2020 LEGAL TECH RECAP and 2021 SPECULATIONS
So many of our conversations we have these days includes - “2020, what a year!” But seriously, what a year to gain perspective, gain appreciation, gain family time, less commuting hours, etc. What a year indeed. Let’s take a moment to look back and reflect and to look ahead to a much-needed new year. With hope and resolution, we say bring it on 2021, our expectations are very high.
Reflection and What’s Ahead in eDiscovery
2020 didn’t slow down activity in mergers, acquisitions and investments throughout the legal technology community. In 2018, legal tech investments broke the $1 billion mark. That figure was topped in 2019, with $1.23 billion in funding by the end of the third quarter alone. 2020 isn’t finished and still impressive given the year we have had.
· DISCO just announced the completion of its $100 million fourth-quarter financing, bringing total investment in DISCO to $235 million and valuing the company at $785 million.
· Nuix made big news and big money when it went public on the Australian stock exchange on December 4th with a starting market cap of $1.69 billion.
· Exterro did not disclose the amount for which it purchased AccessData, but did note that the acquisition was a “nine-figure” deal.
· Everlaw closed $62 million in March to bring the total investment to $96 million.
With the exception of ProSearch, who isn’t backed by PE or outside investors? Outside capital is commonplace as eDiscovery companies try to grow in a mature marketplace. The eDiscovery space, inclusive of adjacent solutions - forensics, IG and investigations continues to be acquisitive, just look at the acquisition of Integro by Innovative Discovery, Reveal’s acquisition of NexLP or TDCI’s acquisition of Cicada. Organizations like HaystackID and NightOwl look to leap-frog competition by merging. These forward-thinking eDiscovery organizations are expanding their portfolio of services and hedging their bets.
Contracts Lifecycle Management (CLM) is ripe for a continued infusion of cash into this industry as investors take notice of this still growing, fragmented and opportunistic industry.
Reading the Gartner 2020 Magic Quadrant for CLM is akin to reading a 2008 Gartner report on eDiscovery. We suspect we’ll see more acquisitions and more funding for companies looking to capitalize on this booming space if DocuSign’s $188m cash purchase of Seal Software is any indication. AI start-Up LexCheck raised $3m. Agiloft raised $45m.
We expect many more consultancies, service providers, law firms and corporations will be launching or expanding their contracts management, contracts intelligence and contracts review practices over the next couple of years. We have pure tech companies selling software to solve your contracts challenges, consultants getting in on the technology angle, and vendors looking to supplement their eDiscovery and document review revenue by offering contracts review and in some cases full CLM solutions.
The “Business of Law” - Law firms and ALSP’s continue to compete for market share.
This year, the business of law brought us mergers such as Nelson Mullins and Redgrave. Not only are law firms embracing technology, they are leading with it. We are seeing law firms like Reed Smith’s subsidiary Gravity Stack and Morgan Lewis’ eData practice expand beyond just eDiscovery to include information governance, analytics and contract management. Some firms are becoming true business counselors, advisors and technologists, not just advising on legal matters. According to a recent article, 35 out of 100 AM LAW firms have launched an ALSP. UnitedLex acquired Paul Hastings’ multi award-winning Data Science, Analysis, and Investigations (DSAI) team and its AI-empowered technology services group, in what the firm has described as a “first-of-its-kind” deal. It turns out, law firms are not just in the business of practicing law. More are realizing they are in the business of business.
Epiq acquired Hyperion to deliver a suite of legal business management services and solutions to corporate in-house law departments, law firms and other clients. Elevate Services and Legility have created a new class of “Law Company''.
In Conclusion
As always, it’s our pleasure and certainly our privilege to work with market-leading organizations and professionals. We hope you and yours (family, business, those pets that will never recover from our absence when we return to “normal work”) have a wonderful holiday season and a prosperous and healthy new year.
About Celeritas Recruiting: Since 2011, Celeritas Recruiting has placed hundreds of professionals with the leading legal service providers, law firms, professional services and technology organizations. We act as career counselors who provide strategic advice to candidates. We provide deep market insights and high-touch execution, combined with our vast network and global reach.