VCS considers the opportunity as legal technological investments nearly $ 1 billion in 2025

It is a boom in legal technology and investors are making their cash fence arguments.

The financing of companies in the legal and legal industries has led to $ 999 million so far this year, the new crunchbase data provided to Business Insider show. Investments reached just over $ 2 billion in 2024, a record for the category.

On the other hand, the global company of the company has slowed down the prospect of prices and decreasing shares, in April displaying one of the lowest financing totals of the past year, according to crunchbase data.

“In a venture capital market which is really sleepy for the rest of the world,” said Zach Posner, co-founder and managing partner of the Legal Technology Fund, “it was as hot as you can imagine it humanly.”

Posner said he had seen dozens of traditional software investors who pushed around legal technology agreements, eager to claim an element of the digital transformation of the legal industry.

In April, Sapphire Ventures led a round of $ 60 million for Somme, a software platform for law firms in body injury and mass offense. Meanwhile, Bessemer, Masha Bucher’s Day One Ventures, and others entered a seed tower for Marveri, who says that he creates faster and more precise business diligence. Theo AI, a startup using artificial intelligence to predict cases, told BI that he closed a series of $ 4 million seeds this month.

First-rate investors on their CAP tables show to what extent the venture capital warms of legal technology.

Not long ago, the sale of software to law firms looked like a lost battle for startups. Lawyers have mainly worked from documents that are difficult to read for software. They stored these files on physical servers on site for superior security and control over their data.

Then came Chatgpt.

“It was the best demo that has ever existed in the history of software, from the Internet, and Cetera,” said Posner, “and that is why it took 60 days to reach a hundred million users when it took Facebook five years. And I think it happened from that moment, each lawyer said:” Wow, I could see how it could transform us. “”

Shortly after, Goldman Sachs abandoned a report that artificial intelligence could automate up to 44% of legal tasks. This forecast “was a shot in the arm to the Silicon Valley,” said Posner.

Legal technology was built by former lawyers solving the problems they knew. It has become a home for talents, said Posner, attracting engineers wishing to apply automatic learning to legal work.

Meanwhile, customers started knocking on the doors of law firms, asking how they used technology. They had seen how the AI ​​transformed operations into their own companies, and they wanted the assurance that they obtained the best service, at the best pace, of their external lawyer. This pressure prompted law firms to try to buy more advanced software, providing early and crucial income to legal technology startups.

But with the sharp increase in funding came to a push of the similarity: startups built on slightly different combinations of the same foundation models, to pursue the same general promises. The technical ditch is thin like a razor, if it exists.

The next phase of the boom, said Posner, will reward those who go further.

POSNER said that it was the most excited by startups that build highly specialized tools aimed at cases of close legal use. “The pits are below,” said Posner, referring to startups that attack precise pain points such as the commercial examination of real estate leases or the drafting of contracts for niche industries.

While Microsoft is already deeply rooted in the operation of lawyers, it has been largely horizontal, leaving room for vertical players to prosper. Some startups have even built new figures by selling what is mainly word plug-ins.

“The only thing that can be good at the moment,” said Posner, “is a vertical technology that goes deep – tools that say:” It is for residential real estate leases, we have seen everything and we are 100%precise. “”

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