Cash flowing into UK legal tech start-ups rose to £61m in 2018, a considerable increase on the previous year’s £22m, according to a Thomson Reuters report published today (16 October).
Over a five-year period the increase is even more drastic, with just £1.5m invested into legal tech companies in 2014 according to the report, created in collaboration with legal technology community Legal Geek. Moreover, the cash influx shows no signs of abating, with 2019’s investment already standing at £62m.
‘When you work in the sector it doesn’t surprise you, clearly activity has increased year after year,’ Thomson Reuters vice president of customer markets Jim Leason (pictured) told Legal Business. ‘The legal market is accelerating its adoption. You don’t see the same valuations in the US as you do in the UK. It feels the UK is slightly ahead in its adoption of technology.’
This year’s figure is bolstered by leading companies increasingly landing hefty funding rounds. Machine-learning company Tessian, which looks to protect firms from data breaches, raised £33.5m in early 2019 following its expansion in to the US. Elsewhere, AI company Luminance raised a further £8m this year, with Magic Circle ally Slaughter and May among those who contributed to the funding.
Other notable funding rounds in the past 18 months include: flexible lawyering start-up Lexoo’s $4.4m financing in October last year; deal platform Legatics’ £500,000 investment from angel investors and venture partners; Eigen Technologies’ £13m investment round and in-house legal fee tracking tool Apperio’s $10m funding. Meanwhile, in another sizable deal, Allen & Overy (A&O) Fuse start-up Bloomsbury sold to Facebook for $23m.
The Thomson Reuters report also details how Big Law’s increasing tendency to set up technology incubators is fuelling investment, with alumni of such programmes among the most successful companies in the market. The industry’s more prominent incubators are A&O’s Fuse; Mishcon de Reya’s MDR LABS; Slaughter and May’s Collaborate; Dentons’ NextLaw Lab and Barclays’ Eagle Labs. Thomson Reuters also has an incubator, having launched Thomson Reuters Labs in 2017.
‘If you’re a private equity house, knowing a company is part of an incubator or has been part of one tells you they’ve been engaged with customers and had access to feedback,’ Leason added.
Elsewhere, Big Four accountancy firm Deloitte made a significant technology hire, recruiting chief executive and founder of in-house consultancy BamLegal, Catherine Bamford, to lead legal engineering. Bamford formerly managed Pinsent Masons’ legal knowledge engineering team, and follows the likes of former Bryan Cave Leighton Paisner director of legal operations Bruce Braude in joining Deloitte.