canada coverage also makes sense – especially in the context of its earlier deal with vLex.
So, not hiring in talent primarily there, but bringing in data – another resource you can’t just make with AI.
In short, the buyers are bringing aboard – in several cases – things that cannot be made inhouse using AI: talent and legal data – plus the goodwill those brand names bring with them.
Meanwhile, sellers were faced with a long hard slog in a very competitive market, and buyers with deep pockets provided a perfect exit.
Moreover, as broadening legal AI skills become more ubiquitous, did some companies wonder how long they could sustain any kind of moat? Possibly that figured in the sales equation as well.
To conclude: this seems to AL more like a buzzy period of opportunity for cash-rich buyers to bring in talent, data, brand goodwill, and some IP, rather than a sector-wide, systemic consolidation. Plus, by the end of this year, one can bet that there will be another 20 – at least – new startups appearing around the legal tech world.
There are also dozens and dozens of smaller legal tech companies still chugging away. It would take many years to consolidate them all – and who would buy them? There are only so many cash-rich companies like Legora, Harvey, Relativity, and LexisNexis. And their appetites are not infinite. Nor do they need multiples of the same offering.
But, is this a good time to sell? If you have talent, brand goodwill, and can fit a specific growth need for one of the cash-rich buyers out there, and your moat hasn’t vanished yet…? You bet!
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[ Image: RT photo, a group of Herons fishing on the Serpentine, Hyde Park. ]
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Two Major Legal Innovators Conferences this November
Come and join us in New York and London this November at Legal Innovators!
Legal Innovators UK – London, Nov 4 and 5
And, then Legal Innovators New York – Nov 17 and 18.
After another fantastic Legal Innovators California, where we had speakers from OpenAI, Y Combinator, Google, Meta, and many more pioneering organisations; and our stellar inaugural event in Paris this June, we are now looking forward to the landmark conferences in London and New York, both in November, and both across two days: Law Firm Day, and Inhouse Day.
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