Landmark news broke this morning that law practice management company Clio has signed a definitive agreement to acquire the AI and legal research company vLex for $1 billion in cash and stock.
After my initial report earlier today, I had the opportunity to sit down with Clio founder and CEO Jack Newton to discuss this deal and what it means for the legal tech market. Below is a transcript of that conversation, edited for length, style and consistency.
Ambrogi: I feel like every time I’m on a call with you, it’s some news that’s bigger than the last time I talked to you. And I can’t even imagine what the next call is going to be like, because this is pretty big.
Newton: I don’t know how we’ll keep it up, but we’ll do our best.
Ambrogi: Honestly, I’m still trying to process and digest this, so help me understand this. What’s the significance of this deal?
Newton: Well, I think it’s hard to understate the significance, Bob. Like you, I myself have had a hard time processing just all the opportunity this represents. And I think in the age of AI especially, there’s really a first-in-legal-tech-history opportunity to bring together the business of law and practice of law together. What I saw about a year ago was that AI would drive a really deep convergence of the business of law and practice of law. These had, up to this point, been two very discreet universes in legal and in legal tech. Lawyers had their business-of-law tools like Clio, and they had their practice-of-law tools like Thomson Reuters and LexisNexis and Fastcase and vLex. While there might be some superficial integration between those two tools, they were really discrete.
What we saw with AI was the incredible opportunity that it represented … to bring these two worlds together and to drive a convergence of these two worlds where you’re able to look at all of your legal workflows and all of your legal data from one vantage point. Especially as we evolve into an era of agentic AI, we saw an opportunity for Clio to evolve as a platform – as a platform that is not just orchestrating the work of human legal professionals, but helping those human legal professionals orchestrate the work of agentic AI, helping support them in realizing their full potential and helping them deliver best-in-class legal services to their clients.
We saw vLex as a unique company and a unique asset in the marketplace to enable those AI ambitions and our ambitions – to bring together the business of law and practice of law. This company is incredible in that – as you’ve pointed out in your own writing – they’ve built what is widely regarded as the best legal AI in the market. They have the most comprehensive global legal database. When brought together, this represents an opportunity to bring incredibly strong AI capabilities to Clio’s platform and to leverage the incredible wealth of data and actionable insights that data represents and embed those deeply within the tool that lawyers use every day in the form of Clio.
We really haven’t seen in the history of legal tech these two types of companies brought together. The Thomson Reuters and LexisNexis duopoly is rooted in a history of legal publishing. Bringing these technologies to the place that legal work gets done, I think, is a uniquely empowering capability for legal professionals. And I think this becomes essential in the world of AI because legal professionals will expect the tools they’re using to support both their execution of the business of law and them doing their real legal work within the practice of law. Bringing these under one platform, we think is the same kind of unlock that Microsoft was able to achieve when they brought Microsoft Windows and Microsoft Office together for the first time. We’ve all seen what a powerful combination of platforms that has been over the course of the last 20-plus years. We think this is the combination of platforms that will power the next 20-plus years of legal innovation.
Ambrogi: You’re talking a lot about the AI capabilities that vLex has developed. It’s also a substantial legal research database. It’s a substantial source of litigation data. What do those parts bring to Clio or how do you see those parts as fitting into what you’re doing?
Newton: I really think about vLex as being two companies and bringing two different kinds of value to Clio. One is in what you might describe as the legacy business – this incredible business that Luis and Angel from vLex and Ed and Phil from Fastcase have built over the course of the last 25 years to build out the most comprehensive global legal database and legal intelligence platform that provides, on its own, such an incredible value add to Clio customers to have that incredible wealth of legal data and legal research at their fingertips. The number one feature request we’ve had at Clio for expanded capabilities in our product suite is legal research. Customers want to have this deeply embedded in the tools they use on a daily basis.
This is something Ed (Walters) and I have talked about for the better part of 15 years – what a potent combination that legal data and legal intelligence platform would bring to Clio. Think about the kind of data that Docket Alarm has and how that can get woven into Clio. The possibilities just with that data asset combined with Clio are endless on their own. Now, the second part of what makes vLex so exciting is what I might describe as a startup embedded in that legacy business, and that is the Vincent AI startup, where they have built, with a small but incredibly capable team, an AI platform that is able to deliver on an incredible array of AI capabilities, from legal drafting to legal research to contract review.
Ambrogi: If nothing else, a great thing about this deal is it’ll divert attention from Harvey for a little while, because it seems like all anybody’s been talking about is Harvey. But, of course, there had been the rumors that Harvey was looking to acquire vLex. And then there was the news two weeks ago of the strategic alliance between Harvey and LexisNexis. Was that at all a spur to get this deal going? Were you looking at the competitive market out there in terms of what LexisNexis is doing, what Harvey’s doing, what Thomson Reuters is doing, and trying to respond to that in some way?
Newton: It’s public information that Harvey had been pursuing vLex. But our interest in vLex, our vision of this strategic rationale, behind integrating Clio and vLex, is something that has been a topic of discussion between myself and the principals at Fastcase and then the principals at vLex for a number of years. The interest from Harvey did spur, I think, vLex into becoming an actionable opportunity. The timing aligned with the hold period for vLex’s owner, Oakley Capital, starting to come to a close, which is when assets like vLex potentially get put up for sale.
Ambrogi: I saw Shubham (Shubham Datta, Clio’s VP of corporate development) post on LinkedIn that this is the largest M&A deal in legal technology for a privately held company. I couldn’t think of any acquisition of this dollar amount other than the Reveal acquisition of two different e-discovery companies in one deal. Is this, in fact, the largest M&A deal in legal tech history that you know of?
Newton: That’s our understanding, Bob, in terms of what is publicly disclosed data, which is all any of us have to go off of, but it is the largest legal tech deal in history, which is pretty incredible.
(A Clio spokesperson said this is also the largest-ever technology acquisition in both Canada and Spain.)
Ambrogi: Could you talk more about what this means for your customers now – both with regard to your “legacy” customers in the smaller-firm part of the market, but also as you’ve been looking to expand upmarket, what does this mean for that?
Newton: Number one, our small to medium sized customers should be extremely excited about the capabilities that vLex and Vincent will bring to Clio. In a lot of ways, we see this acquisition as democratizing access to leading edge legal AI. … I think there’s a perception that … there’s a bit of a velvet rope around some of these legal AI technologies and startups that only the biggest law firms in the world can access. I saw Carolyn Elefant just wrote about this a few days ago, where she wanted to access some legal AI technologies and was basically told, no, you’re too small for us.
We think that is hugely disempowering to solos and small firms, which, as we showed in the cloud era, can be some of the fastest moving, most innovative users of legal technology. We believe this acquisition will help make absolutely world class and leading AI and legal research databases available to the small to medium sized law firms that represent the majority of lawyers in every market around the world.
Secondarily, on the flip side of that coin, this opens up a huge enterprise opportunity for Clio. As we continue to expand into the enterprise, as we expand into the Am Law 200, as we expand into the enterprise corporate legal environment, this acquisition will allow us to invest and double down in the huge amount of traction that Vincent and vLex are already seeing in those segments. Coupled with our recent acquisition of ShareDo, we believe this really bolsters our ability to become the de facto category leader for everyone in every segment of the market, from solos to enterprise firms, in both the operating system of legal and the productivity platform of legal in the form of AI.
Ambrogi: What is the category anymore? Some of the comments I’ve seen so far on LinkedIn allude to this idea that this is potentially reshaping the entire way we think about categories of legal tech products.
Newton: I think that’s exactly right. I think we’re in the process of defining a new category of legal productivity software and intelligent legal productivity software. The term “practice management software” seems immediately limiting in terms of the opportunity that this combination represents. What we think we’re fundamentally doing here is redefining how legal work gets done in the era of AI.
Ambrogi: What about globally? One of the ways you’ve been expanding over the last number of years has been into new global markets. vLex is well known in other parts of the world. Does this help accelerate your expansion into other global markets?
Newton: Absolutely. One of the things that really excited us about vLex is the global scale of their legal database and their legal intelligence platform. vLex operates in over 110 countries. Clio operates in over 130 countries. So there’s obviously a very substantial overlap of our international coverage. And vLex, like Clio, wants to be a global player. And unlike some of vLex’s competitors that focus primarily on the U.S. market, vLex is a leading provider of legal data and legal intelligence in 100-plus markets worldwide. So in terms of market opportunity, there’s a significant joint opportunity to realize an opportunity in becoming the global leader in legal AI.
Ambrogi: What happens to the vLex team? What happens to the founders and the rest of the team?
Newton: Everyone is staying. Our conviction and commitment is around investment and really doubling down on what is working wonderfully well at at vLex. What we’re super excited about is how synergistic these two companies are. When you look at the overlap and you look at the complementarity of what Clio is strong at and what vLex is strong at, these are almost orthogonal capabilities – orthogonal in the sense that Clio is excellent at the business of law and vLex is excellent at the practice of law. The makeup of our employee bases, the makeup of our technology teams, the makeup of our respective capabilities, all really reflect those strengths.
Ambrogi: One of the hallmarks of Fastcase before it got acquired by vLex and now vLex since then has been its relationships with bar associations all across the country. What happens to all of that? Do you expect that those kinds of relationships will continue? Do they get stronger?
Newton: I think they get stronger in the sense that the only company that does bar association relationships as deeply and as well as Fastcase and now vLex is Clio. We are two of very few companies that can say they have partnerships with every single bar association in the United States, and with hundreds of additional bar associations at the county, regional and practice area specific level. We see this as a really important channel for building awareness and making technology accessible to lawyers. So what exactly that evolved form of a joint bar partnership program looks like is something we’re obviously going to be working on over the integration period. But bar associations can expect to bring an even more compelling value proposition to their members in the form of a combined Clio and vLex.
Ambrogi: What about your own development of Clio Duo? Does that all go away now? Does that all get merged together in some way with what vLex has been building? Have you figured that out yet?
Newton: How Clio Duo and Vincent either become unified or remain distinct is something we’re still working through in the integration process. But what is fundamental is – and again down to the underlying deal thesis and the synergy that exists here – when you look at the capabilities of Duo and Vincent, they’re really reflective of that underlying business of law versus practice of law strength. Ideally, what we see us presenting our customers with is a deeply integrated experience that makes both the business of law AI capabilities and the practice of law AI capabilities deeply embedded into Clio’s interface. Those respective capabilities emerge and are accessible at the right time, in the right place, depending on context.
We certainly want our user experience to be one where they’re not wondering, do I work with Duo or do I work with Vincent to achieve this kind of legal outcome or to achieve this kind of outcome in my business. We want that to be a unified and streamlined experience. We’ll be working with the vLex team to map out exactly what that looks like.
Ambrogi: What about the whole idea of agentic AI and what this might mean for workflows?
Newton: That’s one of the most compelling use cases, Bob, and one of the reasons we felt this acquisition made so much sense. Agentic AI will create the opportunity for the workflows and automations that we’ve already built deeply into Clio to trigger agentic workflows. Where you could imagine a workflow in Clio, for example, triggering an agentic AI to go draft a legal document and to present that to you for review when it’s complete, and for another agent to be triggered and to coordinate filing those documents with the appropriate court.
You can imagine an agentic AI being triggered for every new case that is taken in through Clio Grow to assess the deal value or the case value and what the likely outcome of that case would be, leveraging the vLex data set.
Whereas historically Clio has been about really orchestrating the business activities of a law firm and the human being legal professionals at that law firm, the Clio of the future will be about orchestrating both the human beings doing the legal work, as well as enabling the human beings to in turn orchestrate a set of legal AIs, agentic AIs that can help them not just manage their business, but actually execute the legal work, the practice of law that is embedded in their practice – for Clio to be a singular platform spanning the business of law and the practice of law and all the opportunities for agentic AI to span those business of law and practice of law workflows. What is so exciting is we believe Clio is the only company in the world positioned to execute on that vision.
Ambrogi: That may be right now. I mean, certainly nobody else has the combination of capabilities that you have at this point. It’s unique and potentially powerful.
Newton: It is unique and it’s on us to make it powerful.
Ambrogi: That’s all the questions I had. What else stands out for you about this? What else haven’t we talked about that you wanted to mention?
Newton: I think this is the most transformative moment. I think we’ll look back on this as a really key inflection point, not just for Clio, but for the legal industry. We are creating a new type of legal tech company and a new category of capabilities with this acquisition. In the 17 years that I’ve been running Clio, there hasn’t been a moment as substantial and as impactful as this vLex acquisition – not just from a scale perspective, but from an impact perspective. The impact and the stakes here really can’t be overstated. We’re just so deeply excited about the opportunity this creates for Clio, for vLex and for our respective customers.