After vLex? More M&A + One Day An IPO For Clio – Artificial Lawyer

Yesterday, Clio bought vLex for $1 billion in a cash and share deal. Here, Artificial Lawyer continues the interview with Clio’s CEO, Jack Newton.

As Newton explained to this site yesterday, the deal brings together the business of law i.e. Clio and all of its practice management capabilities, with the practice of law, i.e. vLex with its data store, genAI, and productivity tools.

‘We think it’s a unique combination that will reshape the landscape,’ Newton adds.

All of this is happening against a background of strategic consolidation, such as LexisNexis forming a legal data alliance with Harvey, which has grown massively and has a suite of genAI productivity tools. And with the expectation that Thomson Reuters – the other major data store – likely has its eye on Legora – which is Harvey’s top competitor in the legal genAI productivity platform market.

Yesterday, AL suggested that if Clio/vLex grew and grew and really expanded upon its legal data, legal productivity and practice management offering it could potentially help to create a Big Three, i.e. TR, Lexis, plus albeit a lot smaller to start with….Clio. So, Big Two becomes one day ‘Big Three’.

(See the first part of the AL Interview here)

So, what now?

First of all it has to be said that Newton comes across as someone who is very much in the middle of building something, rather than someone who has already been building since 2008, when he started Clio.

He talks of the ‘next decade’ and of a whole new way of looking at the legal world where AI and agents are core parts of the market, working alongside human lawyers. He is embracing the future, planning for it, and wants Clio to be right there in the centre of the action….(and clearly is thinking about taking market share as well).

In which case, where does Clio go from here? Will there be more M&A deals, for example?

The answer is that Clio is on the lookout for more companies to acquire that will fit beneficially with its offering. And it will need to. Clio plus vLex may be a lot larger than some rival legal tech companies, but compared to Lexis and TR it’s got a long way to go still.

‘This is not the end of M&A for Clio, but our [deals] have been strategic, and it’s not financially driven,’ he notes.

I.e. they are buying products and talent and data, and market access, not just adding on more revenue.

Part of this is also about getting deeper into Big Law. Newton underlines the recent deal with ShareDo, a UK-based provider of cloud-based enterprise software for large law firms. ShareDo produces case and matter management software designed to streamline work processes – which one might see as more of the same for Clio, but….it has the connection to Big Law, and that’s what Clio wants.

So, more large clients – after historically starting with Small Law – then adding in vLex and legal data and AI and productivity tools – and last year bagging $900m in funding………where is this all going?

AL asked if the goal is to go public? Surely this is the logical way for Clio to really scale and achieve its ultimate goal?

Newton is also very clear on this point.

‘Going public? We do have the ambition to go public at some point,’ he states, but then quickly adds that they are well capitalised and are profitable, so there is no hurry to do this.

‘We hope to go public, but there is no pressure to do so,’ he concludes.

And if they can grow and grow, do more M&A deals with strategic companies – especially which serve Big Law, and perhaps also large inhouse teams – and then go to an IPO and get a huge cash infusion….where can Clio get to?

Well, as noted above, the Big Three idea is not crazy when you look at it this way. It may take some time to get there, and of course TR and Lexis may well push hard on their own expansion strategies as well in order to keep open space between them and potential rivals….but if Clio can do all that’s potentially on the table, then yes, we could one day see the creation of a stable Big Three group – each with legal data at their core.

However, the remaining strategic issues remain:

Will TR buy a genAI platform? Will it be Legora?

Will Lexis tie the knot with Harvey?

Will other large platforms such as Litera, for example, also do a big M&A deal, given how the market is changing?

What will happen to all the point solutions, which despite what platform players say, remain very popular with law firms and inhouse teams.

And….then we have issues such as what happens with CLM, and also eDiscovery? If we are really going to see consolidation at scale, then those have to come with at some point.

All in all, as Artificial Lawyer said when Lexis did the alliance deal with Harvey: this is the beginning of a new chapter in legal tech history – and the ramifications and market moves that it has triggered are far from playing out.

Whatever happens next, it’s going to be interesting. Congrats to Clio!

Richard Tromans, Founder, Artificial Lawyer.

(Image: an imagined Times Square one day in the future when Clio does its IPO….)

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