Canadian Lawyer

w w w . c a n a d i a n l a w y e r m a g . c o m F E B R U A R Y 2 0 1 9 35 And to put that another way, Cameron-Huff says many cli- ents dislike what he calls law firms' operational "black boxes." Nowadays, he says, "clients want to know how things are pro- gressing — really the intrusion of the KPI-managerial mindset into law firms." It's perhaps easy to see why when a 2018 study involving legal academics reportedly saw LawGeex's AI tool achieve an average 94-per-cent accuracy rate, higher than that of 20 top lawyers (85 per cent). Reported Crunchbase News at the time, "It took the lawyers an average of 92 minutes to complete the NDA issue- spotting, compared to 26 seconds for the LawGeex AI." Go, Toronto! Amid all this change, Matthew Peters — national innovation leader at law firm McCarthy Tétrault LLP — says Toronto has a chance to turn itself into the world's first legal tech super- cluster. Peters points to Toronto-headquartered legal tech major players Kira Systems and Blue J Legal as evidence. Kira, with 130 employees and five of the biggest Bay Street law firms as clients, attracted US$50 million in its first external funding round in 2018 — by far one of the largest legal tech rounds to date. The same year, 33-employee Blue J attracted US$7 mil- lion in Series A funding. The latter company — a University of Toronto startup — has 120 clients, including law firms Osler Hoskin & Harcourt LLP, Fasken, Gowling WLG, Miller Thom- son LLP and accountants Collins Barrow. Says Peters, "Downtown Toronto has a very strong concentra- tion of clients and law firms. Then you've got MaRS, Ryerson Uni- versity's Legal Innovation Zone, the Creative Destruction Lab, Thomson Reuters and OpenText Magellan … Big buyers, big users. "It's an incredible legal tech ecosystem, stronger than that of Silicon Valley, New York City or London, England," says Peters. In fact, Ontario-born Andrew Arruda, the CEO of U.S. AI- focused law tech firm ROSS Intelligence — which opened in Toronto last year — says that if he could have done anything differently, it would have been to "expand our engineering pres- ence in Canada sooner. "There's such an incredible tal- ent pool in Canada that's actively looking to stay, instead of mov- ing to Silicon Valley," Arruda told Canadian Lawyer via email. Epiq's Swansburg calls Canada "a great sandbox." "Success breeds success. There is a strong, connected support community. Also, the Canadian market here is smaller, more definable and, in many ways, more accessible — making for easier testing, and a lower risk environment." Not so fast Toronto has plenty of competition, however. The U.K. and Singapore governments are actively investing big bucks in legal innovation, most of the big English law firms are tangibly working with legal tech players, while the U.S., Israel, China, Russia, Berlin, Paris and Brazil's São Paulo finan- cial centre are all chasing the legal tech supercluster crown. Canada probably has some ground to make up, says Arruda, especially compared with the U.S. "Canada is maybe lagging a bit behind . . . [due to] the Canadian market, until very recently, being essentially closed off from international competition. There's a lot of interest- ing work happening in Europe, especially in London, and I'm continuously impressed by the focus and momentum building around Asia's legal tech industry." Toronto lawyer Kowalski says Canada's "not a hotspot" for venture capital and agrees the legal market is small. "The U.S. has a massive advantage due to size and the relatively homogenous legal market with its uniform language and com- mon law system. The EU's of comparable size but fractured by language and different laws, which handicaps its legal tech scene." Says Kowalski, "It's noteworthy that Clio and Kira, the two most successful Canadian legal tech companies, have created products that are jurisdiction agnostic — they can be used in vir- tually any jurisdiction or language." Canadian company Closing Folders (approximately 15 employees, founded 2013) is one to watch, says Kira Systems CEO Noah Waisberg. Legal Innovation Zone managing director Chris Bentley adds that Closing Folders is used by "just about every Toronto law firm." He also highlights Lex Machina (approximate- ly 80 employees, founded 2010) as a "big deal" in legal tech. Lex Machina has attracted at least US$8 million. That company, along with Ravel Law (approximately 16 employees, founded 2012), is owned by legal intelligence giant LexisNexis. U.S. company Fastcase (approximately 50 employees, founded 1999) is singled out by Clio executive Joshua Lenon as significant, while Epiq Canada's general manager Carla Swansburg highlights HighQ, Recommind (a search-focused subsidiary of OpenText Corporation), Luminance (a U.K.-focused Kira competitor) and AI-powered document extraction company iManage RAVN — a company founded by Prosperoware's co-founder and current president Keith Lipman. Atrium (130 employees, founded 2017) is a San Francisco-based law firm combined with a Delaware- based corporation. Atrium's relatively new technology platform helps clients draft and review com- mercial contracts and raise capital, among other tasks. Atrium has US$75.5M from investors that include Andreessen Horowitz (a prominent legal tech investor), as well as top tech incubator Y Combi- nator. Atrium is backed by Twitch founder and Y Combinator partner Justin Kan and was co-founded by Silicon Valley corporate lawyer Augie Rakow. But … Don't forget, says Cameron-Huff, the two established legal tech players, LexisNexis and Westlaw (owned by Thomson Reuters, publisher of Canadian Lawyer). "They are huge and have lots of great products," he says. "There's a bit of a debate as to whether legal tech means startups or should mean the broader industry. It should include the giants because they make the most widely used tools, and some of them are excellent." ONES TO WATCH …

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