For over a decade, D.C.-based Lawfty Law LLP has amassed data on tens of thousands of personal injury settlement claims it and partnering law firms have won. Now, following a $40 million investment, it's hoping to bring the insights and analytics it can derive from this data to more clients and other law firms.
CEO and co-founder Todd Richheimer said the $40 million debt financing from investment firm CoVenture Management LLC will allow the company to hire more workers to oversee the collection and use of this data, which can project how much a plaintiff can reasonably expect to collect in a settlement based on the injury.
Richheimer said the benefits of this data are twofold. For potential clients, Lawfty uses these case settlement insights as evidence that it can yield more successful verdicts in court compared with competing law firms. And if Lawfty decides not to take the case directly due to geographic constraints or otherwise, it can tap into the data to determine which personal injury firms have the best track records in winning certain types of cases and refer clients to them. Lawfty then collects a percentage of the settlement if a firm it recommended wins the case.
"One firm might be good at smaller cases, one firm might be good at bigger cases, one firm might be good at [medical malpractice], another might be good at product liability," Richheimer said. "It's about pairing up the right case with the right firm and having the analytics to do that."
Richheimer, who was an investment banker before becoming an attorney, launched Lawfty in 2013 alongside his co-founder, Mike Terry, a software development engineer.
One reason Lawfty has been able to invest so heavily in tech is because D.C. is one of the few jurisdictions in the country that allows nonattorneys, like Terry, to own stakes in law firms. Now, with the influx of capital from CoVenture, Richheimer aims to ramp up the firm's investment in tech ahead of what he believes will be a surge in demand for data-driven insights across the legal world. Arizona recently changed its rules to permit outside investment in law firms, and Richheimer and other legal experts believe it's just a matter of time before other states follow suit.
Law "is an industry that's otherwise been antiquated and very slow to change," Richheimer said. "The Arizona rule has really put steroids on it."
In D.C., Maryland and Virginia, Lawfty handles its own cases but in nearly all other states across the country, it uses its in-house analytics tools to pick the best co-counsel partner for its clients based on firms' prior successes.
Richheimer said the new funding will be used to increase the firm's marketing and advertising and hire more data scientists and engineers for its analytics team. Lawfty employs 105 workers across the firm, though only 10 are attorneys. About half of its employees staff Lawfty's call centers and roughly 40 work in tech-focused roles.
