Investors

While the coronavirus has accelerated tech usage, it has also stoked economic uncertainty and more selective investments. These days, investors are eyeing legal tech that strengthens remote working processes and provides end-to-end support for enterprises and consumers. 

"Anything that can support remote working I think is obviously well-positioned given where we are. But not just in the short term," said Dan Jansen, CEO and managing director of Dentons-backed venture investor Nextlaw Ventures.

He explained a long-term hybrid model of working remotely and in the office means "having a good contract-management system is critical. You can't go down the hall and open the filing cabinet, you have to access it remotely."

Still, while optimistic about the midterm and "very bullish" on the long-term prospects of legal tech, Jansen echoed the sentiments of legal tech investors in March, who told Legaltech News they were cautious about investing during economic uncertainty. Still, Jansen said it's difficult to pinpoint when COVID-19′s adverse economic impact will end.

"We are very bullish on legal tech, [but] on the short term it's harder because there's a great deal of uncertainty in the market," Jansen said. That uncertainty has fueled fewer investments in early stage legal tech companies, he added.

Ajay Agrawal, co-founder and CEO of contract life cycle management tech provider SirionLabs, noted investments haven't dried up, but investors are now more discerning.

"The money has not gone away but it's now chasing a few that are considered high-growth products in high-growth areas," Agrawal said. He said he's seen firsthand the legal market's growing enthusiasm for contract software and investors accompanying interest.

"CLM seems to be coming out of its shell and connecting with other business operations," he said. "That's led to the growth in investors and spurring the emergence. It's also led to the growth of contract analytics; Seal was acquired earlier this year by Docusign. Those are the two industries that are hot now."

Indeed, Agrawal's SirionLabs was one legal tech company of a few to secure outside investment in mid-2020 despite a U.S. recession. In May, SirionLabs announced it raised $44 million during a Series C round for its AI-powered contract life cycle management platform. Agrawal argued COVID-19 intensified corporate legal departments' need to efficiently review and gain insights from their contracts.

"In a pre-COVID world there was a need to understand what was in their contracts and their risks, but the COVID realities have only accelerated that trend," he said. Soon, more contract managers will provide post-signature features to further its reach beyond a corporation's legal department, Agrawal noted.

While corporate legal departments will leverage more legal tech, there will also be a demand for a one-stop-shop platform, Jansen noted.

"The average corporate legal department can't work with 30 or 50 legal tech [solutions]," he said. "Someone will become the legal tech platform where you can find all these different solutions on one platform. … I think there's a lot of money that will pour into those platforms like Clio and Elevate that are trying to become that legal tech platform."

While focused primarily on enterprise legal tech, Jansen said he was also optimistic about LegalZoom.com Inc. and other similar consumer-centric legal service providers. Noting the continued lack of access to legal representation in the United States and the predicted eviction uptick caused by COVID-19, "there's going to be a lot of need from the consumer-side legal tech," he said.