Bessemer Venture Partners Acquires Majority Stake in Legal Practice Management Company Litify
Bessemer Venture Partners, a VC firm that has already made substantial investments in legal technology companies such as Clio, DISCO and Anaqua, has acquired a 60% majority stake in Litify, a law practice management platform founded in 2016 by a team of people who came out of Morgan & Morgan, the largest plaintiffs’ law firm in the United States.
The investment comes at a time when the legal technology has been seeing cutbacks and economic uncertainty. It also highlights the industry’s move toward platformization, interoperability, and cloud-based digital transformation, all themes I’ve previously highlighted.
Litify’s platform is unique in that it is built on top of Salesforce, the sales and marketing platform used by many Fortune 500 companies. It describes its product as an “end-to-end legal operating platform” that can be used for full-service practice management, enterprise legal management, plaintiff practice management and claims litigation management.
The parties did not disclose the dollar amount of today’s investment. Litify had previously raised $50 million in Series A funding in 2019, on top of earlier rounds of $2.5 million in 2018 and $5 million in 2017. The lead investor in that Series A round, Tiger Global Management, will remain a minority investor.
Litify said that Bessemer is now a majority shareholder, which means all shareholders and vested option holders participated in the transaction equally, unlike a regular funding round. Litify said this was not a growth investment wherein Bessemer is adding a large amount of cash onto the company’s balance sheet to enable increased spending.
In 2021, Litify acquired LegalStratus, an e-billing and matter management platform for corporate legal departments and government agencies that was also built on the Salesforce platform.
With today’s deal, Bessemer Partner Brian Feinstein will serve as chairman of Litify’s board of directors. Bessemer has a record of investing in industry-defining software companies such as Procore, ServiceTitan, Shopify, Toast, nCino, and Vlocity.
In the legal industry, Bessemer is an investor in the e-discovery company DISCO, which went public in July 2021, and was a relatively early investor in law practice management company Clio.
It is also an investor in legal tech companies Anaqua, which provides IP asset management software; contract lifecycle management company Contractbook; and Formally, a platform for immigration cases.
“Litify stands out as the legal technology player that is uniquely positioned to transform legal business operations at its core,” Feinstein said. “I’m excited to lend my expertise to Litify customers at a time when demands on legal service providers are increasing.”
Vote of Confidence
Ari Treuhaft, president and COO of Litify, told me in an interview that he views Bessemer’s investment as a strong vote of confidence from one of the world’s largest institutional investors, and he said he is excited for what this will mean for the company’s customers.
“It’s a strong vote of confidence in everything that we’ve been doing and everything we plan on continuing to do, now under their tutelage and guidance, learning from best practices for other very successful legal tech companies that they worked with, like Clio, Anaqua, and DISCO, and also wildly successful vertical SaaS companies, public companies like Procore, nCino and the like,” Treuhaft said.
Related: On LawNext Podcast: Litify COO Ari Treuhaft on Why the Practice Management Company Considers Itself A Unique Category of Legal Tech.
“We’re in this for the long haul. We want to add a ton of value to law firms and legal departments and Bessemer believes in that mission.”
Treuhaft said the acquisition will not change the company’s course. “This is very much a continuation of exactly what we do right now. We work with high-volume law firms, large high-volume practices, and we also work with large companies that have quite complex legal departments, legal operations and management of outside counsel. And we’re going to continue doing the same.”
Law Firm and Corporate Customers
Litify was founded in 2016 by John Morgan, founder of Morgan & Morgan, and Reuven Moskowitz, COO at Morgan & Morgan, and continues to be used by that firm as its practice management platform. Both Morgan and Moskowitz remain minority investors in the company.
Morgan and Moskowitz issued a joint statement in which they said: “We are grateful for this milestone and thrilled to see the company take this exciting next step with the support of Bessemer. We are thankful to investors, incredibly proud of the team, and we are looking forward to Brian’s leadership to accelerate Litify’s growth.”
The company says it now serves more than 45,000 legal professionals across more than 20 different legal practice areas. Treuhaft said the company primarily serves law firms in the mid-to-large range and that corporate legal departments are a fast-growing part of its market. In fact, he project that, by next year, the corporate legal business could be on par with the law firm business.
A press release announcing the acquisition said that the deal is occurring as Litify “achieves profitability and continues its next phase of growth.” When I asked Treuhaft about the company’s profitability and growth, he said that he could not discuss the company’s finances but stood by the language of the press release.
But Treuhaft said that, over the past few years, Litify has become keenly aware of the types of lawyers who gain the most value out of its system, and they are the ones on which the company focuses.
Who are those lawyers? I asked.
“Any legal practice that deals with a high-volume, more-repeatable type of legal work — litigation attorneys, defense attorneys, immigration, employment, trusts and estates, and any lawyer that’s working on contingency for anything,” he said.
“And then on the corporate side, it’s really big businesses that have very complex organizational legal needs, and where you have one centralized group that’s trying to direct traffic on all of it, both internally and to outside counsel. Those are the areas that we shine in. The focus is on complex organizations that are looking for scale and operational excellence out of their software.”