Monday, November 23, 2015
LEXIS BUYS STANFORD SPIN-OFF LEX MACHINA
NEW YORK — Legal research provider LexisNexis has acquired Lex Machina, a first mover in the area of litigation analytics, the companies announced Monday. The move will expand offerings to Lexis users and could rapidly deploy Lex Machina's technology to areas beyond its roots in intellectual property.
While the financials of the deal were not disclosed, Lex Machina CEO Josh Becker said the Silicon Valley-based company will continue to exist as a subsidiary of LexisNexis, allowing it to maintain its culture and continue to develop the product with the support of the larger organization. Becker said that through the deal Lex Machina will gain access to Lexis' massive data library. Lex Machina pushed beyond patent law to trademark and copyright earlier this year, and now it will start expanding its analytics to federal civil law and eventually state law,
"This is recognition of the importance of analytics in law … and a validation that analytics are here to stay," Becker said. "The first piece for us is to just get access to documents, and since our analytics are already tuned for legal documents we're confident that our algorithmic magic can produce some great use cases. After that there's lots of other really cool and exciting things we can do, including offering analytics via Lexis' products, but for now we're focused on expanding practice areas."
Lex Machina was spun out of Stanford University in 2010, four years after law professor Mark Lemley had the idea of creating a clearinghouse for patent litigation data. Lemley joked on Twitter that with the sale of the company, "I finally feel like a true resident of Silicon Valley." His formal relationship with Lex Machina ends, as the company's board of directors will be dissolved, but Lemley said in an interview he anticipates remaining involved in an advisory capacity.
The sale figures to return money to Stanford, which is listed on the company's website as an investor along with XSeed Capital, Cue Ball Capital, Teec Angel Fund and Ulu Ventures, plus 17 individuals including DLA Piper of counsel Dan Cooperman and Santa Clara University law professor Eric Goldman. CEO Becker noted that Lex Machina also drew investors from outside the legal space, including Yahoo cofounder Jerry Yang and Ulu's Miriam Rivera and Clint Korver. "I think they were really taken with the idea of transforming law and making it more transparent," he said.
Becker also credits IP partners Richard Frenkel of Latham & Watkins and Sasha Rao of Maynard Cooper & Gale with playing invaluable advisory roles from an early stage.
Lex Machina's products have previously empowered IP practitioners to analyze a large volume of cases, providing insight into everything from case strategy to venue assessment and filing motions. In applying analytics to those cases, users can identify patterns to better understand their challenges and tweak their strategies.
But, said Lemley, "there's nothing about the model that says it only works for patents. There's room to grow beyond patents and intellectual property as a whole."
Sean Fitzpatrick, managing director of North American Research Solutions at LexisNexis, echoed that sentiment. "Data and analytics are integral to the future of the practice of law and the addition of Lex Machina solidifies the LexisNexis position as a leader in providing analytic decision tools for legal professionals," he said. "We are excited to welcome a company at the forefront of innovation, and we plan to leverage our extensive resources to bring the benefits of Legal Analytics to lawyers everywhere."
Adding Lex Machina's technology to the content and resources offered by LexisNexis will allow the partnership to bring these tools to more people.
"When I think back to five years ago and approaching senior partners and trying to explain why they need data analytics, it makes me realize we've come such a long way, but that we've still got a long way to go," Becker said. "We think the use of data analytics will be as significant as going from books to online legal research."
David Perla, president of Bloomberg Legal, pointed out in a conversation with Legaltech News that the development of data analytics platforms is ripe for application to the legal industry, but also requires far more support and resources than many realize.
"I think this is a validation that the large players are all-in on data analytics and in a very serious way," he said. "It's also a confirmation of how difficult it can be to build Big Data solutions outside of a large company. People underestimate the resources but it takes a lot of money, time and personnel to get these solutions where they need to be."