Investors in legal technology remain bullish. Investment in legal technology businesses has increased to nearly $1 billion, according to Crunchbase, from $512 million in 2016. Since contracting teams at major businesses now manage an average of 19,000 contracts annually, and the busiest firms manage more than50,000, vendors specialising in contract management have reaped significant benefits from this trend.
With today’s announcement, AI-powered contract analysis platform LexCheck, which is backed by Mayfield Fund, has secured a $17 million Series A fundraising round. LexCheck will use the funds for research and development as well as marketing and sales, according to co-founder and CEO Gary Sangha.
“At a time of macroeconomic challenges, companies need a solution that accelerates key business processes,” Sangha told. “My prior experience as an entrepreneur, along with LexCheck’s unique product development model, success, and ease of implementation, positions us to take on the potential headwinds in tech head-on.”
LexCheck was developed in 2015 by Sangha, an attorney licenced to practise law in New York and a law instructor at the University of Pennsylvania. Sangha established Intelligize, a regulatory filings research tool that was bought by LexisNexis in 2016, after practising securities law at Shearman & Sterling in New York City and White & Case in Hong Kong.
“I have witnessed the complexity, enormous workload, and time limits encountered by corporate legal teams, and how contracting can sometimes be a barrier rather than a business accelerator,” Sangha added. I created LexCheck to help businesses like yours boost their bottom line by streamlining and speeding up their commercial contracting procedures.
There is data to support the claim that AI can have an impact in the realm of business contracts. Contract review software may make human reviewers around 33% more efficient by doing activities like first-pass contract evaluations and producing contract risk assessments, according to a report cited by legal workflow automation provider Onit (not the most objective source, to be honest).
LexCheck employs AI techniques like natural language processing to help with tasks like contract editing and negotiations. The platform provides digital playbooks to organisations in an effort to standardise the contract negotiation process. These playbooks automate contract reviews through the delivery of redlines (i.e. edits), comments, insertions, and deletions, and the automatic escalation of deviations from “playbook-preferred” positions.
“These industry-standard playbooks are available for use immediately. If custom playbooks are required, LexCheck only requires between 24 and 50 sample documents to train the AI,” Sangha explained. “LexCheck’s products are built by practicing lawyers in collaboration with linguists and software engineers … Our mission is to create solutions that work the way lawyers need them to work, and this staffing model helps us achieve this goal.”
Blackboiler, LawGeex, LegalOn, ThoughtRiver, Luminance, and Ontra are only few of LexCheck’s competitors in the contracting industry. The Allen Institute for Artificial Intelligence served as an incubator for Lexion, an AI and machine learning platform that automates contract administration. Earlier this month, Terzo announced that it had secured $16 million in funding for its software that automatically pulls vital information from contracts. In a similar vein, ContractPodAi uses IBM’s cloud AI technology to simplify contract administration and, in theory, lessen the load on in-house legal departments at businesses.
Given the potential, the segment’s size isn’t all that shocking. According to a recent survey conducted by Bloomberg Law, contract tools are now being used by in-house attorneys more frequently than any other type of legal technology. Those that utilise contract management software constitute more than half of the poll takers.
It takes only a tiny sample set of contract redlines to train LexCheck’s AI for custom playbooks, according to Sangha, making it the fastest-deployable option. And, he adds, it may be incorporated with preexisting contract lifecycle management tools, enhancing rather than replacing their functionality.
Whether or not that is the case, it’s clear that LexCheck has made a substantial inroad into the industry, increasing the size of its client base to include some of the world’s largest financial institutions, software suppliers, and “leading legal firms” (although Sangha wouldn’t provide any specific names). Sangha refused to provide LexCheck’s income, stating only that the company “continues to enjoy tremendous growth” and that he is “optimistic” about future investment.
“Business leaders have four critical priorities that impact contracting teams — reducing costs, improving risk management, digitizing the business and enabling growth — all of which LexCheck can help with,” Sangha added. “Contract management solution implementations can be time-consuming and challenging to deploy, often requiring significant oversight and involvement from IT teams. Deploying LexCheck is quick and seamless, reducing the IT team’s burden.”
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