Legal Tech Spending Burgeoning Post Pandemic
by: Tom Hochstatter, President
Just reviewed a first half 2021 report by Raymond James on the legal tech and “NewLaw” tech sector’s investment and M&A activities, and no surprise, the space is booming. A hold out industry is finally getting tech enabled and there is very little to stop it entering these here 2020s… Law firms and corporate legal departments finally see the benefits of more automated and efficient legal services to their clients and constituents. No more holding out for the good ol days of pure billable hours and black box services.
“The latest survey of legal tech and ‘NewLaw’ businesses by Raymond James shows an incredible last six months, with investment at £1.015 billion ($1.41 bn), while M&A in these linked sectors hit an all-time high with 87 deals from January to June 2021.”
This march is omnipresent on the patent side of law as well. We are seeing new innovations in/around patents for services such as auto claims drafting from the likes of Specifio & DraftBuilders and Rowan Patents’ Tech Enabled Legal Services (TELS). Reynen Court recently closed significant funding from its sponsor law firm clients/investment partners to keep pursuing its vision of “Accelerating adoption of cloud-based technologies for the legal industry." Being backed not by traditional VC, but Big Law confirms there’s no turning back on technology now.
Closer to home we also saw Austin’s adopted CS Disco, Inc., ticker LAW, go public on the NYSE on July 23rd. They launched with a $32/share offering and as of Friday’s close they were hovering around $41/share. Their market cap stands at about $2.33 Billion. Not bad for a company that began in 2013 right here in Texas.
Why all the hoopla? Well Disco endeavors to be the legal “platform” of the future for all legal services apps & solutions. Think cloud platform like AWS or an application platform like Salesforce.com, etc for legal services. With their sales momentum and now their public market capital access they are one to watch. I’d say equally important - watch the sector players around them for frothy acquisition activity. Organic growth can sustain you for many years, but that LAW stock is an efficient currency to grow by acquisition in both technology advancement and geographies.
Fast forward to just last week and we’ve saw the very first country, Australia, to legally recognize a patent from a non-human. In addition, South African’s patent office issued a patent that lists an artificial intelligence (AI) as the inventor on Wednesday. AI will become a way of life for legal practice. We are also watching the various western U.S. states that now allow non-lawyer to have equity ownership in the firms. This is a game changer too and should accelerate new hybrid legal services offerings.
There is no stopping innovation in the legal sector, our lawyer clients and colleagues will do well to embrace what’s here today and invite new innovations to remake their practices around these advancements. It may be the difference between practicing law and practicing one’s resume writing skills…