Venture capitalists continue to gamble heavily on legal technology. According to Crunchbase, organizations have invested over $1 billion in legal technology startups, a significant increase over the $512 million spent in the previous year. In particular, contract management providers have profited from the rise in contracting workloads; according to a 2021 EY study, hiring teams at major firms now handle an average of 19,000 contracts yearly, while the most engaged associations manage more than 50,000.
What Is LexCheck?
LexCheck, an AI-powered contract analysis tool, revealed today that it had secured a $17 million Series A fundraising round headed by Mayfield Fund to capitalize on the gold rush. Gary Sangha, co-founder, and the chief executive officer, said that the funds will be used to drive the growth of LexCheck's contract review technology, with an emphasis on R&D and sales and marketing.
According to Sangha, "In a time of macroeconomic issues, businesses want a solution that speeds critical business procedures." "My former expertise as an entrepreneur, together with LexCheck's unique product development approach, success, and simplicity of deployment, equips us to face future headwinds in the technology industry front on."
In 2015, Sangha, a law teacher at the University of Pennsylvania and a New York-licensed attorney established LexCheck. After studying securities law at Shearman & Sterling in New York and White & Case in Hong Kong, Sangha established Intelligize, a research tool for regulatory filings that LexisNexis bought in 2016.
"I've seen firsthand the complexity, tremendous workload, and time limits encountered by corporate legal teams, as well as how contracting may be a hindrance rather than a business accelerator," said Sangha. "I established LexCheck to enhance revenue by streamlining and expediting commercial contracting procedures throughout the whole enterprise."
There is evidence to show that AI can, in fact, impact contracts. A study cited by legal workflow automation provider Onit — hardly the most objective source, to be honest — revealed that contract review software may make human reviewers around 33 percent more efficient by doing duties such as first-pass contract evaluations and producing contract risk profiles.
LexCheck employs AI, including natural language processing, to facilitate contract editing and negotiation. The platform provides enterprises with digital playbooks that automate contract reviews by giving redlines (i.e., revisions), comments, insertions, and deletions and automatically escalating deviations from "playbook-preferred" positions.
"These industry-standard playbooks are instantly ready for usage. LexCheck needs between 24 and 50 example papers to train the AI if specific playbooks are needed," Sangha noted. "The products of LexCheck are developed by practicing attorneys in partnership with linguists and software developers... This staffing strategy assists us in achieving our aim, which is to provide solutions that function in the manner attorneys need.
Top LexCheck Competitors & Market Size
In the contracting industry, LexCheck competes with BlackBoiler, LawGeex, LegalOn, ThoughtRiver, Luminance, and Ontra, among others. Lexion, incubated at the Allen Institute for Artificial Intelligence, automates portions of contract administration using machine learning and AI. Recent funding of $16 million was secured by Terzo for its technology that automatically pulls crucial data from contracts. ContractPodAi utilizes IBM's cloud AI technology to expedite contract administration and (theoretically) minimize the workload of corporate in-house legal staff.
The segment's magnitude is not overly unexpected, given its possibilities. According to a recent Bloomberg Law poll, in-house counsel use contract tools more than any legal technology. Over fifty percent of survey respondents said that they use contract management systems.
Sangha asserts that LexCheck's solution can be developed faster than others and needs just a tiny sample of contract redlines to train its artificial intelligence for specific playbooks. It may also be connected with current contract lifecycle management systems, complimenting its functionality rather than supplanting it.
LexCheck looks to have established a considerable market presence, increasing its client list to include some of the world's major financial institutions, software suppliers, and "leading legal firms" (although Sangha declined to give names). LexCheck "continues to enjoy tremendous growth," and Sangha is "optimistic" about future financing, although he refused to provide sales statistics when asked.
Sangha continued, "Company leaders have four essential goals influencing contracting teams: decreasing costs, increasing risk management, digitizing the business, and allowing development. LexCheck can assist with all four of these purposes." "Contract management system installations may be time-consuming and difficult to deploy, typically requiring extensive IT staff supervision and participation. The deployment of LexCheck is rapid and simple, easing the pressure on the IT staff.
The New York-based company LexCheck has 32 workers at present. The business has raised $22 million to far.
Featured image: Lexcheck
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