Last week, Israeli news reported that #legaltech company Lawgeex, one of the pioneers in AI based contract review, was laying off a third of their staff and pivoting to selling to SMB’s under a new brand superlegal.ai

Zach Abramowitz @ZachAbramowitz

Israeli news reporting that Lawgeex has laid off a third of their staff. Breaking my teeth now on the Hebrew, will let you know more as the story develops.

4:33 PM ∙ Sep 6, 2022

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Following that tweet, Isha Marathe from Legaltech News spoke to me and then quoted me the following day:

“If you’re going to pivot the business, does that really require firing a bunch of people? I don’t really buy that line,” he said. “I think they were always good at raising money, and their marketing was always really good at getting Lawgeex out there. But I never felt like they had a good product market fit. The product didn’t seem to live up to the marketing.”

Turns out, I was partially right, partially wrong and missing some key information that I can share you with now.

After speaking with multiple sources with knowledge of the situation, I can now report that CLM company SirionLabs was set to acquire Lawgeex’s enterprise business. But, at the last minute (with legal docs ready to be signed), SirionLabs got cold feet and pulled out (possibly because their own funding sources dried up). After that deal fell through, Lawgeex made the difficult decision to lay off staff connected with the enterprise business.

What I had wrong in my quote to LTN was that I implied that the pivot to SMB was a cute narrative, but not one that persuaded me. Based on what I know now, Superlegal.ai is showing super growth and could very well be poised to finally deliver on promises made by Lawgeex marketing.

Nir Golan @lawheroez

@ZachAbramowitz Interesting move away from tech vendor to tech enabled contracting outsourcing solution for smbs that do not have a legal department. ..

4:53 PM ∙ Sep 6, 2022

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What’s interesting about this pivot is that, before they sold to enterprise customers, Lawgeex originally was launched as a B2C company. Rather than hire an attorney to review your lease agreement, you could simply drag and drop the agreement into Lawgeex and Lawgeex would tell you if your agreement had any clauses that were problematic. The problem with the B2C approach is that it confuses what a lawyer does with why people hire a lawyer. A lawyer may review your agreement against precedent, but ordinary consumers hire lawyers because they view them as a kind of shaman who will bless the agreement and tell you it’s kosher.

But AI cannot replace a shaman, so Lawgeex pivoted to enterprise sales. The problem is that, while there is an appetite for CLM at the enterprise level, there is less appetite for contract tech that replaces lawyers on review. Lawgeex had reasonable traction with big customers, but not one that could justify venture investment. Superlegal.ai, Lawgeex’s second major pivot, appears to actually have the kind of growth that would excite VCs. SMBs that may not have a big legal department or any lawyers for that matter, get real value out of Superlegal.ai’s solution.

Now for the weird part of this story. Why would SirionLabs — a company that claims to be AI-first — need to purchase another AI company? I am certainly aware of CLM companies looking at buying AI companies to compliment their workflow. But I’m not aware of contract AI companies buying other contract AI companies. I reached out to SirionLabs, but they have yet to respond. I am still doing my best to digest this story and am certain to have further takeaways. If you have more information on this story, please get in touch or comment on this post (hot-takes welcome as well). And, if you want more analysis as this story develops, go ahead and hit that subscribe button.