Legal tech consolidation continues as Onit buys SimpleLegal
SimpleLegal, the spend management pioneer, which Artificial Lawyer only recently profiled, has been bought by Onit, the massive process automation and legal data management company, in further signs of consolidation in the legal tech market.
SimpleLegal has been beavering away since 2013, and the last couple of years have seen an explosion in spend and legal costs data platforms hitting the market. Meanwhile, Onit saw K1 Investment Management make a $200m ‘strategic investment’ in the company this January. By chance, K1 also recently sold its stake in Litera Microsystems to Hg Capital earlier this month.
And this is just a small slice of what is happening in the legal tech world at the moment, especially if one includes the big fund investments into legal AI companies over the last 12 months, and the several purchases of Elevate and also by Big Four firm, EY.
Why is it all happening now?
Here’s a few thoughts:
- The legal tech market has hit the headlines sufficiently for the larger funds and multi-sector businesses to really take it seriously. While legal tech may seem big to those who are within it, compared to banking, or consumer electronics, it’s notably smaller. Moreover….investing in companies that are involved with lots of lawyers has never been an easy sell to people with lots of money.
- The newer wave of legal tech companies and ALSPs are maturing. This is driven by broader uptake of automation and workflow tools, moreover AI tools are now seen as far from fringe. As the potential market grows and shows stability – and good revenues – investors start to get excited about what could happen next.
- We are starting to see the very first small signs of a formation of true market share. For the most part ‘legal tech’, aside from legal research/case law, has been an incredibly atomised market. That is a huge opportunity for investors who have the cash to shape the market.
- A lot of ‘smaller companies’ i.e. less than a few hundred staff, are starting to realise that they’ve been working incredibly hard but have not been able to grow to anywhere like the size of peers in other sectors. Selling to a larger group/or major fund that can help them to scale makes a lot of sense to the owners of the smaller, pioneering business.
- Missing pieces in the platformisation battle – a lot of the larger platforms can see now they are missing key pieces in the legal ops and legal innovation jigsaw. If they are large enough they can readily find what they are looking for in a market overflowing with smaller pioneering companies.
Any road, that’s what Artificial Lawyer thinks.
Here is what the two parties above say.
Eric M. Elfman, Onit CEO and co-founder, said: ‘Onit and SimpleLegal share both a passion for both disrupting the legal technology space and valuing product innovation. Our shared commitment to elevate legal operations technology is an asset for all of our customers – from rapidly growing start-ups with their first in-house counsel all the way to the largest, most complex organizations. Together, our goal is to help all legal operations professionals achieve operational excellence on their legal technology journey.’
And Nathan Wenzel, previously the CEO and co-founder of SimpleLegal, said: ‘Today, corporations spend more than $160 billion on their in-house legal teams. The combination of Onit and SimpleLegal is a game-changer for the legal market and the future of legal operations. Our teams are uniquely equipped to help shape the technology that is powering legal departments worldwide. Together, we’re looking forward to combining efforts and talent to build and bring to market the next generation of legal operations technology.’
Exciting times……if you are a medium size legal tech or ALSP-style business and are looking for a buy-out…..who will be next….?
P.S. Now, you may say, ALSPs/LPOs/Law Companies are not tech companies – and that is right. But they are in effect human-heavy efficiency engines, i.e. they are fleshy versions of legal tech companies. And, the ALSPs/LPOs/Law Companies have mostly now all realised that fleshy stuff alone is not going to win the day and so have embraced AI and automation tools of different types.
In fact, it’s hard now to say where the tech part and the fleshy part divides in the ALSPs/LPOs/Law Company world. So, too for that matter for many law firms – although the ALSPs/LPOs/Law Companies are explicitly focused on the process work, hence even the fleshy bits are mainly being asked to behave like machines on a repeating cycle.
Hence the inclusion of the ALSPs/LPOs/Law Companies into this analysis…….in AL’s mind the two ways of doing things (fleshy and also via digital engines) are merging together.