Investment of $1.4 billion in the first half of 2021 alone
2021 has been a record year for legal tech: $1.4 billion was invested by venture capital firms in the first half of the year, which is more than in the entirety of 2020, and well above what was raised in 2018 and 2019. Leading the investment boom are startups like RocketLawyer (which provides legal services to individuals and small businesses), Verbit (voice transcription for the legal sector), Notarize (digital notarization), and Clio (cloud based CRM).
Several companies have already achieved unicorn status, including Verbit, Clio, IronClad (digital contract management, and Icertis (digital contract management). There were also three significant IPO’s in 2021, with LegalZoom making a market debut at $7.5 billion, and companies like InTapp and Disco not far behind ($1.6 billion and $2.4 billion respectively).
The era when legal tech was considered as secondary to financial markets or other industries is over, and the “slow moving” legal sector is now fully up to speed, with increasing private equity and corporate capital investments as well.
Legal Tech industry continues to grow
What are the reasons for such a sharp increase? It’s not altogether a surprise – legal technology has been growing for the last several years and firms have invested in their own legal technology and alternative legal services (such as Wilson Sonsini’s investment in SixFifty [www.sixfifty.com], an automated legal document service). What has changed is the ability of legal tech startups to “scale” faster than ever before. Analysts point to several factors that have enabled the hyperspeed scaling of legal technology including: the pandemic, huge amounts of data that need to be handled efficiently, and the increasing risks of cyber threats.
It’s yet to be seen whether 2022 will continue the trends of 2021 or whether there will be a market retraction, but legal tech leaders are bullish on the future relationship of technology and the law. "We decided to go public because we think there's really an opportunity to build a big independent company in the legal technology space," said Kiwi Camara, CEO of Disco. "And we think being a public company makes clear to our customers, who are general counsel at some of the largest firms in the world, as well as many law firms around the world, that DISCO can be a long-term partner for them, as they think about how technology will transform their work."
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