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UK-based legaltech company Lawhive, which offers an AI-based in-house ‘lawyer’ through a software-as-a-service platform targeted at small law firms, has raised £9.5 million ($11.9M) in a seed round to expand the reach of AI-driven services for ‘main street’ law firms.

To date, most legaltech startups that are deploying AI have concentrated on the big, juicy market of ‘Big Law’ — meaning large, either country-wide or global, law firms that are keenly pushing AI into their workflows. These include Harvey (US-based; raised $106M); Robin AI (UK-based; raised $43.4M); Spellbook (Canada-based; raised $32.4M). But there has been scant attention paid by startups to the thousands of ‘main street’ lawyers, which have far smaller budgets and are harder to monetize.

Lawhive targets its platform at small law firms or solo lawyers running their own shop. Lawyers can use its software to onboard and manage their own clients or be matched with consumers and small businesses through a marketplace feature.

The startup applies a variety of foundational AI models, and it’s own in-house model, to summarise documents and speed up the legal process for both lawyer and client across repetitive administrative tasks such as KYC/AML, client onboarding and document collection. Lawhive says its in-house AI lawyer, “Lawrence”, is built on top of its own large language model (LLM), which it claims has passed the Solicitors Qualifying Examination (SQE) — scoring 81% against a pass mark of 55%.

Speaking to TechCrunch over a call Pierre Proner, CEO and co-founder of Lawhive, said: “Pretty much all of the existing legaltech — AI companies like Harvey or Robin AI, or Spellbook — all go after the corporate market. That’s a very small number of big law firms in the US in the UK. We’re trying to solve the problem in the consumer legal space, which is totally different and a separate market, both in the UK and globally. It’s served at the moment by — in the UK — 10,000 small law firms.”

He said small firms have faced higher costs and a shrinking market: “They’ve got all of these high costs of staffing and paralegals and junior lawyers, trainees, etc, etc. And they only have one to three actual senior lawyers who are earning any money. So the model doesn’t work. There’s this huge exodus of like mid-career lawyers from the main-street/high street model, and a lot of them are going freelance self employed, and that’s where we’ve sort of seen a lot of traction through our platform of self-employed lawyers who use our AI lawyer.”

Although the UK consumer legal market is worth an estimated £25BN, like most legal markets, it’s groaning under the weight of its own costs. This means around 3.6 million people have an unmet legal need involving a dispute each year and around a million small businesses handle their legal issues on their own. So there’s a strong opportunity for automation to help the sector dial up productivity.

Proner added: “We do combine with foundational models from OpenAI and Anthropic, and as well as open source models. But it is our own model, which has been trained on the data that we’ve been able to gather from 1,000s of cases.”

The startup plans to use the seed round to enter other markets, per Proner: “We have our eyes on other markets yet to be publicly disclosed.”

It might be possible to infer where the planned market expansion will focus by looking at Lawhive’s lead investor: The seed round was led by GV, the venture capital investment arm of Alphabet, the US-based parent of Google. Also participating is London’s Episode 1 Ventures, following a £1.5M investment in April 2022.

In a statement, Vidu Shanmugarajah, partner at GV, said: “As a lawyer by training, I have experienced firsthand how needed technology-driven innovation is in the legal sector. Lawhive represents a transformative shift for both lawyers and consumers.”