The use of artificial intelligence in legal technology is not a novel concept. For years, AI has been an important force in shaping how lawyers and legal departments work, offering tools that streamline workflows, predict outcomes, and analyze complex datasets. But as AI has grown more sophisticated and its capabilities more critical to competitive advantage, the legal tech sector has seen an influx of innovation, investment, and debate.
The story of legal tech’s evolution is one of two distinct eras: companies that embraced early AI to solve foundational challenges and those thriving today with cutting-edge applications. Their differing strategies in technical focus, funding, and marketing paint a picture of how AI has transitioned from a helpful tool to an essential, industry-transforming technology. Despite the differences in approach, both old and new legal tech companies are successful. This begs the question: what is it about small startups or big corporates that makes them successful in this space?
Laying the Groundwork: Early AI in Legal Tech
AI has been around for much longer than many of us think – not because it wasn’t there, but because the hype has come in waves, arguably all of which have been smaller than that which we are experiencing today. AI research has been conducted since the early 1950’s, and while the vigour of AI initiatives has at times waned, we have certainly come a long way. Despite its ups and downs, the AI industry had become a billion-dollar enterprise by the end of the 1980’s. Following a second “AI winter” in the late 1980’s to early 1990’s, AI has again risen in international popularity.
For the legal industry, this has been significant. While legal tech companies using AI in the 2000’s and early 2010’s were already experimenting with AI, firms like LexisNexis, Westlaw, LegalZoom and Ross Intelligence were among the first to fully recognize and take advantage of AI’s potential to address inefficiencies in legal workflows.
LexisNexis and Westlaw targeted professional firms with comprehensive databases, LegalZoom went for accessibility, and ROSS Intelligence pursued a bold AI-first approach. These systems, though less sophisticated than today’s AI models, demonstrated how data-driven insights could transform decision-making in the legal world.
The New Wave: AI’s Role Today. Focusing on Westlaw and LegalZoom
The legal tech market is flooded with companies promising the “next big thing” or “what your firm needs to succeed”, but the offering is far from homogenous. Success in the legal tech space has been achieved by vastly different companies in terms of strategy, technical offering, funding and marketing. So, what have those companies that have “made it” have done right?
What distinguishes today’s legal tech companies isn’t the use of AI itself. Of course not, AI has been around for decades. But what many of these companies have in common is their clear focus on a specific target market, and with a niche legal solution. As an example, we’ll compare two successful legal tech companies that have vastly different brand stories, but which both “play in the big leagues”.
For example, Westlaw’s technical focus has evolved significantly since its inception in 1975, driven by its goal to simplify legal research for professionals. Initially, the platform focused on creating a robust digital database of statutes, case law, and secondary legal materials. By the 2000s, Westlaw began integrating natural language processing (NLP) to enable lawyers to search in plain English, moving beyond traditional Boolean searches. The launch of WestlawNext in 2010 introduced predictive search capabilities, dramatically improving search efficiency and accuracy. In 2018, Westlaw unveiled Westlaw Edge, incorporating advanced AI tools like litigation analytics, citation verification (KeyCite), and case visualization features. These advancements reflect a sustained commitment to leveraging AI and machine learning to make legal research faster, smarter, and more user-friendly.
Strategically, Westlaw has positioned itself as the premier legal research platform for law firms, corporate legal departments, and academic institutions. While its early focus was on providing access to legal databases, the company has expanded into analytics-driven tools that help professionals predict litigation outcomes and assess legal risks. Westlaw Edge marked a strategic shift toward offering comprehensive legal solutions, with tools designed to provide deeper insights and reduce manual research efforts. The platform has also embraced cloud-based technology, ensuring accessibility for remote legal teams and fostering collaboration in an increasingly digital legal environment.
Westlaw’s development has been fueled by the substantial financial backing of Thomson Reuters, its parent company. This corporate support has enabled ongoing investment in research and development, as well as strategic acquisitions, such as HighQ for collaboration tools and CaseLines for digital bundling. Marketing efforts have focused on highlighting Westlaw’s premium quality and reliability. It targets large law firms, corporations, and academic institutions. Partnerships with law schools have been a key strategy, introducing students to the platform early in their careers. Westlaw also maintains a strong presence at legal tech conferences and emphasizes thought leadership through trend reports, ensuring its relevance and authority in the legal tech landscape. Westlaw is arguably one of the stereotypical “big league players”.
While major players such as Westlaw have focused on refining and deepening its capabilities for legal professionals, LegalZoom has taken a vastly different path by targeting accessibility and affordability for individuals and small businesses. LegalZoom’s approach has been about simplifying legal services, automating routine legal processes such as will creation, LLC formation, and intellectual property registration to make them accessible to non-lawyers.
From a strategy perspective, LegalZoom adopted a disruptive strategy, targeting a previously underserved market: individuals and small businesses unable to afford traditional legal services. It expanded its offerings to include subscription plans, tax assistance, and attorney consultations, aiming to be a one-stop shop for legal needs. While LegalZoom has received its fair share of setbacks, including class action lawsuits and the rather sudden departure of its CEO, it remains a force to be reckoned with.
By contrast to the substantial financial backing of Westlaw within the Thomson Reuters group, LegalZoom has raised significant venture capital (including a USD 535 million IPO in 2021) to scale its platform and expand its customer base. Its marketing has been consumer-focused, leveraging aggressive TV and online campaigns, partnerships with financial institutions, and referral programs. While Westlaw appeals to professionals with its advanced AI tools, LegalZoom’s campaigns highlight affordability, ease of use, and accessibility, making it a household name among non-lawyers.
So, What Makes a Legal Tech Company Successful in Today’s Market?
Of course, with the vast number of legal tech companies in existence, it’s difficult to say. However, what is apparent is that a successful legal tech company in today’s market needs to align its offerings with a clearly defined target audience while leveraging technology to solve specific pain points effectively. Success hinges to a notable degree on a combination of innovative tools, strategic positioning, customer engagement, and scalable funding models that match the company’s ambitions.
Strategy plays a critical role in defining a legal tech company’s market position. Westlaw’s success lies in its ability to cater to legal professionals by delivering premium, AI-driven tools for advanced research and analytics. By contrast, LegalZoom’s strategy of democratizing legal services targets a completely different market – individuals and small businesses, offering affordable, user-friendly solutions. This contrast shows that the ability to understand and cater to a specific market segment is fundamental.
Technical focus is equally important, and successful companies must leverage technology that aligns with customer needs. Westlaw, as our example, has invested heavily in cutting-edge AI tools like natural language processing, predictive analytics, and litigation insights to provide depth and efficiency for legal professionals. LegalZoom, on the other hand, focuses on automation and user-friendly interfaces to simplify legal processes for non-lawyers. The lesson here is that successful legal tech companies prioritize the practical application of technology to save time, reduce costs, and enhance user experiences, whether for professionals or consumers.
Lastly, marketing and funding highlight the importance of building trust and scaling operations effectively. Westlaw relies on professional-focused marketing, cultivating loyalty through law school partnerships and thought leadership, while LegalZoom uses direct-to-consumer advertising to reach a broad audience and build brand recognition. Both approaches are valid but require alignment with the company’s audience. On funding, LegalZoom’s venture capital and IPO allowed it to expand aggressively, while Westlaw’s corporate funding from Thomson Reuters ensured steady innovation. This underscores that successful legal tech companies require adequate funding to scale technology, build trust, and market effectively, whether through venture capital for fast growth or corporate support for consistent innovation.
Ultimately, the legal tech market thrives on companies that can identify specific pain points – whether for legal professionals or the public, and solve them with innovative, accessible, and scalable solutions.
