UK-based legaltech company Lawhive, which offers an AI-based in-house ‘lawyer’ through a software-as-a-service platform targeted at small law firms, has secured £9.5 million ($11.9M) in a seed round, ramping up the availability of AI-driven services for ‘main street’ law firms.
So far, most legaltech startups utilizing AI have focused on the lucrative market of ‘Big Law’ – large, nationwide or global law firms that are enthusiastically implementing AI into their workflows. These include Harvey (US-based; raised $106M), Robin AI (UK-based; raised $43.4M), and Spellbook (Canada-based; raised $32.4M). However, there has been minimal attention given to the thousands of ‘main street’ lawyers, who have limited budgets and are more difficult to monetize.
Lawhive caters to small law firms or solo lawyers running their own practice. Through its software, lawyers can efficiently onboard and manage clients, or be connected with consumers and small businesses through a marketplace feature.
The startup utilizes a variety of foundational AI models, as well as its own in-house model, to streamline documents and speed up the legal process for both lawyers and clients. This includes repetitive administrative tasks such as KYC/AML, client onboarding, and document collection. Lawhive’s in-house AI lawyer, affectionately known as “Lawrence”, is created with its own large language model (LLM), which has successfully passed the Solicitors Qualifying Examination (SQE) with an impressive score of 81% against a pass mark of 55%.
Speaking with TechCrunch via a call, CEO and co-founder of Lawhive, Pierre Proner, said: “Almost all of the existing legaltech companies such as Harvey, Robin AI, and Spellbook focus on the corporate market. This consists of a very limited number of big law firms in the US and the UK. We are dedicated to solving issues in the consumer legal space, which is vastly distinct and separate from a large market segment in the UK and worldwide. The sector is served by around 10,000 small law firms.”
Proner noted that small firms face higher expenses and a shrinking market: “They struggle with the added costs of staffing, paralegals, junior lawyers, trainees, and more. In reality, they only have a handful of senior lawyers who earn a significant income. This business model doesn’t work well. We are witnessing a massive exodus of mid-career lawyers from main-street/high street firms. Many of them are opting to work freelance or self-employed. We have gained traction through our platform among these self-employed lawyers, who leverage our AI lawyer.”
Although the UK consumer legal market is estimated to be worth £25BN, like most legal sectors, it is facing its own financial challenges. This means approximately 3.6 million individuals have unfulfilled legal needs involving a dispute each year, and around a million small businesses handle their own legal issues. Therefore, there is significant potential for automation to assist the industry in increasing productivity.
Proner added: “We do combine foundational models from OpenAI and Anthropic, as well as utilizing open source models. However, our main model has been trained on data gathered from thousands of cases.”
The startup intends to use the seed round to explore other markets, as stated by Proner: “We have our sights set on other markets, which have yet to be publicly disclosed.”
It is possible to deduce the focus of the planned market expansion by looking at Lawhive’s main investor: GV, the venture capital investment arm of Alphabet, the US-based parent company of Google, lead the seed round. Also participating is London-based Episode 1 Ventures, following a £1.5M investment in April 2022.
In a statement, Vidu Shanmugarajah, partner at GV, expressed: “As a lawyer by profession, I have seen firsthand the necessity of technological innovation in the legal sector. Lawhive demonstrates a transformative change for both lawyers and consumers.”
