2 legal-tech rivals' biggest fight might not be against each other
Legora
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I've got a brief on some legal beef.
Two AI startups are duking it out over the future of corporate law. Harvey and Legora both agree that artificial intelligence will upend the legal world. But they have very different views on who'll do it.
BI's Melia Russell, our resident legal-tech wizard, profiled Legora and its 26-year-old founder, Max Junestrand.
Legora is unquestionably the underdog. Its recent valuation of more than $5 billion is nothing to sneeze at, but it's still well below Harvey's reported $11 billion. A potential price tag only tells part of the story, but Harvey also counts more than half of the largest US law firms among its customers. Legora has cracked only about 20% of that group.
Legora's second-place status isn't slowing it down. Melia was first to report that Legora used its new $550 million funding round to secure its first acquisition, Canadian legal-tech startup Walter. (I'm not sure why legal tech loves using first names for their companies. I'll check with Melia on that one.)
Not to be outdone, Harvey is partnering with The LegalTech Fund to start investing in young legal-tech startups.
It's a sign of the times, as Melia has previously reported. Legal-tech giants looking to add more features and specialities to their products are hunting for deals.
Legora and Harvey's biggest fight might not ultimately be with each other.
There are still traditional legal players like Thomson Reuters and RELX. And while they've certainly taken some bumps this year, they still hold an incredible amount of proprietary data that gives them a strong edge (and staying power).
But Legora, Harvey, and other AI-powered legal-tech startups face an even bigger potential challenge with their own customers.
The efficiencies they're looking to provide could upend the current business of some of the people they're looking to sell to. I realize being too good at your job sounds like a made-up problem, but the risk is there.
While in-house lawyers love speeding up their workflows, Big Law works on billable hours. There's a fine line between AI streamlining how they work and cutting into how much they can charge clients.
Even if you think those fears are overblown, Big Law also needs to consider the impact the tech has on young lawyers getting experience. David Goldschmidt, a longtime partner at high-profile firm Skadden, told Melia he's worried smarter machines don't necessarily make better lawyers.