In this edition of Localogy’s Local Radar, we focus on AI and SMB-SaaS startups addressing the legal vertical.
1. Definely
Legal tech has the distinct characteristics of being specialized yet TAM-rich. Though the software is built to handle the nuanced operational needs of lawyers and law firms, it’s a big enough market where “focused” doesn’t mean “niche.” All the above is one of the founding principles for Definely, which recently raised a $30 million Series B round from a mix of European and North American investors. This follows its $7 million Series A raise last May. The company focuses on a specific but foundational part of the legal process: contract review. Utilizing AI (of course), its software automates and streamlines the traditionally-tedious process. This takes form in a productivity suite including a draft feature, quality review, and other widgets that do things like launching case-law reference material without losing their place in the document. The software’s AI capabilities also happen on agentic levels, including task prompts that can activate an AI agent to synthesize and complete several tasks given a specified goal. That last part makes this particularly scary for an oft-cited occupation at risk of AI displacement: paralegals. Definely will use its fresh funding to expand from the U.K. to the U.S. – where it derives 30 percent of its revenue.
2. Lawhive
Beyond the legal vertical’s size and revenue opportunity, it’s highly specialized, nuanced, and regulated. That means it’s ripe for specialized players that have the focus and domain expertise to keep things in order. Lawhive checks all those boxes and recently raised a $40 million series A round led by Google Ventures. This closely follows the $11.9 million round that it raised in April, and is a strong confidence signal. So what does the company do? In short, it provides a SaaS-based operational software platform that’s purpose-built for “Main Street” law firms. This includes lots of automation functions to help smaller firms scale and tackle all of the admin work they’re forced to complete. These include things like new client onboarding, service, and billing. According to Lawhive, the software can reduce costs for small firms by up to 50 percent. And though these legal-focused platforms are plentiful, Lawhive differentiates by focusing on smaller firms, which it says are underserved. That’s especially the case in the highly-litigious U.S. market, to which the U.K.-based Lawhive will use its new cash infusion to expand.
3. SpotDraft
Another trait of the legal profession is that it’s often on the list of disruption victims from AI. Lawyers themselves are likely safe – especially those who embrace AI to make themselves more effective. But lower-level legal functions like paralegal work are already being massively disrupted. And legal pros are increasingly embracing AI for such functions. According to Clio, 79 percent of law firms use some form of AI for casework in 2024, which is up from 19 percent in 2023. It’s likely even higher now, given the pace of AI adoption. SpotDraft is the latest company to blip on our radar screen to tackle this opportunity. The company focuses on contract automation and management software. It’s meant for legal pros to streamline the tedious and time-consuming process of contracting. This includes everything from devising copy using LLMs to project management functions to organize inputs and action items from various stakeholders. In that sense, it competes with the likes of LinkSquares, DocuSign-owned Lexion, Workday’s Evisort, and Filevine. But though it’s the latest to challenge these established players, it’s penetrating well so far, with about 400 customers, 169 percent year-over-year revenue growth. This was all validated recently with investor confidence, to the tune of a $54 million Series B round led by Vertex Growth Singapore and Trident Partners. This brings its total raised to date to about $80 million, and the new cash will be applied to some R&D as well as geographic and human-capital expansion.
Honorable Mention: LegalOn
Speaking of contract review, our honorable mention in this edition of Local Radar is a company we wrote about recently: LegalOn. Like SpotDraft, the company was founded with the idea that contract review is a slow and manual process that strains legal teams, yet it’s something that can be largely automated in the age of AI. For example, traditional processes involve typical document collaboration between several lawyers who must manually sift through dense language and perfect the output. And the high-stakes legal field means that mistakes are costly. LegalOn addresses this opportunity with language models that have been trained on nuances within several areas of law so that it can automate large portions of the contract review process. And the company claims that it can both reduce review times by up to 85 percent while improving accuracy and quality control. Beyond the company’s own claims, the numbers speak for themselves in its customer list of 7,000 law firms across the U.S., U.K., and Japan; and its 4x year-over-year revenue growth. All the above was enough to land LegalOn $50 million in Series E funding led by Goldman Sachs’ growth equity fund. This brings its total lifetime funding up to $200 million. The company plans to use the latest cash infusion to further develop and refine its AI agent tools, and to beef up sales efforts to penetrate further into the above geographic markets.
Header image credit: Tingey Injury Law Firm on Unsplash
