For those of you who may not have spent years as I did in and around Wall Street, “don’t fight the tape” may be an obscure phrase but its meaning is essentially self-evident.  If the market (the “tape”) is strongly headed in one direction, forget about what you think should be happening: As rude as the news may be to you, admit the market is behaving as if it knows something you don’t and, if you value your wallet, don’t fight it.

Which brings us directly to the news today that the private equity firm CVC Capital Partners acquired a majority stake in UnitedLex for US$500-million.  Here’s the gist of the story:

UnitedLex has grown to more than 2,700 lawyers, engineers and consultants since it launched in 2006, providing legal services to clients across 18 countries. It says it has signed contracts worth $1.8bn in the last 18 months, including high-profile deals with DXC Technologies and GE. […] Its deal with CVC, described as ‘one of the largest transactions to date with any legal services provider’, gives UnitedLex access to $500m for investment and acquisitions.

As regular readers know, Adam Smith, Esq. does not cover breaking news; it’s not our business model, much less a core competence.  But consider what else has happened in this space just in the last few months:

  • Insight Venture invested $50-million in Kira Systems
  • Atrium scored its own $65-million round
  • Bowmark Capital acquired Lawyers on Demand (LOD) from BCLP, and
  • EY acquired Riverview Law.

I won’t attempt a laundry list of all the other substantial money changing hands activity in the NewLaw sector over the past year or so, but if you want a cook’s tour of the headlines I suggest you start here (you will find 16 pages worth of stories at ten stories/page).

Some concise perspective.

There is no such thing as economic demand for law firms; there is only demand for legal services.

Law firms have always provided the lion’s share of those services, but in-house (measured by lawyer headcount) has grown in the United States at 750% the rate of law firms over the past 20 years, and there are now more lawyers in-house than in the AmLaw 200’s domestic offices.

Meanwhile, NewLaw, our topic du jour, has moved from not being a measurable market presence ten years ago to…well, it depends on where you draw your circle around NewLaw. (Some people put particular technologies inside the tent and others put them outside.)

But we can debate who’s NewLaw and who’s not some other day; their day has arrived.  And it has arrived because they’ve embraced one of the first laws of capitalism, to follow the money.  As Siddharth Patel, the senior  managing director of CVC, put it in announcing the UnitedLex deal:

UnitedLex has a multibillion dollar opportunity ahead of it, as legal services is one the few remaining verticals still early in the penetration curve of technology, consulting, and solution delivery.

This man is reading the tape.


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