Investing in Digital Transformation: Menlo Ventures Bets on Everlaw to Transform Legal Services
Technology is changing how we work. For the better. When technology enters a previously underserved sector or role, that workforce can be more successful, more efficient, and more productive. Menlo’s bets on this phenomenon have paid off, as we’ve watched many of our companies transform workflow: Alloy in supply chain management, Scout for procurement, Qualia for title insurance, and Carta for cap table management.
We see opportunity in every industry but the legal category is particularly exciting: It’s a large sector, previously underserved by technology and even today, only in the early innings of a cloud technology-enabled transformation.
The market opportunity is huge. Legal services comprise 2% of the U.S. GDP. E-discovery software is a $3.2 billion market. E-discovery as a whole is $10.5 billion and growing 15% YoY. (Probably not surprising when you think about how often and on how many platforms we communicate today.) Law firms understand this: according to a recent study, 63% of firms are increasing or maintaining their cloud adoption this year.
Knowing the market opportunity, it’s no surprise that there are other software companies trying to get into this market. But as we scoured the legal space looking for the right company to back, we landed on Everlaw—which delivers e-discovery and beyond—as the best-in-category. On the surface, Everlaw is elegant and easy to use. Under the hood, Everlaw is a powerful solution capable of ingesting a massive corpus of electronic evidence. The software can find all the needles in the haystack to help litigators knit their stories together. Everlaw goes beyond discovery, addressing every pain point that follows: all work product, collaboration, communication, and organization. Their customers include law firms, corporates, and the government.
With such a complete offering, it’s no surprise that lawyers are increasingly living in Everlaw. And loving it. Everlaw is used by all 50 U.S. state attorneys general, in-house counsels at major organizations, and eight out of the top 10 class-action law firms. Last year, the company grew revenue by over 100% and added customers including Zenefits, Benesch, Friedlander, Coplan & Aronoff LLP, and McDonald Carano LLP.
At the heart of this success is founder AJ Shankar, a Ph.D. in computer science from UC Berkeley. We consider him a world-class founder. He really understands how technology can be applied to address the daunting challenges litigators face in complex cases. And he’s recruited a talented team to help him achieve that mission. Combining technical skill with incredible product intuition, they make solving hard problems look easy. I’m thrilled to invest in Everlaw and even more excited to partner with them as they take over the category and expand it in ways not previously thought possible.