Nexl, a burgeoning tech startup specializing in customer management software for law firms, has successfully raised $23 million in a strategic move to expand its clientele among prominent law firms and potentially acquire other companies. The Series B funding round was spearheaded by Tidemark Capital, an investor also backing the legal business software company Clio.
Currently, Nexl boasts a client roster of approximately 150 law firms, including esteemed names such as Winston & Strawn LLP, Dentons, and Polsinelli. This latest influx of capital occurs amid a notable surge in funding within the legal software sector, which has been gaining momentum over the past few years. In recent weeks, significant deals have been reported, including EvenUp and Eve – startups offering software solutions for plaintiffs’ firms – each raising over $100 million. Meanwhile, Harvey, another legal tech startup, recently announced securing an additional €50 million ($59 million) for international expansion, valuing the company at $5 billion.
Nexl’s Unique Focus
Unlike many of its contemporaries, Nexl concentrates on enhancing the business operations of law firms rather than focusing solely on legal work products. The company’s software suite includes tools designed for customer relationship management, email marketing, and project management.
Philipp Thurner, Nexl’s founder, highlighted the startup’s ambitions to acquire companies that contribute to “elevating the business of law.” Nexl currently employs around 90 individuals and plans to increase its workforce by about 40% by the midpoint of the upcoming year. The newly acquired funding will also be directed towards developing a platform aimed specifically at the top 50 largest law firms.
Strategic Expansion Plans
Nexl already serves several Am Law 100 and 200 clients but is poised to expand its reach to the most prominent law firms. Thurner expressed that investing in artificial intelligence (AI) within legal practice will create a leveling effect for law firms, as they adopt similar tools to deliver comparable quality work more efficiently. Consequently, law firms will need to distinguish themselves by offering superior client experiences and identifying niche markets for growth.
Challenges in AI Adoption
Despite the potential benefits, law firms encounter challenges in adopting AI due to concerns that these tools may undercut the traditional billable hour model. Additionally, there is apprehension about the risk of mistakes in legal arguments and citations.
Although changes in billing practices are not yet widespread, a recent Bloomberg Law survey indicates that the volume of work outsourced to external counsel and the use of non-hourly fee arrangements remain largely unchanged due to AI. However, AI implementation is more straightforward in managing client relationships and interactions.
“In the business of law, it’s super easy,” Thurner remarked. “These tasks are often overlooked on the administrative side, but they are crucial.”
The Customer Management Revolution
Dave Yuan, founder of Tidemark Capital, compared the ongoing revolution in customer management and AI within the legal industry to a similar transformation in private investing two decades ago. During that period, investors transitioned from insular practices to leveraging data and software for sourcing investments.
“Today’s law firms are not the traditional ‘clubby’ entities,” Yuan explained. “They are modern organizations employing teams to target the largest clients, using technology to break new ground.”
Note: This article is inspired by content from https://news.bloomberglaw.com/legal-ops-and-tech/tech-startup-nexl-raises-23-million-aims-for-top-50-law-firms. It has been rephrased for originality. Images are credited to the original source.