Mckay still more incisive in understanding the market more than the rest of us put together
It has happened again; once more, v-Lex has changed hands, this time from Oakley Capital to the Canadian software company, Clio (Themis Solutions Inc.), for around US$1bn. Clio/Themis sits within the portfolio of New Enterprise Associates (NEA) venture capital firm, which previously shared in the funding of Ravel Law. Ravel, in 2017, was sold to RELX, which might indicate the future directional path of Clio/v-Lex. Harvey AI had been linked to rumours that it considered acquiring the much more established competitor, v-Lex, the alleged purpose being for the former to exploit the latter, to assist growth. That notion must be firmly off the table, as dramatic events have unfolded. The price paid by Clio is huge and probably disproportionately high, compared to v-Lex’s true value, set against Thomson Reuters market capital of $125bn and RELX’s of $100bn, or thereabouts. The two market leaders are probably more stirred than shaken by the news, but, more than likely, are anxious to retain and gain as much business as they can, perhaps using bundling and price incentives. It might be an opportune time for customers to exploit this.
Of the deal, Outsell’s Hugh Logue, describing AI without content as “hollow”, comments that it “proves [that] AI is empty without exclusive content, growth now sits in the underserved long tail, and point solutions risk fading if they lack specialist data and AI depth that clients can’t easily replicate with today’s low-code tools”. He sees the Clio/v-Lex combination appealing to small and mid-sized law firms, though, I would imagine, primarily serving N. American rules and traditions of legal practice.
The transaction has been applauded widely for its potential to enhance Clio’s practice management platform with the integration of v-Lex’s legal research capabilities and access to such v-Lex content as it maintains, either proprietary or under license, for such time as such exclusive or non-exclusive licences remain in place. There are, at the same time, sceptics who will be pleasantly surprised if it all works out.
I would imagine that the worlds of venture capitalism, private equity, hedge fund management and gambling (are they all the same?) are confusing, or regarded as dark arts, by many others, as they are to me. Still, having regard to the changing world of law publishing, legal information and electronic legal research tools, they are very much in evidence and must, therefore, be extremely important. To semi-outsiders like me, it is always intriguing how recent start-ups and unprofitable businesses can acquire such high valuations derived from what appears to be very little. But then, what is puzzling to one person is everyday stuff to another, so I am not too troubled by my own relative ignorance, in this particular case.
Having recently but erroneously opined that Lexis Nexis and their corporate peers were too rich and well-established to descend to the depths of having to collaborate with market minnows, and that California-based Harvey AI was just another financially-backed, and highly valued, young hopeful, I was taken aback at the news that the two have entered into a strategic alliance to integrate AI technology and legal content and develop advanced workflows. The apparent intention is to offer primary law content and established case citations within the Harvey platform and jointly develop advanced legal workflows. I would assume that secondary law content is, wisely, not included. As Outsell’s Tatiana Khayrullina writes in relation to standards publishing, which might be considered analogous to primary law, “Standards publishers face growing uncertainty as legal shifts and tech disruption challenge traditional subscription models. Monetization is under pressure, prompting a shift toward value-added products that offer integration, usability, and digital delivery to meet evolving user needs”. The plan is for the alliance to combine LexisNexis AI technology and content with what users expect in Harvey, for the benefit of Harvey customers.
Regarding the deal, Hugh Logue describes it as Lexis Nexis having armed Harvey, as he views artificial intelligence without proprietary data as obsolete. It is difficult to disagree with that. He writes that the “LexisNexis and Harvey deal removes Harvey’s biggest weakness – the lack of access to proprietary legal content – by baking LexisNexis’s cases and statutes into Harvey’s AI app. The result is a powerful combination of a legacy content giant and a startup innovator that puts competitors on notice”. I am not clear, though, about what is the notification, other than that there are opportunities for acquisitions to be done by the behemoths. I doubt if it greatly affects Thomson Reuters, which dealt with its minor challenger, ROSS Intelligence, using different strategies, while making significant strides in both artificial intelligence and deep research capabilities. I am not certain as to who are the other competitors to which reference is made. For some time, observers had expressed the view that Harvey was going to have to obtain data, particularly caselaw, from outside sources, in order to be able to flourish. If that is the case, Harvey attaching itself to Lexis Nexis looks like a smart move, certainly for the newcomer.
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