Clio and Harvey, two fast-growing startups that sell software for legal professionals, have raised $1 billion in combined funding to expand their market presence.

Clio disclosed this morning that it has closed a $900 million Series F round at a $3 billion valuation. In conjunction, Harvey announced that it has secured $100 million from an investor consortium led by Alphabet Inc.’s GV startup fund. OpenAI participated as well. 

Streamlining law firms’ work

Clio’s round was led by New Enterprise Associates, which provided more than $500 million of the $900 million haul. The rest came from Goldman Sachs Asset Management, Sixth Street Growth, Alphabet Inc.’s CapitalG startup fund and Tidemark. TechCrunch reported that the raise included a “substantial” secondary financing component, which allowed employees and investors to sell some of their shares.

Clio, officially Themis Solutions Inc., sells a suite of cloud applications that law firms use to manage their business operations. One application, Clio Accounting, helps law firms’ finance teams carry out their day-to-day work more efficiently. Clio Draft is a tool for turning legal documents into templates that can be reused across projects.

The company also sells software for law firms’ marketing teams. Clio Grow can be used to create a website for a law firm, run search engine ads to advertise the website and measure which marketing methods are most effective at winning over clients. The application also includes a built-in customer relationship management system that legal professionals can use to store data about sales opportunities.

Rounding out Clio’s software portfolio is an application called Clio Manage. Like Clio Grow’s built-in CRM system, it’s designed to help law firms manage their internal data, but focuses on information related to legal cases rather than sales opportunities. The application can store all the documents related to a case in one place, as well as maintain a log of which employee changed which record and when.

Clio generates revenue from not only software subscriptions but also payment processing. The company provides client billing features as part of its application portfolio and charges a fee for every transaction that law firms complete. According to Clio, it has processed billions of dollars worth of transactions since 2022.

The company’s payment processing business helped push its annual recurring revenue above $200 million ahead of its latest funding round. According to TechCrunch, Clio reached that milestone with positive EBITDA, or earnings before interest, taxes, depreciation and amortization.

The company will use the new capital to expand its international presence. In parallel, Clio plans to enhance its application portfolio with a focus on payment processing and artificial intelligence features.

AI-supported legal arguments 

Harvey competes in a different part of the market than Clio. Its namesake cloud platform uses large language models to help attorneys more quickly review legal documents. It also automates several related text processing tasks.

Harvey’s LLMs can extract key information from trial transcripts, draft responses to legal questions posed by a firm’s clients and scan contracts for errors. Moreover, it can help legal teams find legal documents with which to back up their court arguments. Harvey’s platform includes citations in each prompt response to help users verify the accuracy of the provided information.

Besides Alphabet’s GV fund and OpenAI, the $100 million round that the company announced today included contributions from Kleiner Perkins, Sequoia Capital, Elad Gil and SV Angel. Harvey is now valued at $1.5 billion. The company claims to have tripled its annual recurring revenue and doubled its headcount since its last funding round last December.

Harvey will use the new capital to continue adding employees with a focus on growing its engineering team. The new developers will support the company’s efforts to integrate more LLMs into its platform. As part of the same development initiative, Harvey will collect training data to facilitate the development of new AI models optimized for legal tasks.

Image: Clio