Ten-year-old San Francisco legal technology startup Casetext is being acquired for $650 million by global news and data organization Thomson Reuters, the companies announced Monday.
Casetext was last valued at $125 million after it raised $25 million in a Series C round in early 2022, according to PitchBook. Its investors included Y Combinator, SV Angel, Susa Ventures, Crosslink Capital, Red Sea Ventures, Box Group, A-Grade Investments, Union Square Ventures, Proof, Formation 8 and Canvas Ventures, among others.
"This is undeniably a highly successful startup exit. But we’re excited about this deal precisely because we won't be 'exiting,'" the company said in an announcement of the all-cash deal. "Quite the opposite. Our entire team will join Thomson Reuters, together accelerating the revolution in legal tech."
Casetext has 104 employees and more than 10,000 customers, according to Reuters.
Founded in 2013, Casetext began as a free Wikipedia-like resource for lawyers, but within a few years, the team switched the product to software powered by artificial intelligence, the company wrote in a blog post earlier this month.
“I felt like I was working against the technology, not working with technology,” Casetext co-founder and CEO Jake Heller told the San Francisco Business Times in a 2019 interview about how his experiences as a lawyer led him to launch Casetext.
A few years ago, Casetext began incorporating OpenAI's latest software, and it now uses GPT-4 in its products, according to its website.
In May, Thomson Reuters announced that it planned on spending around $100 million annually on artificial intelligence investments, and that it would start adding generative AI tools into some core products later this year. The corporation's total budget for mergers and acquisitions is much higher at $10 billion through 2025.
Other companies are also attempting to tap into the potential of generative AI for the legal industry.
San Francisco-based DoNotPay launched as a "robot lawyer" in 2015 and has purportedly helped consumers generate letters for issues like seeking restitution or fighting parking tickets.
“The most popular forms are the ones that allow people to deal with something they feel is an injustice. Our service helps them level the playing field,” DoNotPay founder and CEO Joshua Browder told the San Francisco Business Times in 2019. “For them, it is more about emotional resolution than a financial resolution.”
In January, DoNotPay dropped plans to use its chatbot to represent a client in court after backlash from the legal industry, and in March, DoNotPay was sued for allegedly practicing law without a proper license.
Another San Francisco-based legal AI startup called Harvey is developing productivity software for legal workers that is powered by generative AI, and the company was one of the first four companies to receive funding from OpenAI's own startup fund.
