Fresh off its acquisition of Workshare, Chicago-based Litera Microsystems is not slowing down and has acquired Indianapolis-based legal tech startup Doxly per an announcement that went up on Doxly’s website this morning. The move may have come as a surprise given Litera’s acquisition of Workshare, whose suite includes Workshare Transact. In a joint press release, Litera’s CEO Avaneesh Marwaha said that, “By bringing together two companies with strong expertise in the US, UK, and EMEA markets, the acquisition of Doxly helps further strengthen our offering allowing us to become the leading transaction management software provider.”
The distraction of the exit notwithstanding, everything appears to be business as usual for Doxly, that just this week was the subject of another news release in which Wilson Sonsini announced the firm was rolling out Doxly across its transactional practice. But, as Doxly founder Haley Altman told me yesterday, “The acquisition of Doxly was managed in Doxly (including our deal room), so managing the transaction was less of a headache.” Haley would not confirm whether or not there were other interested parties, but I know of two other strategics that had, in fact, expressed material interest in acquiring Doxly. There are many implications for this deal — and if you are still around ILTA Thursday, you can come hear Christian Lang, Peter Stovall, Jeffrey Brandt, and I go deeper — but for now, let me highlight two takeaways, each with a prediction.
Transaction Management as Collaboration
I previously predicted that transaction management would be a hot space and I was the first to write about Doxly. Having seen how transactions were managed inside firms, the pain point and the solution were obvious to me before I ever even saw a demo. What I did not understand fully when I made those predictions was how workspaces across industries would become more collaborative. Yesterday, I visited Tel Aviv-based Monday.com, a collaboration platform that recently was valued at $1.9 billion, up from their previous valuation of $550 million just over a year ago, and in June, I visited the Houston office of legal collaboration platform Onit, a legal technology rocket ship in its own right. Collaboration and workflow (defined best by Liberty Mutual’s Jeff Marple as the reduction in the number of clicks required to perform a task) are replacing AI as the newest buzzword and with good reason. The shift in how companies are working is real, and should the trend prove sustainable, that will eventually extend to how those companies want to work with their outside counsel, not to mention rate cards. Wilson Sonsini is likely seeing this trend earlier with their clients, many of whom are themselves tech companies that have not yet been ingrained with outdated work habits and expect to work collaboratively. Apparently, Litera, and investor partner HG Capital, see it as well.
Lawyer-Founded Startups
Bigger picture, more lawyers are going to point to Doxly as an example of the lawyer (an equity partner no less) who left her big firm to start a legal tech startup which she sold in just over three years. I would counsel those would-be entrepreneurs and market-makers to look closely at how Haley and her team both strategized and executed. Doxly was eminently acquirable because their tech addresses a niche problem relevant to many strategics, including deal room tech, eSignature, document management, and general collaboration platforms to name a few (to say nothing of ALSPs). Since transaction management collaboration tools are acquirable (remember that NetDocuments acquired Closing Room from law firm Chapman and Cutler last November, to say nothing of Thomson Reuters’ acquisition of HighQ), I fully expect other companies in this space like Closing Folders and SimplyAgree to become hot ticket items for potential acquirors.
That said, Doxly’s execution — building a robust software product while always running lean and scrappy (easier written than done) — is a big part of the reason for the company’s success, not just the fact that are a transaction management startup. Jae Um recently published an excellent article where she detailed the maturity of the crop of companies that have raised later stage rounds after having put in the hard work years earlier. The startups that scored big Series D rounds in 2018 toiled for years to refine their products and build their sales channels. While Doxly exited rather than score another round of funding, Jae’s description of “toil” reminded me of Doxly. Haley understood the pain point having managed transactions herself, but creating and educating the marketing on the alternative takes years of “toil.”
Zach Abramowitz is a former Biglaw associate and currently CEO and co-founder of ReplyAll. You can follow Zach on Twitter (@zachabramowitz) or reach him by email at zach@replyall.me.