Why Jack Newton of Clio sees profits and progress in the “latent legal market”

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Newton invested in Hello Divorce, DoNotPay, Athennian See promise in automation, machine learning

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(Reuters) – The legal tech industry has felt like a money magnet lately, with companies launching new funding rounds, cutting private equity-fueled M&A deals, and expanding their investor base through initial public offerings. .

Jack Newton, CEO and co-founder of law firm management software company Clio, has been on both sides of the investment action.

Vancouver-based Clio raised $ 110 million with a valuation of $ 1.6 billion in a Series E round announced in April. Last month it acquired a company that offers rule-based automated calendars for law firms. Newton, meanwhile, has individually invested in at least three law-related companies this year, including Hello Divorce, DoNotPay, and Athenian.

Hello Divorce, a technology platform that aims to solve the “broken and expensive divorce process,” raised $ 2 million in a seed round last month. The next day, DoNotPay, the self-described “first robot lawyer in the world,” announced a $ 10 million Series B round. In April, corporate management software company Athenian raised $ 5.5 million in funding for the Series A extension.

Newton recently spoke to Reuters about what prompted him to open his portfolio to legal technology investments, what he is looking at on the legal innovation front, and what the outlook is for the industry.

This conversation has been edited for clarity and brevity.

REUTERS: What attracted you to the companies you recently invested in?

NEWTON: What I am investing in the legal technology space are companies that I would say are aligned with Clio’s mission, but not competitive with Clio from a product or positioning point of view.

Our mission is to transform the legal experience for everyone, which is to make legal services more accessible to 77% of legal consumers who have legal problems, but currently don’t see those legal problems solved by a lawyer. That huge gap I describe as the latent legal market is a multi-billion dollar opportunity.

What we are doing at Clio is trying to create a platform that allows lawyers to deliver innovative legal services and legal solutions to that latent legal market. Hello Divorce is a great example: a solution that allows lawyers to connect more efficiently with legal consumers and for legal consumers who have uncontested divorces to see those divorces completed without the frictions and costs associated with a traditional divorce. . It’s a great example of a company that is devising a way to deliver better legal results to consumers in a more cost-effective way, while making the attorneys who provide those legal services more effective and more profitable.

DoNotPay is an interesting alternative method to make legal services more accessible. They are trying to fully automate some types of legal representation with an app that you can access from your smartphone. It’s a really good example of how automation can be used to provide access to legal solutions, without necessarily needing a lawyer who is directly involved.

What Athenian is doing is really interesting in the sense that it is helping to transform the world of entity management into a cloud-based system. This is normally done in the world of spreadsheets and also quite manual processes. What they are doing is making entity management really simple and easy for companies that manage multiple entities.

There is another category of company that is so complementary to what Clio does, that it has direct value to all of our clients, that we will actually seek to acquire rather than invest in them. Our recent announcement about the acquisition of CalendarRules is a great example of this. Maybe it’s something you’ll see more from Clio too, it’s the companies I’m really excited about that are close to what Clio is doing, probably over time they will become part of Clio, as opposed to an investment on market terms.

REUTERS: What is investor interest in legal technology? You wear both hats.

NEWTON: I see investor interest at levels that I have never seen in my 13 years in legal technology. We are seeing more innovation, more business training, and more inbound investment in the past two years than in the previous decade.

REUTERS: What do you see as the role of legal technology in maintaining the adoption of the technology that we saw during the pandemic?

NEWTON: I think the really crucial role down the road is to make some of the changes we’ve seen and, frankly, changes for the better – permanent and ongoing and not going back to the way things were. Because the way things were was broken. We had an inaccessible legal system that offered very little results in terms of access to justice; delivered, on average, very poor results and customer experience.

And we’ve seen, on the lawyer side, most lawyers feel overworked, exhausted, with worrying rates of substance abuse and suicide in the profession. And many lawyers struggle financially just to make ends meet. So this is by no means a world we want to return to.

What we are as a legal technology industry [need to] Keeping our eyes on, is how we continue to drive this transformation in order to deliver positive results for both lawyers and consumers, so that we can create a better normality to get out of the pandemic.

REUTERS: What excites you now in legal technology?

NEWTON: Anything that applies machine learning or artificial intelligence or even just basic tech improvements to how lawyers do their jobs. There is still a huge amount of opportunity to take lawyers out of pen and paper or Excel spreadsheets and into a modern cloud-based world. And so the whole class of driving digital transformation in the legal arena, and where it makes sense, layering machine learning and artificial intelligence, is a very promising area.

I [also] I think there is a lot of work for both the consumer and the business to do to transform the way consumers interact with their lawyers.

Read more:

With new funding, Clio becomes a law firm management ‘unicorn’

Sara Merken

Sara Merken reports on privacy and data security, as well as the business of law, including legal innovation and key players in the legal services industry. Contact her at [email protected]

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