Extract from Daniel Lewis’s article “We May Be in a Legal Tech Bubble—And That’s Great for Lawyers and Consumers”
AI companies are booming, and legal technology is riding the wave as investors search for sectors where generative AI, the latest breakthrough, will have a big impact. This is great news for lawyers and consumers of legal services.
Investor interest in legal tech “seems to only be growing” reports Crunchbase . Legal tech startups raised $871 million in 2023 and have already surpassed that in 2024. Valuations of 30-100x revenues are additional indicators of booming enthusiasm. Indeed, it feels almost bubbly.
Are we in a boom or a bubble?
Booms are marked with rapid and sustainable growth, while bubbles also grow quickly but eventually pop. Bubbles are hard to see or time from the inside, so it’s difficult to tell which we are in. What’s certain, though, is that these funding rounds, acquisitions, startups, and valuations are all unusual in legal tech.
The conventional wisdom about bubbles tends to focus on the negative, with gleeful finger-pointing: “I can’t believe they thought that would work!” And while it’s true that from a bubble some companies don’t survive, the underlying technology moves forward. We’ve seen that with the internet, mobile phones, and broadband.
