Two Canadian legaltech firms are headed for a legal battle over access to a research database that is part of a $1-billion USD deal.
Fastcase’s lawsuit alleges Alexi breached the terms of a data-licensing agreement established in 2021 by using the database to build a competing legal platform.
Fastcase, a company owned by Burnaby, BC-based legaltech firm Clio, is suing Toronto’s Alexi for allegedly using Fastcase’s data to build a competing legal platform in what they say is a violation of a data-licensing agreement. Clio, one of Canada’s largest legaltech companies, bought Fastcase’s parent company vLex—and access to its proprietary research database—in November for $1 billion USD ($1.4-billion CAD) in cash and stock.
The suit, filed by Fastcase in Washington, DC, on Nov. 26, accuses Alexi of breaching the terms of a data-licensing agreement established in 2021 by using the data to build a competing legal platform. It also claims that Alexi misused Fastcase’s intellectual property and misappropriated trade secrets.
None of these allegations have yet been proven in court. Alexi CEO Mark Doble called the claims “baseless” in an interview with BetaKit on Wednesday and alleged the lawsuit is a “Hail Mary” attempt to end the licensing agreement. In an emailed statement to BetaKit, a Clio spokesperson said it “takes its contractual obligations and intellectual property very seriously” and follows processes to make sure its licensed data is used properly. When asked by BetaKit for further comment on Doble’s remarks, Clio declined and pointed to its statement.
Alexi and Fastcase entered into a data-licensing agreement in 2021, the lawsuit alleges, when Alexi was given access to Fastcase’s case law database. The licensing agreement is under seal, and neither Alexi nor Clio agreed to share the document with BetaKit (Doble cited confidentiality clauses).
According to the lawsuit, the agreement allowed Alexi to use data for “internal research purposes,” but not for commercial purposes, competing with Fastcase, or for publishing or distributing the data.
RELATED: Clio secures $500-million USD Series G as it completes vLex acquisition
Alexi sells artificial intelligence (AI)-powered legal software designed to help lawyers and legal teams produce research memos, identify relevant legal issues and arguments, and automate routine tasks. It recently began creating a library of legal workflows that clients can use as needed, where AI agents prompt each step of a process. Doble told BetaKit in October that Alexi saw a 3,000-percent boost in users year-over-year and serves more than 600 mid-market to enterprise legal firms.
The lawsuit argues that Doble contacted Fastcase to explore a partnership in 2022, and that Doble “raised the possibility” of Fastcase acquiring Alexi. No broader agreement materialized, and Fastcase merged with Spanish-American firm vLex in 2023 to create vLex Group. Fastcase alleges that Alexi pivoted its offering to directly compete with it as a legal research platform starting in 2024, using Fastcase’s data to do so. Doble denies that Alexi ever used Fastcase data in breach of the established agreement.
This year, leading Canadian legaltech company Clio entered the picture and acquired vLex on Nov. 10. Valued at $5 billion USD and one of Canada’s best-capitalized scaleups, Clio sells law firm management software and has been increasingly leveraging AI on its platform to help customers complete tasks like document preparation and legal research. The firm says it reached $400 million USD in annual recurring revenue and caters to more than 400,000 legal professionals.
RELATED: “It is war”: How Alexi hopes to dominate the AI legaltech market
Doble said that, based on his belief and his interpretation of Clio’s public statements, the $1-billion USD acquisition of vLex was predicated largely on gaining exclusive rights to this database held by Fastcase and vLex. “We don’t know when they found out that this is not true,” he told BetaKit on Wednesday. In Doble’s view, its existing access to Fastcase’s database through the licensing agreement threatens the exclusivity of what Clio paid $1 billion USD for.
Clio CFO Curt Sigfstead told BetaKit in November that its acquisition of vLex was a “really big deal” because it would give Clio access to “arguably the best legal database and data assets in the world.” He claimed that vLex’s database rivaled only those owned by legal industry juggernauts LexisNexis and Thomson Reuters.
“Clio’s an amazing company and an amazing team. What they’ve done for legaltech in Canada is incredible,” Doble said. “I’m optimistic that in due course, they will recognize that they’re on the wrong side of this. Even though there’s a billion dollars at play, we’ll find a great resolution quickly.”
“Clio takes its contractual obligations and intellectual property very seriously,” a spokesperson from Clio told BetaKit in an email. “We follow established processes to ensure our licensed data is used appropriately in order to protect the integrity of our content library.”
Feature images courtesy Clio and Alexi.