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Legal Tech Download: Big Money In Legal Technology

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The world of legal technology is evolving quickly, with new products coming to market in rapid succession.

Recent developments include a few news items with major price tags, including OpenText’s $75 million acquisition of e-discovery provider Catalyst Repository Systems, the completion of an $83 million funding round by Texas-based legal tech company Disco, and Tel Aviv-based Verbit’s completion of a $23 million funding round.

Here, Law360 rounds up the biggest news in legal tech.

E-Discovery Co. Acquired for $75M

Enterprise information management company OpenText Corp. announced Feb. 1 that it had acquired e-discovery provider Catalyst Repository Systems Inc. in an approximately $75 million all-cash transaction.

Catalyst will be integrated into OpenText’s discovery solutions business.

“The joint strength of OpenText and Catalyst confirms our position as a leading provider of e-discovery technology and combines a powerful set of solutions to help corporate legal departments and law firms seize the opportunities of automation, digital transformation, AI and machine learning,” OpenText CEO Mark J. Barrenechea said.

Legal AI Co. Completes $23M Funding Round

A company that sells artificial intelligence-powered speech recognition technology to the legal industry has completed a $23 million funding round, the company announced Jan. 29.

The Series A round for Tel Aviv-based captioning and transcription technology provider Verbit, which was led by Viola Ventures, with participation from Vertex Ventures, HV Ventures, Oryzn Capital, Vintage Venture Partners, and ClalTech. This latest round of financing brings Verbit’s total funds raised to $34 million, following an $11 million seed round.

The company said it plans to use the money raised to support its global growth initiatives, including scaling its sales, marketing and product teams; driving product development; and accelerating its U.S. expansion.

“I am lucky to work with such a talented team that is devoted to customer experience, company growth and product innovation,” said Tom Livne, CEO and co-founder of Verbit. “It’s been only eight months since our last round of funding and this latest infusion of capital is a testament to the strong demand for an AI solution in such a manual and traditional space.”

Law Co. Expands in Asia

Law company Elevate continued its expansion Jan. 25 with the latest in a string of acquisitions, this time of Hong Kong flexible lawyering and legal consulting business Cognatio Law, according to a company announcement.

Cognatio will integrate its operations into Elevate’s business, which provides consulting, technology, tech-enabled managed services and flexible lawyering support to the legal sector globally, the announcement said.

During the past three months Elevate has acquired legal AI technology and consultancy LexPredict, contract life cycle management provider Sumati Group LLC, U.K. legal resourcing firm Halebury, and Yerra Solutions AG, a law company providing consulting, technology and managed services.

“Cognatio is a key element of our strategic growth plan,” Elevate CEO Lokendra Tomar said. “Our customers tell us they want consulting, technology and tech‑enabled services from a single provider with a global footprint and deep experience in each regional market. Cognatio’s experience in Hong Kong and Singapore, especially with flexible lawyering, will enable us to better serve customers in Asia.”

E-Discovery Co. Raises $83M

Texas-based legal technology company Disco said on Jan. 24 that it has landed an $83 million funding round that the company plans to use to accelerate growth in the cloud-based e-discovery market.

The funding round was led by Toronto-based venture capital firm Georgian Partners as well as existing investors Bessemer Venture Partners, LiveOak Venture Partners, The Stephens Group and venture debt provider Comerica, resulting in the largest capital injection for the company to date. The company said that the funding signals support within the industry for e-discovery as well as other ways technology can impact the legal industry.

“I think one nice thing about the financing is that it is really a testament to how the market has come around to legal tech,” Disco founder and CEO Kiwi Camara told Law360 in an interview following the announcement. “I think if you go back to when we started the business, five or six years ago, there wasn’t a lot of capital being directed toward legal tech and it was kind of a sleepy sector.”

According to a company statement, the latest funding round brings the total amount of capital raised to $135 million. Disco said that it believes the investments indicate a shift from traditional e-discovery software providers to cloud-based.

Law Firm Launches Tech Subsidiary

On Jan. 18, Chicago law firm Actuate Law LLC announced the launch of Quointec LLC, a technology and advisory subsidiary that will develop technology and services aimed at resolving corporations’ legal and compliance challenges.

According to the law firm, Quointec will build AI-driven tools that automate the delivery of legal and compliance services, in an array of practice areas such as data privacy and security, corporate disclosure, information governance, health care, and more.

“Quointec starts with the client’s voice and looks at the value stream for legal services from that key perspective,” Quointec Chief Innovation Architect Jeffrey Sharer said. “By doing so, we find opportunities to proactively unbundle what traditionally has been considered ‘law firm work.’ That enables the forging of new solutions through which clients can quickly and affordably ‘self-serve’ for advice on straightforward issues and be guided to counsel for more complex matters.”

Law Firm Giant Expands E-Discovery Reach

Herbert Smith Freehills LLP is expanding the technology arm of its global Alternative Legal Services business by opening up two new e-discovery hubs in New York and in Hong Kong, the firm announced Jan. 16.

The additions bring the firm’s legal services business to 11 operating locations, including offices in Beijing, Belfast, Brisbane, Johannesburg, London, Melbourne, Perth, Shanghai and Sydney. And, the firm said it will hire nine new team members in New York and one in Hong Kong, bringing the total number of e-discovery technologists in the business to about 50.

“Our ALT offering has proven very popular with clients all over the world,” Herbert Smith Freehills CEO Mark Rigotti said. “We intend to keep investing in innovative solutions that add value for our clients, including continuing to grow this exciting and fast-moving part of the business.”

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Verbit Raises $23 Million in Series A Funding Round

Latest round brings Verbit’s total capital raised to $34 million since its founding two years ago

Verbit, the leading transcription and captioning solution, announced today the close of a $23 million Series A round led by Viola Ventures, with participation from Vertex Ventures, HV Ventures, Oryzn Capital, Vintage Venture Partners, and Clal-Tech. This latest round of financing brings Verbit’s total funds raised to $34 million, following an $11 million seed round.

Verbit will use the latest investment to support its global growth initiatives, including scaling the sales, marketing, and product teams, driving solution development, and accelerating its U.S. expansion. This news comes on the heels of an explosive 2018 for Verbit. The company opened a new office in New York and saw total revenue grow by 300 percent.

“I am lucky to work with such a talented team that is devoted to customer experience, company growth, and product innovation,” says Tom Livne, CEO and Co-Founder of Verbit. “It’s been only eight months since our last round of funding and this latest infusion of capital is a testament to the strong demand for an AI solution in such a manual and traditional space.”

Over 100 customers in the legal and higher education industries are utilizing Verbit’s in-house, AI speech recognition technology. Verbit’s solution also uses human intelligence via an on-demand network of transcribers, which creates thousands of work opportunities for freelancers. This hybrid approach enables Verbit’s customers to optimize their workflows and meet the increasing demand for transcription services, which is reflected in the company’s high customer retention and renewal rates.

“We have been closely following Verbit for the past two years. The disruption it brings to the market, both in its technological superiority, as well as market traction, are really exceptional. We believe that using human assisted AI services is the strongest trend in the technology world today, and Verbit perfectly fits our investment thesis in the area,” says Ronen Nir from Viola ventures, who led the round and will join Verbit’s board of directors.

“Verbit’s unique combination of AI and network of human transcribers have been making waves in the market since coming on the scene two years ago, and the rate at which the company is growing is a clear indicator that organizations are seeing the value their solution brings,” added Yanai Oron, General Partner at Vertex Ventures. “We are thrilled to be an early investor in the company and continue to play a part in its growth.”

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