Legaltech startup Plexus has raised $4.65 million as it strives to reshape the legal sector globally, with investment coming from the likes of KPMG and Aconex co-founders Rob Phillpot and Leigh Jasper.
KPMG led the funding round, and KPMG Law has also formed a strategic alliance with the startup, in a bid to help incumbents in the legal sector better adopt new technologies.
Alongside Jasper and Phillpot, additional investors include Message Media co-founder and executive director Grant Rule.
First launched in 2011 by chief executive Andrew Mellett, Plexus was founded on the “very simple idea that the way the industry functioned was kind of crazy”.
A former consultant, Mellett had the ability to chat with high-level executives without inhibition, but no legal experience to speak of. He found, however, he could approach the industry like “a blank sheet of paper”.
“I was young and crazy enough to go do something radical.”
He started out by rewriting the value proposition for law firms, paying top-tier lawyers for the work they do, rather than having fees redirected to company directors and overheads.
“We would pass on the efficiencies from not having a partnership model and having lean overheads back to the clients.”
This was a success, Mellett says, but all Plexus was really doing was changing the labour model.
“Our ultimate mission was to transform the value of legal services,” he explains.
“We had an ‘aha’ moment that perhaps the silver bullet here was technology.”
Mellet and the team started testing the end-to-end automation of legal processes, and eventually landed on a solution capable of making things “vastly faster and cost-effective”, while also leading to much better customer satisfaction.
“Now, our product vision is to create the infrastructure to accelerate the future of the law, to the benefit not only of our clients, but for society at large.”
The startup currently has offices in Sydney, London and Washington DC, and has more than 100 clients, globally, including the likes of Samsung, Coca-Cola and Lion Beer.
According to Mellett, the business saw 142% revenue growth last year, and is forecasting 111% growth this year.
It’s also growing quickly in terms of headcount, Mellett says. His goal is to hire one person a week, he says, although at the moment he’s achieving one new hire every 10 days or so.
“If we could find the talent we would be adding more than one a week,” he says.
“We’re at day one of a 20-year industry transformation. Most people think the legal industry is a game of consonants and vowels. We think it’s a game of zeros and ones,” Mellett adds.
“We think the potential in front of us is mindblowing.”
The funding will be used to invest in Plexus’ automation platform, and for “dramatically scaling out our new product offering”.
It will also be used to fuel further expansion on a global scale.
This is the startup’s first batch of external capital, Mellett explains.
Previously, it has been funded via its professional services arms within the business, which acted as “the engine that got the caboose out of the station”.
While the startup hasn’t ever really needed to raise, now “there’s an arms race kicking off”, he says.
While Plexus has been in this space for a while, Mellett is cognisant of well-funded competitors that could be coming out of Silicon Valley very soon.
“[They’re] going to become frightening competitors of the future if we don’t start moving at a fast pace now,” he says.
More than this, however, raising now was about getting good people on board.
In this sense, Phillpot and Jasper are “phenomenal for us, and great thought partners”.
It was also about bringing a little credibility to the business as it continues its international expansion.
It may have a good product and significant growth stats under its belt, Mellett says, but if he’s in a meeting with general counsel at an overseas bank, they want to know who the founders are, and who the business is backed by.
“Telling them it’s just an Aussie in his 30s with no law degree wasn’t something that gave them a lot of comfort.”
They set out to find a “credible partner”, he adds.
Here, KPMG ticks all the boxes in terms of expertise and credibility, but it also provides an opportunity for the startup to show its not out to eat the lunch of incumbent players in the space.
“We don’t think the future of the legal industry is us disrupting and taking out traditional professional services firms,” he explains.
In fact, he says he dislikes being described as a disruptor.
“Large organisations are going to need a range of different services.”
Rather than coming to destroy the traditional providers, it’s trying to change the game to best serve clients.
“Combining their content and credibility with our technology and revolutionary business models, we can build solutions that weren’t conceivable even a year or two ago,” he says.
“Easier ways to succeed”
When it comes to offering advice to startup founders, Mellett warns others not to go down the route he did.
“Going into an industry where you know no one and that you know nothing about is a good story retrospectively, but it’s certainly not good practice,” he says.
“There are easier ways to succeed.”
The only reason he says he had the confidence to launch Plexus was he was used to working with executives at very large companies, understanding their problems and trying to work out how best to solve them.
He identified such a problem, and set out to solve it.
“As long as, as a founder, you understand what is the thing you can do that creates a lot of value, and match that to a market, you should be okay,” he advises.
Where possible, however, “you want to make winning easy”, he adds.
“I’m not sure I did that.”