Thomson Reuters has signed a definitive agreement to acquire Casetext, a legal tech startup powered by artificial intelligence (AI) that has previously been backed by Y Combinator. Valued at $650 million in cash, the acquisition is anticipated to close in the second half of 2023, subject to regulatory approvals and customary closing conditions.
In an official statement, Thomson Reuters CEO Steve Hasker expressed that the acquisition of Casetext aligns with their 'build, partner, and buy' strategy to bring generative AI solutions to their clientele. He believes that Casetext will not only accelerate and expand their market potential for these innovations but also revolutionize the way professionals operate and the nature of their work.
Founded in 2013, Casetext initially focused on providing a platform for attorneys to share knowledge and gain free access to legal texts annotated by fellow lawyers. However, the company eventually shifted its focus to AI and machine learning (ML) technologies, developing automated workflows and tools for legal teams.
The company's primary product, CoCounsel, employs AI technology to review documents, assist with legal research memos, prepare depositions, and analyze contracts. OpenAI's GPT-4 language model, which Casetext obtained early access to, serves as the infrastructure backend for CoCounsel. With 104 employees, the firm boasts a customer base of over 10,000 law firms and corporate legal departments. Prior to the acquisition, Casetext raised more than $64 million from investors such as Union Square Ventures.
Jake Heller, Casetext CEO, views the Thomson Reuters acquisition as an opportunity to further their mission and expand the development of generative AI solutions in the legal sector. Additionally, collaborating with Thomson Reuters aims to benefit the field of AI technology and contribute to its advancement across multiple professions.
As for Thomson Reuters, their long-term strategy aims to incorporate generative AI technologies within their core business verticals, such as legal, tax, accounting, and news. The company recently revealed plans to invest $100 million annually in AI, integrate generative AI into their products during the second half of this year, and set aside $10 billion for mergers and acquisitions—many of which focus on AI—from now through 2025.
Legal professionals seem to understand the potential advantages of incorporating generative AI into their work. According to a Reuters survey, 82% of professionals believe that generative AI can be readily applied to legal labor, while 51% believe that it should be applied.
Many experts predict that generative AI could contribute trillions in value to the global economy, while skeptics point to issues like overhype and job loss concerns. Nonetheless, venture capitalists and corporations continue to invest heavily in this segment, estimating that the generative AI market will generate $36 billion in revenue by 2028.
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