Our Investment in Brightleaf
We are pleased to announce our investment in Brightleaf. Brightleaf, located in Westwood, MA, is a legal process automation company dedicated to providing business and legal solutions to in-house legal departments and law firms. Brightleaf has developed a software platform that automates much of the creation process for the legal profession’s most commonly used documents. For law firms, automating this process allows for both faster and more consistent document creation – saving them time and money while increasing quality. For in-house legal groups, the company’s platform allows for unprecedented control and standardization of business documents which allows companies to more quickly meet their customers’ needs. The company brings together a deep understanding of how enterprises create, move, store, retrieve and derive information from their legal documents.
You’ll notice that this company does not neatly fall into one of our typical investment themes. In addition, it’s focused on a single vertical market, which is a characteristic that we usually avoid when investing. That being said, we were very comfortable with Brightleaf given our previous success with the legal-focused e-Discovery provider, Stratify, the large size of the legal market, as well as Jason Mendelson’s Law Firm 2.0 philosophy.
We believe there is a large market for on-demand business solutions directed at law firms and legal departments. Both law firms and legal departments are constantly seeking ways to lower costs without suffering a drop in the quality of work produced. Legal departments are finding themselves overly constrained with regulatory and corporate compliance tasks. These burdens have increased as a result of Sarbanes-Oxley and are likely to become heavier and more time intensive with the regulations almost certain to result from the current economic crisis. At the same time, law firms are under intense pressure to decrease billings to their clients, while the cost structures of these firms have continued to bloat .
Many legal tasks, while costly, are essentially repetitions of work done previously. Tasks such as venture financings, sales contracts, non-disclosure agreements, discovery requests and many others are currently handed down to junior associates costing $200-$400 dollars per hour for work that could be largely automated.
Despite this pricing pressure, law firms around the country continue to increase hourly rates; in some cases these rates are over $1200 an hour. The rates increase as competition for top lawyers increases. While this happens, however, clients either leave the firms or begin to farm out less sophisticated tasks to other service providers. In the end, the law firms are losing hours by increasing rates and at some point, this business model cannot continue. Brightleaf allows these law firms to automate many tasks, increase margins and work for lower hourly rates and / or provide fixed fee offerings to their clients.
In-house legal departments can use the Brightleaf solution to gain real control of their document creation and review processes. Many of the functions that require copious amounts of legal review can be largely automated such as NDAs, discovery requests and sales contracts. Furthermore, different authorities can be allocated to different individuals within an organization allowing for more or less flexibility, all the while maintaining good corporate governance hygiene.
Brightleaf initial product, Secure GC, version 1.0 has already been released to customers. Secure GC offers on-demand services that are fast, flexible, and extensible solutions to managing a transactional legal practice which supports the entire transactional process from document origination through expiration. It offers the authorship of structured and highly specified contracts and can assimilate litigation, M&A, and legacy document contents. Secure GC imports, interprets, and negotiates counterparty contracts.
We are excited to join the Brightleaf team and look forward to assisting them in the next phase of their journey.