Venture capital firms continue to bet big on legal tech. according to Firms have invested more than $1 billion in legal tech companies, up from the $512 million invested last year, according to Crunchbase. Contract management vendors in particular are benefiting as contract workloads increase; large organizations’ contracting teams now manage an average of 19,000 contracts per year, with the busiest organizations managing over 50,000, according to 2021 EY survey.
To cash in on the gold rush, artificial intelligence-driven contract analytics platform LexCheck today closed a $17 million Series A round led by Mayfield Fund, the startup announced. Co-founder and CEO Gary Sangha said the proceeds will be used to drive the expansion of LexCheck’s contract review technology, specifically focusing on research and development, sales and marketing.
“At a time of macroeconomic challenges, companies need a solution that can accelerate key business processes,” Sangha told TechCrunch in an email interview. “My previous experience as an entrepreneur, combined with LexCheck’s unique product development model, success and ease of implementation, allows us to face potential headwinds in the technology space head-on.”
Sangha, a law instructor at the University of Pennsylvania and a practicing attorney in New York State, founded LexCheck in 2015. After working in securities law with Shearman & Sterling in New York City and White & Case in Hong Kong, Sangha founded Intelligize, a regulatory filing research platform acquired by LexisNexis in 2016.
“I have seen first-hand the complexity, overwhelming workload and time constraints faced by corporate legal teams, and how contracts can sometimes be obstacles rather than business accelerators,” says Sangha. “I started LexCheck to grow revenue by simplifying and accelerating the business contract process across the organization.”
There is evidence that AI can indeed be useful where contracts are involved.One study Legal workflow automation vendor Onit cites — to be fair, not the most unbiased source — found Contract review software can increase the efficiency of human reviewers by approximately 33% by completing tasks such as first-pass contract review and providing a contract risk profile.
LexCheck uses artificial intelligence, including natural language processing, to support processes around editing and negotiating contracts. The platform seeks to standardize the contract negotiation process by providing organizations with a digital script that automates contract reviews by providing redlines (i.e. edits), comments, insertions and deletions, and automatic escalation of deviations from “script preferred” positions.
“These industry-standard playbooks are ready to use. If a custom playbook is required, LexCheck only needs 24 to 50 sample documents to train the AI,” Sangha explained. “LexCheck’s products are developed by practicing attorneys in collaboration with linguists and software engineers…Our mission is to create solutions that work the way attorneys need them, and this staffing model helps us achieve that. “
LexCheck competes with many companies in the contracting space, including Blackboiler, LawGeex, LegalOn, ThoughtRiver, Luminance, and Ontra. Thesauruswhich was incubated at the Allen Institute for Artificial Intelligence, uses machine learning and artificial intelligence to automate aspects of contract management. Terzo It recently raised $16 million for its technology that automatically extracts key data from contracts. Not to be outdone, Contract PodAi Leverage IBM’s cloud AI technology to simplify contract management and (in theory) reduce the burden on your in-house legal team.
The size of the segment is unsurprising given the opportunity it presents. In-house lawyers already use contract tools more than any other form of legal technology, according to A recent Bloomberg Law investigation. More than half of respondents indicated that they actively use contract management programs.
Sangha claims LexCheck’s solution can be implemented faster than most and requires only a small sample of redlines to train its AI for custom playbooks. It can also be integrated with existing contract lifecycle management solutions to complement rather than replace their functionality, he noted.
Whether or not this is true, LexCheck appears to have established itself in the market, tripling its client base to include some of the world’s largest financial institutions, technology providers and “top law firms” (although Sangha declined to be named) Sangha declined to disclose revenue figures when asked, saying only that LexCheck “continues to experience significant growth” and is “optimistic” about future funding.
“Business leaders have four key priorities affecting contracting teams—reducing costs, improving risk management, digitizing the business, and enabling growth—all of which LexCheck can help,” added Sangha. “Implementing a contract management solution can be time-consuming and difficult to deploy, often requiring significant oversight and involvement from the IT team. Deploying LexCheck was quick and seamless, reducing the burden on the IT team.”
LexCheck is headquartered in New York and currently has 32 employees. The startup has raised $22 million to date.
