Legalon Secures $50M Funding to Revolutionize Legal Workflows with AI

The Challenges of Traditional Contract Review

The process of contract review frequently remains a lengthy and largely manual undertaking. This places significant strain on legal departments, requiring attorneys to meticulously examine complex wording, identify potential risks, and interpret specialized legal terminology.

LegalOn Technologies: A Leading AI Solution

Recognizing this widespread issue, LegalOn Technologies, a company based in Tokyo, has established a strong market presence. For several years, they’ve offered AI-powered contract review software, currently utilized by approximately 7,000 organizations across Japan, the United States, and the United Kingdom.

The company asserts leadership in the Japanese market, with its platform being adopted by 25% of all publicly traded companies within the nation.

How LegalOn’s ‘Review’ Tool Works

LegalOn’s core product, ‘Review,’ leverages artificial intelligence to pinpoint risks and propose modifications. These suggestions are based on pre-defined playbooks crafted by legal professionals and tailored to each client’s specific legal guidelines.

LegalOn claims that ‘Review’ can reduce review times by as much as 85%, simultaneously enhancing both the quality and accuracy of the process.

Expansion Through New Funding

Despite its existing success, LegalOn is pursuing further growth. The company intends to expand its offerings with advanced AI agent tools and has recently secured $50 million in funding to facilitate this development.

Details of the Series E Funding Round

This Series E funding round was spearheaded by Goldman Sachs’ growth equity fund, with participation from existing investor World Innovation Lab (WiL).

Additionally, new investors including Mori Hamada & Matsumoto, Mizuho Bank, and Shoko Chukin Bank contributed to the round.

Strategic Focus: US and UK Market Growth

A significant portion of the newly acquired funds will be allocated to the development of additional AI agent products.

Furthermore, LegalOn is actively strengthening its market penetration in the U.S. and U.K., where it reports a fourfold increase in business over the past year.

The company has not disclosed its current valuation.

Company Origins and Core Philosophy

Founded in 2017 by former corporate lawyers, Nozomu Tsunoda and Masataka Ogasawara, LegalOn aims to streamline tasks both preceding and following the contract review stage.

This includes the organization of legal requests and the automation of contract management processes.

Differentiating Factors: Attorney-Driven AI

According to Daniel Lewis, Global CEO of LegalOn, the company’s unique strength lies in its foundation of attorney-created, expert legal content.

He emphasizes that this approach distinguishes LegalOn from other legal tech startups that either require users to build rules from scratch or rely on generic AI models lacking the necessary precision for legal applications.

Benefits of LegalOn’s Approach

“Our methodology guarantees that contract reviews align with established legal standards, resulting in more accurate, consistent, and practical outcomes for legal teams,” Lewis stated.

“We offer over 50 attorney-developed playbooks, seamless integration with existing workflows, and a solution that is fully functional from day one.”

New Tool: Matter Management

Recently, LegalOn launched ‘Matter Management,’ a tool designed to help legal teams track contract requests, assign responsibility, link matters to relevant individuals and documents, and facilitate collaboration across departments.

Partnership with OpenAI

LegalOn has also established a non-equity technology partnership with OpenAI, granting it access to the ChatGPT creator’s advanced large language models.

“This is a technical collaboration that provides us with early access to their latest models,” Lewis explained. “It allows our engineers to work alongside OpenAI’s engineers, accelerating our goal of developing cutting-edge AI agents grounded in our proprietary legal content and expertise.”

The Rise of AI in Legal Tech

The increasing adoption of AI is significantly benefiting legal tech startups globally.

Harvey AI, for example, secured $300 million in Series E funding in June, achieving a $5 billion valuation, while Clio raised $300 million last year, reaching a $3 billion valuation.

The Future of Lawyers in an AI-Driven World

Despite the transformative potential of generative AI, Lewis believes it will not replace lawyers.

“The technology isn’t advanced enough for that, and replacement isn’t our objective,” he said. “Lawyers will continue to be essential, overseeing, editing, and exercising judgment – those who embrace AI will see the greatest benefits.”

Total Funding and Investors

This Series E funding brings LegalOn’s total capital raised to over $200 million.

The company’s investor base includes SoftBank Vision Fund, HSG (formerly Sequoia Capital China), JAFCO, and MUFG Bank.