Clio has made its third acquisition to date as the legaltech startup increases focus on a merger and acquisition (M&A) strategy to bolster its product offerings.
The Burnaby-based company has purchased San Francisco startup Lawyaw, which creates digital workflows for legal documents. The financial terms of the deal were not disclosed.
The deal marks Clio’s second acquisition this year and third overall; the startup’s first acquisition was client intake and relationship management platform Lexicata in 2018 followed by automated court calendar-focused firm CalendarRules this year.
“Our product-driven M&A strategy is supported by data to help us deliver the core tools a lawyer needs.”
The increase in M&A activity follows $136 million CAD in Series E capital raised earlier this year, which gave Clio a $1.6 billion USD valuation. Speaking with BetaKit at the time, founder and CEO Jack Newton emphasized his plan to use the capital to make a number of acquisitions in the coming year. Clio is also using the capital to “dramatically accelerate” the pace of innovation of its product suite, according to Newton, something an aggressive M&A strategy also supports.
Thirteen-year-old Clio is on a mission to replace on-premise solutions” with cloud technology that makes it easier for lawyers to manage firms, cases, and clients. Its products include practice management software and client intake and relationship management software.
Shubham Datta, the company’s vice president of corporate development, explained in a recent interview that Clio is focused on building out an app partner program as well as buying companies that further its product offerings. Clio’s goal, he said, is to provide a full suite of services to help legal professionals manage their business.
“If you think about legal, and you think about all of the different permutations and combinations of how legal services can be delivered, there’s a lot of it,” said Datta. “It depends based on the practice area, it depends based on the jurisdiction that you practice law. And, so, it’s not possible for Clio to be building for every single one of those conditions.”
“Our product-driven M&A strategy is supported by data to help us deliver the core tools a lawyer needs in our cloud-based platform,” added Newton in a statement to BetaKit. “Our customers benefit from our 200+ integration partners for specific needs related to their location, firm, or practice area, and the entire legal system is made better for both legal professionals and consumers. Over the years, we have found certain technologies are so core to the legal process, we will look to acquire the company to bring its offerings forward to our customer base.”
When it comes to the Lawyaw acquisition, the startup’s working relationship with Clio dates back to 2018, when the company started working with Clio as an integration partner. Lawyaw was also the first document automation company to offer an app inside of Clio’s app store.
Lawyaw was founded in 2016 by CEO Tucker Cottingham and is a Y Combinator alumna. In addition to technology integration as part of the deal, the startup’s around 20 person team is also joining Clio, with Cottingham set to become general manager of Lawyaw within Clio.
The purchase of Lawyaw fills a major need for Clio: document automation.
“What we’ve realized over time is that documents are the lifeblood of the legal system.”
“What we’ve realized over time is that documents are the lifeblood of the legal system, all of our customers use document workflows in one way, shape, or form,” said Datta. “The acquisition of Lawyaw is really our ability to accelerate, the ability to modernize, those legal document workflows.”
“Bringing our companies together is enabling us to bring into view a new paradigm of legal services,” said Newton.
“Through streamlining, automating, and digitizing the creation of critical legal documents and forms, we can open up a whole new way of engaging with and accessing legal services,” the CEO added.
Clio claims the COVID-19 pandemic has given it and the legal industry a major bump towards digitization and cloud-based technology. “[Clio] ended up facilitating what felt like this mass evacuation to the cloud for law firms,” Newton said, earlier this year. “We saw, virtually, in every aspect of our business, from our core SaaS business to our payments business, really exploding growth.”
Clio’s software is currently used by 150,000 legal professionals globally, with a heavy presence in North America. And that number is growing as the startup continues to expand its product offerings through acquisitions and development.
That growth was clearly noticed by investors like T. Rowe Price Investment Management and OMERS Growth Equity, which financed Clio’s Series E round earlier this year. Clio has raised $503 million CAD to date and has a track record of attracting sizeable investments. In 2019, Clio secured a $330 million CAD Series D round, the largest growth stage investment in a Canadian company since 2000 at the time and the kick-off of a number of megadeals that year.
Its backers have also included TCV, JMI Equity, Bessemer Venture Partners, Version One Ventures, and German-based Acton Capital.
“What we’re looking to build out is the ability for legal professionals to use Clio at the heart of their work, and to manage their practices,” said Datta.
“[Clio is] really the source of truth that legal professionals come to when they think about running their law firm, their law practice and we, from a product standpoint, think about all the ways we can make that more effective and more efficient for our customers,” he added.
Image courtesy Clio