Recent years have seen significant advancements in Natural Language Processing (NLP), particularly with the development of Large Language Models (LLMs) like GPT. These advancements, coupled with continuous improvements in data accessibility and computational resources, have markedly enhanced the capacity of LegalTech companies to automate complex text analysis. According to Goldman Sachs, Artificial Intelligence could replace as much as 40% of legal work[1]

Amid this technological evolution, AI-powered workflow solutions are emerging as more than a trend — they are poised to become indispensable for law firms under increasing pressure to balance quality of service with pricing and cost efficiency, and for legal departments who risk falling behind in terms of efficiency if they fail to implement these technologies.[2] Solutions that can enhance quality and save time will crucially lead to improved client outcomes. 

While the promise of LegalTech is substantial, the funding landscape tells a story of its own. Despite a significant surge in funding, reaching $2 billion in 2021 from a mere $500 million in 2017, momentum stagnated in 2022. This year, funding has declined by over 50% YTD.[3] The initial funding excitement experienced during previous years has resulted in a crowded market, intensifying the competition among LegalTech companies.

The challenges of fundraising in this environment, increased awareness of AI solutions combined with a group of consolidators that may favour acquisition over internal development, and a large cohort of companies reaching scale, create a compelling backdrop for an active M&A market in 2024/25. We still see opportunities for investing in LegalTech as in most cases, the market is yet to reach maturity, but expect the window to close over the next few years as the consolidation trend becomes dominant.

The workflow solutions landscape

The market for attorney workflow solutions spans diverse software products designed to enhance the efficiency and effectiveness of lawyers and legal departments. Covering a broad spectrum that includes legal research and litigation management software, eDiscovery, AI-driven legal assistants, and collaborative platforms equipped with data repositories, these solutions cater to the diverse requirements of legal professionals. They achieve this by automating routine tasks, providing real-time insights, and fostering smooth collaboration among team members.


eDiscovery involves identifying, collecting, and analysing electronic information, including emails, documents, and databases to support legal proceedings. It plays a pivotal role in assembling pertinent digital evidence during the discovery phase of litigation, serving as an integral element within the broader context of litigation management.[4]

Specialised platforms streamline the discovery and review of documents, enabling lawyers to analyse large data sets efficiently. eDiscovery is the most mature segment in workflow solutions, with established leaders backed by significant funding from prominent investors.

Austin-based Disco is a cloud-based eDiscovery software solution that leverages AI to help lawyers, law firms, and corporate legal departments identify, collect, and analyse evidence and scale their efforts during the discovery phase of litigation and beyond. In late 2020, Disco secured $60 million in equity and $40 million in debt financing, taking the company’s total funding to more than $200 million.

Everlaw is a Californian eDiscovery software company backed by TPG and Andreessen Horowitz, among many other big-name investors. The company has developed an advanced cloud-native eDiscovery platform that enables legal teams to find, identify, analyse, and visualise critical information. The platform can process 900K documents per hour while providing rapid reviews and summarisations to streamline and automate the discovery process. In late 2021, Everlaw closed a $200+ million Series D funding round, bringing the company to a valuation of over $2 billion.[5]

Headquartered in Chicago, Relativity is another big hitter in the e-discovery domain. The RelativityOne platform enables legal practitioners to navigate through all stages of the eDiscovery process, encompassing document collection, processing, review, and analysis. Relativity secured a strategic investment from Silver Lake in 2021, putting the company’s valuation at $3.6 billion.[6] Boasting a user base exceeding 300,000 across over 50 countries, including the majority of the Am Law 200’s leading US law firms, Relativity is widely acknowledged as an industry frontrunner.

Looking ahead, we anticipate a relatively subdued level of transactional activity in the eDiscovery space, given its mature nature. An exception could arise if one of the significant consolidators opts to expand its market share through acquisitions, potentially targeting companies like Relativity, DISCO, or Everlaw.

Contract analysis & automation

Contract analysis and automation tools play a pivotal role in streamlining the multifaceted tasks undertaken by lawyers and legal teams on a daily basis. These tools often leverage advanced technologies such as AI, ML, and NLP to extract critical information, identify potential risks, and automate repetitive tasks, enhancing efficiency and reducing the burden on legal teams and removing human error from the equation. Many players in this sector focus on serving law firms while concurrently extending their services to corporate legal teams. They can reach this broader customer base because their solutions can increase the efficiency of any department dealing with contracts, from sales and procurement to legal operations.

London-based legal-tech start-up Juro has built an end-to-end contract automation platform with a native e-signature system. The platform enables teams across sales, legal, HR, and finance functions to automate contract management and accelerate the contract signing process. In 2022, Juro raised $23 million in Series B funding led by Eight Roads. The investment round increased the company’s funds raised to $31.5 million.[7]

Across the Thames is another London-based start-up, Thoughtriver. The company has developed a pioneering NLP-based automated contract pre-screening and review solution that drives faster contract reviews and accelerates the negotiation process for legal, sales, and procurement professionals. In 2020, the company raised $10 million in Series A funding led by Octopus Ventures.[8]

Also in the UK is Robin AI, an AI-powered contract management platform that helps large multinational corporations and SMEs streamline their contracting processes. The platform uses ML and NLP to automatically review, analyse, and draft contracts, saving businesses time and money. Larger corporations can also access more advanced features for editing a high volume of contracts and specialist support provided by Robin AI’s in-house team of lawyers. The company raised $10.5 million in a Series A funding round earlier this year led by Plural.[9]

In addition to these innovative start-ups, large competitors such as ContractPodAI, SirionLabs, Icertis, and Ironclad have garnered substantial investment in developing comprehensive end-to-end Contract Lifecycle Management software (CLM), predominantly tailored for large corporate entities.

Legal AI assistants

Legal AI assistants harness the power of artificial intelligence and conversational interfaces facilitated by the LLMs, on which they are commonly built to automate and support lawyers in various tasks. The market is becoming crowded, with Casetext’s CoCounsel, now under Reuters, one of the most prominent players. Powered by GPT-4, CoCounsel excels in document drafting, summarisation, review, data extraction, and other litigation and contract management activities.

ContractPodAI, known for its AI-powered contract lifecycle management (CLM) platform, now offers a legal co-pilot named Leah. Leah is a standalone Generative AI solution designed to support lawyers’ daily legal work, such as creating first drafts, reviewing, redlining, and conducting deep document analysis for discovery. Leah can automate and optimise significant portions of the contract lifecycle management process, reflecting the company’s CLM expertise. The company secured a $115 million Series C investment led by SoftBank Vision Fund 2 and serves an impressive roster of global enterprise Fortune 500 clients.[10]

Luminance is another key player in the legal AI space. Operating from the UK, the company has pioneered an advanced end-to-end legal document processing co-pilot, harnessing the power of a Large Language Model (LLM) trained on a vast repository of over 150 million documents. This co-pilot automates critical processes such as contract generation, negotiation, review, and eDiscovery, catering to the needs of corporate legal departments and law firms.

A notable achievement for Luminance was the recent demonstration of the capabilities of its proprietary large language model. The company negotiated a contract with another AI in a ground-breaking live demo, marking the first contract without human intervention. Luminance’s last funding round was in 2019, raising $10 million from existing investors Invoke Capital, Talis Capital, and Slaughter and May.[11]

US-based Harvey is a GPT-4-based solution that is still in beta. The solution provides lawyers with a natural language interface where they can describe the task they wish to accomplish and receive the generated result. The company announced an exclusive launch partnership with leading international law firm Allen & Overy at the beginning of the year and is attracting much attention, with over 15,000 law firms on the waiting list to use the solution.

Harvey received $5 million in initial investment led by the OpenAI Start-up Fund and prominent angel investors Jeff Dean of Google AI and Mixer Labs co-founder Elad Gil. The company also recently raised $21 million in a Series A round led by Sequoia Capital. Existing investors also joined in the round.[12]

Incumbents & rising challengers as consolidating forces

Incumbent legal software providers such as Reuters and Wolters Kluwer offer a wide variety of practice management tools and workflow solutions designed for law firms, while LexisNexis has ventured into leveraging LLMs for legal research, issue summaries, and document drafting.

This innovative offering is designed to answer legal research questions, provide summaries of legal issues, and generate document drafts.[13] These industry leaders serve as gateways for large clients, enabling cross-selling of additional tools based on specific needs.

Recent strategic developments in the space include Reuters’ acquisition of Casetext and its commitment to an annual investment of $100 million in AI.[14] Dye & Durham’s $530 million acquisition of DoProcess further underscores a broader trend of investments in LegalTech.[15] But it’s not just incumbents making their moves. Rising challengers are pursuing expansion through strategic acquisitions.

Since being acquired by the global private equity investor Hg in 2019, Litera has acquired more than 15 LegalTech companies, including notable names like Kira. Reveal Data has made substantial acquisitions, too, surpassing the $1 billion mark since 2019. While these acquisitions have centred on strengthening their presence in eDiscovery, they also indicate a desire for a broader expansion of their service offerings.

Ultimately, incumbent providers and well-financed challengers have the resources and incentive to acquire companies with advanced capabilities that would otherwise prove challenging and costly to develop internally. This will likely further drive competition and M&A in the coming years ahead.

The scene is set for a robust M&A market

We have seen that LegalTech is not immune to the broader cooling off in the fundraising market and expect this environment to persist into 2024. This does not mean investing into areas like contract analysis and AI assistants is no longer attractive. Considering the total funding raised by eDiscovery leaders, often in excess of $200m, there is still an opportunity to back the winners in their upcoming funding rounds but expect a competitive environment for investors who will require companies to demonstrate a clear ability emerge as market leaders.

We also anticipate strong M&A activity in the coming years: the market, saturated with well-funded contenders, sees companies vying for dominance by expanding their product portfolios beyond their initial domains, mirroring the consolidation witnessed in the eDiscovery sector during its maturation. We anticipate 250+ M&A deals across contract analytics & AI legal assistants over the next 3 years and expect a significant number of deals over $100m as challengers continue to mature.

As growth-stage companies gear up for a year of potential deal-making, the key to success lies in establishing differentiation within the crowded marketplace. Three fundamental pillars underpin this strategy:

Technological prowess & unique functionality

Investors & acquirers alike will demand that LegalTech companies have exceptional ability and expertise in leveraging technology and distinctive features or capabilities that set their solution apart from others in the market. For example, Luminance’s Legal Inference Transformation Engine stands out as a technological trailblazer, facilitating versatile functionality across over 80 languages. Notably, Luminance showcased its AI orchestrating a contract negotiation autonomously — an unprecedented feat in the industry. A unique technological differentiator is a key way in which companies can signal their potential to emerge as a market leader to investors and acquirers.

Strong repeat customer base

Companies that can demonstrate a sizeable base of repeat customers set themselves apart in two fundamental ways. Firstly, this demonstrates market demand for their solution, and proves they have an edge over the competition – recurring customers also signal a quality product. Secondly, it makes them attractive to potential acquirers as in addition to the acquisition of the underlying technology, they are also unlocking a cross-selling opportunity. Examples like Juro and Thoughtriver serve as direct gateways to global enterprises using their software, elevating their attractiveness to potential acquirers and signalling maturity in their market presence.


In a setting where switching costs can be high (in both dollar and time terms), it is crucial to prioritise ease of adoption and provide a solution that is convenient to implement. One way of doing so is by building solutions that can integrate directly with other standard elements in a company’s tech stack. Companies like ContractKen and Robin AI have integrated legal co-pilot functionalities directly into Microsoft Word. Juro, on the other hand, integrates into CRM and communication channels, allowing clients to harness diverse data sources. An alternative to providing integrations is servicing multiple business units. This way, you can find your internal champion in the legal, sales, or procurement departments of a customer and proliferate throughout the organisation from there. This is common in contract analysis as demonstrated by Juro & Thoughtriver.

In conclusion, whilst there are clear headwinds in the fundraising market, we still see an opportunity for investors to back the winners if they act quickly. Companies can expect thorough diligence processes and must demonstrate they can win in a highly competitive and crowded market. We also expect an uptick in M&A across the contract automation and AI assistant segments, similar to the trend observed in eDiscovery as it reached a similar stage of maturity. The competitive landscape will be mapped out over the next 2-3 years and those who have not reached a certain scale by then risk falling by the wayside.  

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