Right at the start of the year, Harvey announced a fundraising totalling eighty million dollars. The Series B round was led by the traditional venture capital fund Sequoia, and also included the participation of OpenAI, in a clear sign that generative artificial intelligence is connected to the legal market.

Shortly before that, Ironclad had also announced an investment round, its fifth, totalling no less than 150 million dollars and entering the ranking as one of the year’s top M&A deals.

In the Brazilian market, Softplan, almost a unicorn, raised more than 25 million dollars in its latest round. Lexter.Ai, a legal document analysis platform that adopts artificial intelligence models, announced its first capital raising of around four million dollars, with Canary as one of the participants in the investor pool. What caught the eye was that this is an early-stage platform, unlike Softplan, which serves the São Paulo Court, one of the largest in the world.

But what will be the sexy appeal of legaltechs to attract these investments, after all, what’s at stake is a return on capital?

Firstly, we have a huge backlog of opportunities. In Brazil alone, we have almost ninety million active legal cases, ready to be judged, analysed and, of course, the object of services provided by the legal operator. We can’t lose sight of the tens of thousands of extrajudicial disputes that are naturally not the subject of the state’s legal services. Examples of these are claims over faults in the provision of airline services, e-commerce and consumer services in general, where the conflict is resolved through alternative platforms, the so-called ODRs (on line dispute resolution), and whose segment generates significant amounts of money. We can cite the successful example of the Ebay marketplace.

In addition, there is fertile ground between legaltechs and investors for the ever-growing open justice movement. With open data, i.e. with the judiciary increasingly adopting accountability mechanisms, it is a national consequence that there is a proliferation of tools that process this data, structuring it and thus offering the market effective solutions, such as a robust database of judicial precedents, the best theses and strategies for negotiations and arbitrations. An example of a successful platform in this regard is the JusBrasil platform, with more than five hundred thousand subscribers and twenty million monthly hits.

In addition to the examples mentioned above, legaltechs can offer a wide variety of solutions, including contract management and automation, document “reading”, legal education, e-biling (fee management) and e-discovery, which is one of the most widespread in the UK and US markets due to its effectiveness in due diligence, governance and compliance processes in general. In other words, they are not limited to a single segment, and many legaltechs have adopted the one-stop-shop model, offering multiple of these solutions presented on a single dashboard. The winners, of course, are the users, who are loyalised by the efficiency that legaltechs offer.

It should also be borne in mind that legaltechs, as a rule, are SaaS platforms, therefore exponential in essence, and based on a recurring business model. A large part of their target audience is legal departments, public bodies such as the Judiciary (notorious for large disbursements and investments) and law firms, from small, medium, boutique to full service. In other words, in the b2b format, one of the favourites of investment funds in general.

The storm, as we can see, is perfect, not least because of the blue ocean to be explored by solutions powered by artificial intelligence, and there will be no shortage of adopters, especially the large number of self-employed lawyers who will be able to automate a large part of their services.

But, of course, not everything is perfect. There are still market barriers. Firstly, there is the difficulty of pricing. The subscription/user model can still be costly for large newsagents, who are not willing to allocate part of their budgets to these tools. As Isabel Parker, the British woman who implemented innovation processes in one of the largest law firms on the planet, points out, the old maxim that a winning team doesn’t move applies, so why invest so much in these tools if the firms, in their classic-traditional model, are making a regular income?

Another challenge is that this is a highly regulated professional segment. It is common to find strong resistance from local bar associations, fearful of having their legal services compete with virtual dispute resolution platforms. In Brazil, for example, with more than 1.2 million lawyers, the existence of apps that compensate passengers for faulty airline services is strictly forbidden. For these associations, litigation is the monopoly of lawyers.

Finally, a challenge is the barrier of internationalisation. As is well known, expanding borders is one of the favourite strategies of investment funds in general, which they love to hear in any sales pitch, as they are eager for scale and exponential revenue. However, platforms trained in the English vernacular may find it difficult to find followers in another language. Not to mention the different laws and local peculiarities of each legal market. For example, a search engine for judicial precedents, such as Jurimetria, is doing well in Spain but is banned in France.

If Themis, the Greek goddess of justice, famous for her blindfolded eyes, could observe the movement between legaltechs and venture capital funds, she would surely say, in the modernist expression, it’s a match!