Slaughter and May has invested in artificial intelligence platform Luminance as part of a $10m Series A funding round.
The round, which was led by Talis Capital and also including Invoke Capital, values the M&A due diligence tool at $50m.
Luminance, which launched last year, said it would use the funds to expand its operations internationally and in particular to support its new US headquarters in Chicago.
Luminance CEO Emily Foges said the investment was a reflection of the fact that legal market technology had now “come of age”.
Foges added that the speed of growth of Luminance, which launched just one year ago with help from Slaughters, was partly the result of the product’s simplicity and speed of deployment.
“Lawyers can just switch it on and use it,” said Foges. “This is not technology that need lots of people behind the scenes to make it work. It’s not rules-based, it’s pure machine learning.”
Foges said another factor in Luminance’s favour was its “intuitive” interface.
“This is not technology that requires you to compromise to gain efficiencies, it doesn’t expect you to lose control,” added Foges, who highlighted clause extraction technology in other, older systems which remove clauses from a contract in order to identify and categorise them.
“Doing it this way means you’re losing the context, so it’s a compromise. Clause extraction is a blunt instrument, but the tech has moved on. With Luminance you lose nothing.”
Luminance now has more than 30 law firm clients as well as in-house teams, insurance companies and private equity and venture capital houses, “who want to understand the value of a target quickly”, added Foges. The technology has been used to assist with over 200 live transactions to date.
Law firm clients include Cravath Swaine & Moore in the US, three of the big four in Singapore (including WongPartnership) Gilbert + Tobin in Australia, and Uría Menéndez, Araoz & Rueda and Portolano Cavallo in Europe.
Foges said that a number of US firms were “further behind the curve” than UK and Europen firms because they hadn’t needed to change, “they haven’t had the competitive pressures”. But she said she was now seeing signs of that changing and was already running pilots with firms out of its new Chicago office.
“We’ll be in Chicago and New York next week talking to firms about how they should adopt AI in a way that doesn’t compromise security,” added Foges.
Foges said the funding round was “indicative of the fact that we have a global business”, and that Luminance would be sending a “scouting party to AsiaPac in January.
“We’re not an operationally heavy organisation which is why we can move and grow so fast,” added Foges.
The Luminance CEO refused to divulge any details of the level of financial investment Slaughters has made but said all of the firm’s partners had agreed it was an investment worth making. It is understood that the firm’s initial equity stake in Luminance had been in return for its lawyers’ time in helping build and develop the project whereas its investment in this round was financial.
Vasile Foca, managing partner and co-founder of Talis Capital, said technology integration within the legal sector, in particular that based on artificial intelligence and machine learning, had transitioned from a support function to an enabler and efficiency-driver, allowing lawyers to focus on real added value to clients.
“Since launching last year, we have seen Luminance truly lead the competition in this regard,” added Foca.
Using a unique combination of supervised and unsupervised machine learning, Luminance reads and understands vast quantities of legal documents at speeds no human can match. Moving well beyond legacy contract review software, Luminance automatically sorts and classifies contracts to uncover even subtle risks at the outset of a project.
Combined with in-built, sophisticated collaboration tools, lawyers can increase the efficiency of their review by over 100 per cent without sacrificing accuracy.
US managing director George Tziahanas will be responsible for meeting the needs of firms adopting Luminance’s contract-understanding technology in the region, while building out the Chicago-based team to over 10 by year end.
“My top priority is to hire an impressive team in Chicago to drive growth and serve our great clients,” said Tziahanas. “Throughout my career, I have witnessed legal teams challenged with analysing large sets of complex information. Chicago’s status as major financial, scientific, and legal hub made it the obvious choice for our first US office.”