Clifford Chance and Latham & Watkins have each injected north of $2m into startup services automation platform Reynen Court, which has heavyweight law firm backing to become the legal tech app store that will enable law firms to access new tech in a secure and integrated way. Clifford Chance’s CIO Paul Greenwood has become a director of Reynen Court as has Latham’s CIO Kenneth Heaps as part of the substantial funding round.
Reynen Court in December announced that it had closed its Series A with investment from Clifford Chance and Latham, however the terms of the Series A were not disclosed, leading one Legal IT Insider reader to suspiciously query, “Why wouldn’t you publish the amount if you’re doing a press release on a Series A?” and questions have been raised in the market as to whether the amounts injected were substantive or a something of a publicity play.
Forms filed with the Securities and Exchange Commission should quieten those suggestions: Reynen Court has now raised a total of $6,999,999, which, after deducting the $1.5m injected at its inception, leaves just under $5.5m of new capital, the lion’s share of which is split between Clifford Chance and Latham.
While the legal market has recently seen a number of huge Series A funding rounds (think Kira Systems’ $50m) the average Series A round is between $2m and $15m and Reynen Court’s founder and chief executive officer Andrew Klein told us: “For a Series A this is quite a mid-range number.”
It is unusual for companies to disclose what percentage of the equity they have given away in return for investment and Reynen Court is no exception, however given that this is a Series A it can be expected to be significant, with Series A investors taking anything from 15% to as much as 50% of the company.
As we first revealed in 2017, Slaughter and May was an early investor in Luminance and the blue-chip City firm extended its 5% stake by investing in Luminance’s $10m Series A in 2017. However, this kind of investment is a big gamble and it is still rare for law firms to invest in tech companies at this level or at all.
Investment by Clifford Chance and Latham came after Klein spoke to a number of venture capitalists. He told us: “I got a really good response but when I was at Latham last year, they said ‘We don’t think you need to go to the VC community, we can invest and be a partner.’” Clifford Chance swiftly followed suit.
Reynen Court launched in 2018 with the backing of 12 heavyweight law firms, co-chaired by Latham and Clifford Chance, who were the most obvious first movers. Klein says: “If other firms show an interest, we’d be keen to talk to them, but I want to make it easy for firms to help us strategically and the fact that certain firms wanted to invest was an unexpected development.”
Other firms backing Reynen Court include Paul Weiss (vice chair); Covington; Cravath, Swaine & Moore; Freshfields Bruckhaus Deringer; Gibson Dunn; Linklaters; Orrick; Ropes & Gray; Skadden Arps; and White & Case.
The startup will use the Series A money to hire more engineers and product managers and also put in place experienced account and deployment managers as it prepares to launch pilots with members of the consortium.
A range of legal technology vendors covering document automation, process engineering and AI are said to be working towards making their applications available through the Reynen Court platform.
Speaking at the time the Series A was formally announced, Greenwood said: “Technology is playing an increasingly important role in our drive to service our clients in a way that is ever quicker, simpler, more efficient, and more robust. As the new wave of technologies enter the legal market, we need to consider how firms and clients can access them in a secure and integrated manner. We see Reynen Court as the missing piece of this evolving and exciting puzzle and we are delighted to be supporting its progress.”
Heaps said: “Staying at the forefront of emerging technologies is not only a top priority but a strategic imperative for Latham & Watkins — and Reynen Court is an important part of our strategy. We are thrilled to be joining its board and co-chairing the consortium of firms, who bring insights, experience, and a spirit of forward-thinking collaboration. It’s an exciting time.”