This Week In Legal Tech: A Big Investment, A Virtual Lawyer, A Price-Quoting Chatbot, And A Notable Pivot
Which legal startup just closed on a $12 million funding round?
Casetext founder Jake Heller and COO Laura Safdie.
The headline grabber this week in legal technology was legal research company Casetext’s announcement that it had closed on a $12 million Series B funding round. But that wasn’t the week’s only notable news. Here’s more on Casetext and other developments from the week.
The Casetext financing is notable for a few reasons, not least of which is that it is one of the largest investments in a legal technology startup ever. The only two larger were both from 2014: the $37.5 million raised by Avvo and the $20 million raised by Clio.
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Those numbers do not include e-discovery companies, where there have been several larger investments. Just during 2016, Druva raised $51 million, Lighthouse eDiscovery raised $23 million, and CS Disco raised $18.58 million.
This brings Casetext’s total financing to $20.8 million. It previously raised $7 million in Series A financing in 2015 and $1.8 million in seed funding in 2013. Not bad for a four-year-old company competing in a space dominated by long-established major providers.
Another reason the financing is notable is that it is an investment in artificial intelligence as much as it is one in legal research – maybe more so. Casetext’s original vision was to build a legal research platform enhanced with references and annotations created through crowdsourcing via its users.
In the years since, it has moved away from the granular level of user contributions it originally envisioned – although user contributions remain an important feature – and towards a more programmatic approach to annotating cases.
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Then last summer, Casetext rolled out a feature called CARA (Case Analysis Research Assistant) that it describes as AI-powered legal research. What CARA does is automatically find cases that are relevant to legal memoranda and briefs. Upload a brief, memorandum or other legal document, and CARA analyzes it and generates a list of relevant cases that are not mentioned in the document.
Rebecca Lynn, general partner at Canvas Ventures, the firm that led this investment round, said that she considered Casetext’s disruption of the legal research industry to be “profound,” describing it as “the only company providing AI-powered legal research that is widely available today.”
One final factor making this financing notable is that, for the first three years of its existence, Casetext never made any money. The service was entirely free until last July, when it first introduced paid subscriptions. Access to the basic research platform remains free, but use of advanced features such as CARA requires a paid subscription, which starts at $99 a month.
In Other News This Week
If you’re not paying attention to legal technology news across the pond, perhaps you should. There is a constant flow of interesting news coming out of the U.K., and a great source for keeping up with it all is the website Legal Futures, which had two items of note this week.
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The first is the launch by the international law firm Kennedys of an extended version of its “virtual defense lawyer” KLAiM. The system allows the firm’s clients – primarily insurers and claims handlers in personal-injury cases – to take claims from the service of court proceedings to settlement, often without the need for a lawyer. Kennedys says that, in the last 24 months, 75 percent of cases managed by KLAiM have been settled successfully and that one client saved over a quarter of a million pounds annually in legal costs.
This newly released version of KLAiM enables clients to send cases directly to counsel without the need for a solicitor, Legal Futures reports. In addition, the firm is building a more advanced version of the system using artificial intelligence, which it will launch next year. It will further reduce the need for lawyers in certain types of cases and will enable the platform to be extended to other types of claims, such as professional indemnity and healthcare.
The second notable item from the U.K., again via Legal Futures, is the launch of a chatbot by the conveyancing firm Convey Law. Said to be the first fully automated chatbot that can engage with conveyancing clients, it can provide instant fee quotes and then arrange a follow-up conversation with a member of the firm.
The law firm’s chatbot is built using the Conveybot add-on to the QuoteXpress platform created by the software development company Tonic Works. The service engages with potential clients and delivers quotes directly through communication channels such as Facebook Messenger, SMS, and Skype.
Last but not least this week is the pivot by the New York Times on whether robots will replace lawyers. It was six years ago this month that the Gray Lady warned us of foreboding things to come with the headline, Armies of Expensive Lawyers, Replaced by Cheaper Software. This week, the paper stepped back from that, telling us, A.I. Is Doing Legal Work. But It Won’t Replace Lawyers, Yet.
Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at ambrogi@gmail.com, and you can follow him on Twitter (@BobAmbrogi).
