Legal process outsourcing is experiencing the dawn of a new era. In what was widely perceived as a hand-off from the FinTech Revolution, LegalTech and ALSPs are the new golden child of private equity firms and venture capitalists. For perspective, in 2016, LegalTech received $225 million of investment. By 2019, that amount had grown almost tenfold to $2.1 billion.
When COVID-19 hit, economists feared the worst. The opposite happened. The pandemic accelerated the digital transformation of many a sector and the legal industry was no exception. Although LegalTech and ALSPs were already quietly changing the face of the law, COVID-19 served as the impetus and drew many to the attention of LegalTech’s value proposition as courtrooms and due diligence processes moved online.
According to Complex Discovery, there have been 108 mergers, acquisitions and investments of eDiscovery companies since the beginning of the pandemic. According to Wolter Kluwer’s 2020 Future Ready Lawyer Survey: Performance Drivers, 56% of law firms in Europe said they had an increased need for technology and resourcing solutions due to COVID-19 – with 65% of firms noting their investment in LegalTech and ALSPs will stay the same or increase moving forward.
Amidst such volatility, one constant emerged: growing market consolidation.
ALSP companies have demonstrated their value-add to the legal industry, and numerous investors, among the likes of J.P. Morgan and Blackrock, have rushed to participate in the value creation. We have seen a deluge of M&A deals in recent years, likely the result of the ALSP and LegalTech industries still riding high on surging post-pandemic technology demands. The pandemic has not slowed down the unprecedented growth of ALSPs, in fact it has pulled back the curtain on the business case. Given the urgent need for the legal industry to adopt technology to drive efficiencies, cope with ever-increasing workloads and demand for flexible working conditions, the case for ALSPs has been well and truly made.
Today, LawFlex takes a look at some of the most significant legal outsourcing deals that have closed since the COVID-19 pandemic began.
1. Mitratech
COVID-19 was no deterrent to compliance technology provider, Mitratech, who have acquired eight companies since the pandemic.
After acquiring five companies in 2021, legal, risk and compliance technology provider, Mitratech, continued its M&A streak into 2022. Emerging as one of LegalTech’s most active acquirers, Mitratech have noted that such heightened product growth is in response to corporate legal department’s increasingly embracing technology.
In January, the company announced that it purchased corporate legal spend management and data analytics software provider Quovant.
In July, Mitratech acquired AssureHire, an employment background screening provider, which it looked to integrate with its own compliance software solution.
A few weeks later, Mitratech bought HR technology provider TalentReed, which offers solutions that aim to automate and outsource hiring processes, in what the company said was its 21st acquisition since its inception in 1987.
Mitratech CEO Mike Williams noted that “I think Mitratech acquiring TalentReef is a real recognition that the lines are becoming blurred inside organisations between what may be used to be silos of legal, human resources and compliance”.
2. SurePoint
Leading customer relationship management (CRM) solution for legal professionals, ContactEase, was acquired by SurePoint Technologies, provider of practice management solutions for law firms in February 2022.
SurePoint Technologies, the leading cloud provider of financial and practice management solutions for law firms, acquired Cole Valley Software, the maker of ContactEase, a leading customer relationship management (CRM) solution for legal professionals.
The transaction created the first legal technology platform integrating real-time CRM into practice management and financial data, allowing law firms to holistically manage and group client relationships.
The acquisition further empowers SurePoint to fulfil its vision of transforming the legal industry by automating administrative processes to allow lawyers more time to focus on their practices.
3. Axiom
Axiom, the provider of on-demand legal talent solutions acquired Australian-based legal talent provider, Plexus Engage in November 2022.
Axiom, a leader in on-demand legal talent, acquired Plexus Engage, offering highly experienced, flexible lawyers for in-house legal teams to support projects and augment capacity.
The acquisition further advances Axiom’s long-term M&A and geographic expansion plans, providing an entry into Australia and enhancing Axiom’s footprint in the APAC region. With an estimated $27 billion spent on legal services in Australia, annually, the transaction will position Axiom to drive legal transformation in another large legal marketplace and highlights the ever-increasing global demand for outsourced legal talent.
4. DISCO
After going public in 2021, eDiscovery provider Disco acquired legal workflow products from Congruity in February 2022.
eDiscovery provider DISCO broke new ground in 2021 when they became one of few eDiscovery companies to list on the New York Stock Exchange (NYSE). In 2022, the eDiscovery provider announced the acquisition of Congruity 360’s regulatory request solutions and legal workflow products, Hold360 and Request360.
DISCO Chief Product Officer, Kevin Smith, said on the acquisition, “for us, that signifies a significant opportunity to deploy technology to streamline the work of legal departments, growing requests and requirements [and] for a provider that can go end to end. There’s an untapped need for a complete legal hold [solution] to move people out of Excel”.
5. HaystackID
HaystackID, the eDiscovery service provider, acquired eDiscovery services firm Business Intelligence Associates in September 2022.
In its fifth major acquisition since 2018, HaystackID, one of countless companies that provides eDiscovery services for law firms and corporate legal departments, acquired eDiscovery services firm Business Intelligence Associates (BIA).
According to HaystackID CEO, Hal Brooks, “this deal follows a period of organisational alignment and internal investment around innovation, technology and advisory services and builds on several years of investment and growth.”
6. Aderant
Aderant, the legal billing software company, acquired American LegalNet, a provider of legal e-filing in January 2022.
Business and legal software company Aderant acquired American LegalNet, a provider of e-filing, calendaring and docketing solutions for the legal industry.
Closely after, Aderant closed on another acquisition in August, buying viGlobal, a people management software provider that helps law firms streamline their recruitment, staffing and employee onboarding.
Chris Cartrett, Aderant CEO, noted “viGlobal’s strong product suite combined with Aderant’s front and back-office solutions will create stronger integration for talent management, matter management, and resource planning”.
7. MyCase
MyCase, the case management software provider, has embarked on a shopping spree, acquiring five major legal technology platforms since 2021.
MyCase, the practice management solution provider, has made a suite of acquisitions in recent years.
In May 2022, MyCase announced that it acquired Docketwise, an immigration practice-centric legal technology platform that includes collaboration, case management and CRM features. While it was MyCase’s first acquisition in 2022, it was their fourth acquisition since 2021.
In June 2022, MyCase was then acquired by financial technology company AffiniPay, the parent company of law firm electronic payment software LawPay.
AffiniPay further entrenching themselves into the LegalTech market emphasises a growing trend of FinTech and LegalTech becoming more intertwined, especially with regards to practice management solutions.
Given the fundamental factors driving the rise of legal outsourcing and the development of LegalTech, it is unlikely to be a passing trend. With the proliferation of independent ALSPs and law firm captives, we are likely to see an increasing wave of M&A.
The rapid consolidation and investment in the ALSP industry shows that investors and users alike, no longer view LegalTech and outsourcing legal functions, as a flight risk. Law firms and private equity firms are acknowledging the value of ALSPs, and further growth and investment seems imminent.
If you are ready to experience the benefits that an ALSP and legal outsourcing can bring, contact LawFlex to discuss how our world-class services can assist you.