Legal tech startup Bodhala this week closed a $10 million round, the bulk of which will be put toward product R&D and sales efforts, cofounder and CEO Raj Goyle told VentureBeat. The company’s platform taps AI and machine learning to help companies analyze and optimize legal spend — a valuable service in light of the fact that equity partner profiles at the top 100 U.S. firms have doubled since 2004 (to $1.88 million in 2018), with eight firms averaging more than $4 million.
Bodhala was founded by Goyle and Ketan Jhaveri, who met at Harvard Law School and pursued careers in politics and law, respectively. Goyle was a member of the Kansas House of Representatives and ran for U.S. Congress in 2010, while Jhaveri worked for the U.S. Department of Justice and spent 10 years practicing antitrust law at Simpson Thacher Bartlett. They came together in 2014 and went to market with their legal spend management solution — Hercules — about two years later.
Hercules, which is hosted on Amazon Web Services, spotlights legal costs and firm performance by analyzing rates, as well as relationship- and practice-level discounts. It ingests years of information from law firms and e-billers, which it standardizes at the line-item level to flag alternative free arrangements and detect and correct inaccurate records. It then creates trillions of views to enable clients to examine things like practice areas, matter complexity, and efficiency while identifying trends to help forecast legal spend and suggesting ways that spend might be adjusted.
Hercules lets customers centralize their annual rate card process to measure the impact of law firm rate increases. It also measures the rates customers pay their firms against similar companies and spend types and reveals opportunities to improve management of outside counsel.
Bodhala says the average customer needs three weeks for quality assurance and standardization and to ensure that Hercules is receiving the correct data and any supplemental internal fields are properly mapped.
Markets and Markets anticipates that the legal AI software market will be worth $1.24 billion by 2024. Investors have poured tens of millions into firms like Disco, which streamlines legal discovery with AI and machine learning; Cognition IP, which taps AI that helps patent startups’ inventions; and LinkSquares, which expedites contract management with machine learning algorithms.
Edison Partners led New York-based Bodhala’s latest funding round, which comes after the startup experienced over 300% growth in both revenue and headcount in 2019. Goyle says it’s on track to do the same in 2020, with significant client growth across such verticals as financial services, health care services, insurance, energy, and private equity.