K1 Investment Management this week staked over $100 million in a combined business enterprise between drafting management companies Lit ra, Microsystems and The Sackett Group. The combined service aims to provide a more complete end-to-end service offering around the document lifecycle.
The three companies will continue to operate independently for an undetermined amount of time as the unified service hasn't settled yet on its official branding and integration strategy.
While a $100 million equity investment may not shock anyone in the enterprise technology industry, especially in an information-governance-heavy field like law, the investment seems high for the legal technology space. Since many legal tech private equity deals do not disclose investment amounts, the investment landscape is fairly hard to gauge. Avaneesh Marwaha, president and CEO of Microsystems, said that the equity funding "was a pretty big investment move for us in the space."
More broadly, Marwaha sees the investment as a signal toward the legal industry's increasing interest in more expansive end-to-end offerings, buoyed in large part by the frustrations of managing large vendor networks and trying to integrate multiple solutions.
"When we look at legal technology with other vendors, we all create software that works well on its own, but very rarely works well with each other," Marwaha said.
The investment in the combined companies is not K1's first foray into the legal technology space. The firm put down $15 million in 2015 into e-discovery provider Zapproved and multiple investments in contract management company Apttus since 2013.
Merging company operations can take a lot of company time and energy, but Marwaha said that the unified service hopes to first focus on meeting client technology needs before it develops a finalized consolidation strategy.
He added that the combined company will be looking to its respective client bases for guidance about how the company can and should move forward as a unified entity. "We don't want to make decisions and just say, 'This is what the new world looks like,'" he noted.
Prior to the investment announcement, Microsystems had been growing its reach over the last year on its own. The document review company announced a merger with fellow review company XRef last year, and announced technology development projects around artificial-intelligence-enabled contract review and metadata scrubbing.
Lit ra had also shown signs of growth since it initially launched in 2011, with an early acquisition play in CitationWare and a few different additions to the company's executive team, but seems to have stalled a little following the passing of founder and CEO Deepak Massand last year.