‘Tis the Season … for Layoffs in Legal Tech, As Multiple Companies Send Out Pink Slips

For some employees of legal tech companies, the holidays have been far from merry, as their employers have trimmed headcounts and sent out layoff notices.

The exact number of layoffs in legal tech are unknown. It is difficult to track and confirm layoffs, as companies are often secretive about them. Although, in the U.S., the federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to report layoffs, it generally applies only to employers of 100 or more employees that layoff 50 or more employees.

So, although this may not be a comprehensive list of recent legal tech layoffs, here are the ones that have been reported.

Contractbook. Two weeks ago, Niels Martin Brochner, founder and CEO of the Danish contract lifecycle management company Contractbook, took to LinkedIn to announce the layoff of 32 employees.

“Like many other companies in our industry, we must reduce our headcount and grow in a more efficient way. I’m sorry to take this step, and I wish it could have been avoided. At the same time, I take full responsibility for the decision.”

Last year, the company raised $30 million in a Series B round, just a few months after it raised a $9.4 million Series A round in December 2020.

“There is no good way to lay off good people, but I would at least like to express my gratitude and appreciation towards the people leaving Contractbook today,” Brochner wrote on LinkedIn. “You’ve had a massive impact and helped us grow into what we are today.”

Filevine. The news site Axios Salt Lake City recently reported that Filevine is among several Utah-based tech companies that are laying off workers. However, in an interview with me, founder and CEO Ryan Anderson denies the company had layoffs.

Rather, he said that, as part of a strategic plan announced to employees last January to focus on being a software company, not a services company, certain employees who work in services roles with customers on product implementation and data migration were notified earlier this year that their work would be transitioned to third-party Filevine partners who specialize in implementation and migration. Filevine offered to assist those employees in finding positions with partner companies, and many have already been successfully placed, Anderson said.

While a layoff is typically driven by a need to reduce costs due to a reduction in revenue, Anderson said, this transition was driven by a strategic decision regarding the company’s focus and mission. He noted that it is common for companies such as his to rely on third-party partners to handle implementation and migration, pointing to NetDocuments and Salesforce as examples.

From a business standpoint, Filevine is strong, Anderson said. With much of the $108 million it raised earlier this year still in the bank, it is about to hit $60 million in annual recurring revenue, with 59% ARR growth year over year. It has just had its two strongest quarters ever, and has seen 75% revenue growth year over year.

Bottom line: Anderson said these were not economically driven layoffs, but strategically driven transitions of certain service functions to companies in Filevine’s partner ecosystem.

Lawgeex. In September, the Israel-based contract review automation company Lawgeex announced plans to lay off 30 employees, or about a third of its total staff.

“We had to lower the number of employees so that the product could soon be profitable — remove the auxiliary wheels and let it work on its own, founder and CEO Noory Bechor told the Israeli news publication Tech12 (as translated and reported by Legaltech News).

Onit. The website TrueUp Tech reports that Texas-based enterprise legal management and contract lifecycle management company Onit laid off 19 people, citing employee reports as its source. I reached out to Onit seeking to confirm the report, but a spokesperson declined to comment.

Relativity. Earlier this month, the e-discovery company Relativity laid off 150 employees, or about 10% of its total staff.

In a statement provided to Law.com, the company said:

“To support our core business strategy going forward, we will reduce and realign our investments in certain parts of the business and adjust our overall cost structure. We believe these changes will prepare Relativity, which is healthy and growing, for any headwinds from what is becoming an increasingly uncertain macroeconomic environment. It will also better position the company to focus on, invest in, and continue to lead in our core areas where we have the best product-market fit and that are most valued by our customers and partners.”

Reynen Court. As I reported Nov. 22, Reynen Court, the so-called app store of law, is reducing its headcount, cutting expenses, and telling vendors on its platform they might experience service delays. The company has not said how many employees it is letting go, but reports from various sources have suggested it is a substantial percentage of its workforce.

Andrew D. Klein, the company’s founder and CEO, denied that the company is going out of business or discontinuing support for its platform, and he said he is seeking new investment capital to help the company manage through the economic downturn.

“As a result of the delay in raising capital, we are reducing headcount and other operating expenses to manage through the economic downturn,” he said.

Author: Eliza