JEGI CLARITY’S 21ST Annual Media & Technology Conference in New York brought together senior executives and investors from across the global media, marketing, information, and technology sectors. Among other topics, we explored the evolving landscape of the Legal Market, key industry trends, the impact of M&A, and winning strategies for Legal Software and Services businesses looking to stay competitive. Here’s a brief overview of their insightful presentation.
Introduction
The ongoing reinvention of the way that law firms and their clients do business in the legal market is gathering pace; in an industry historically bound by precedent, the sector is undergoing an uncharacteristically bold transformation.
At the heart of this change is the increasing intersection of law and technology, driven by deregulation, evolving client expectations, and investor appetite. Since 2020, we have completed 20 M&A transactions across diverse software and tech-enabled services sub-verticals of the legal market, from litigation support and contract analytics to online legal services and enterprise legal management, including 6 in the last 10 months alone.
Key Industry Themes
Artificial Intelligence (AI) Everywhere
AI has rapidly transitioned from being primarily used in eDiscovery and litigation analytics to being essential across the entire legal tech services landscape. Its adoption is broadening daily, with applications embedded in the workflow of law firms and their clients. Legal software platforms are placing a strong emphasis on optimizing workflow and harnessing data-driven insights to boost efficiency and accuracy.
This wave of transformation is particularly reshaping high-volume, process-intensive segments of the market such as mass tort, personal injury and workers compensation, where historically human-intensive work impacted the effectiveness and efficiency of relevant market constituents including plaintiff and defense law firms, their clients, courts and settlement administrators.
Regulatory Liberalization
Australia and the UK blazed the trail by allowing non-lawyers to invest in law firms. The U.S., more cautious, has begun to follow suit, with Arizona approving alternative business structures. This deregulation has been a catalyst for private equity and hedge funds to explore structuring investments in law firms through management service organizations (MSOs), providing law firms with an opportunity to increase investments in technology, talent and geographic expansion and to ultimately have a stronger opportunity for an exit.
A Workflow Revolution
Tech adoption is refocusing attention from precedent to process. Legal work—long riddled with its inefficiencies—is being done more effectively and efficiently as a result of software platforms focused on workflow, transparency, knowledge sharing, collaboration and business intelligence.
Robust M&A Activity
The sector has witnessed a surge in M&A activity. Legal software and tech-enabled services companies are at the forefront of this consolidation, especially in areas such as litigation support, legal research and practical guidance, contract automation, and legal practice management. Multiple “in-market” transactions point to continued momentum into 2025.
Private Equity-backed platforms are building scale through add-on acquisitions, targeting niche capabilities in areas like e-discovery, enterprise legal management, and analytics.
These bolt-on strategies are helping firms diversify their offerings and enter new markets rapidly.
Key Players
There are 37 sub-sectors across the legaltech and tech-enabled services market. Some of the most active sub-sectors are:
- Enterprise Legal Management (ELM) – Platforms in this space are expanding rapidly by offering comprehensive tools for outside counsel selection and management, workflow and collaboration as well as compliance.
- Legal Practice Management – These platforms serve law firms in all segments of the market, streamlining client intake, billing, matter management, intake, CRM, business intelligence and collaboration within the relevant firm and with clients.
- AI & Analytics Providers – Specializing in benchmarking, medical and other documents and records review, case prediction and natural language processing, these firms are attracting significant investment and experiencing accelerated adoption.
- Litigation Support and Alternative Legal Services – Companies offering scalable legal and business process outsourced services are drawing interest from PE firms seeking reliable, recurring revenue across large total addressable markets.
Private equity rollups are creating multi-solution platforms that provide differentiated end to end value to law firms and their clients.
Investment Drivers
Several core factors are making the Legal Market Technology & Services sector an attractive destination for investment:
- Market Size & Resilience – The legal sector is large and historically stable, even in economic downturns.
- High Fragmentation – The abundance of legaltech and tech-enabled services vendors creates strong opportunities for consolidation and roll-ups.
- Technology Gaps – Law firms are facing increasing pressure from their clients to invest in AI solutions and practice law in a more effective and efficient way. Also, any law firms still rely on legacy systems, creating opportunities for innovative solutions.
- Regulatory Tailwinds – Evolving ownership structures are allowing financial sponsors to invest in and share fees with law firms whether directly or through MSO structures similar to healthcare and tax & accounting.
- Scalable Business Models – SaaS platforms and managed service providers generate recurring revenue with high margins, appealing to PE investors.
Winning Strategies for LegalTech Businesses, Law Firms and Corporations
To thrive in this fast-evolving market, legal market software and services providers need to adopt targeted strategies:
1. Focus on AI-Driven Solutions – Law firms recognize that they need to invest in AI technologies that drive efficiency and accuracy across the practice of law lifecycle. From document review to litigation forecasting, intelligent automation will be the cornerstone of competitive differentiation.
2. Build Scalable Platforms – Legal market consolidators must architect modular, cloud-based platforms that allow for easy integration of acquired capabilities. Scalability and interoperability will enable rapid growth through M&A.
3. Pursue Strategic M&A – Legal market vendors should look to acquire firms that complement their existing tech stack or offer access to new verticals and geographies. A disciplined M&A strategy can accelerate market penetration and value creation.
4. Leverage Data as a Strategic Asset – The ability to capture, analyze, and act on legal data is increasingly critical. Companies that develop proprietary data assets—such as clause libraries or litigation benchmarks—will have a lasting edge.
5. Tailor Solutions by Segment – A one-size-fits-all approach no longer works. Legal tech firms must customize offerings for specific practice areas, client types and market segments, ensuring relevance and impact.
Conclusion
Legal Market Technology & Services has transitioned from a niche to a necessity. With technological innovation, regulatory change, and investor interest converging, the legal sector has entered a new era of growth and consolidation. Companies that focus on AI, platform scalability, and strategic expansion will be well-positioned to stay ahead.
As private equity continues to back platform strategies and more law firms embrace digital transformation, legaltech will remain a critical enabler of efficiency and competitiveness in the broader legal ecosystem.
The winners will be those who move swiftly, execute strategically, and deliver measurable value to both legal practitioners and their clients.
For further information, please contact Scott Mozarsky, JonThackeray or San Datta.
