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Factor Scores New Post-Axiom Investment, Majority Owner

Aug. 18, 2020, 3:13 PM

Less than two years after its spinout from Axiom, legal managed services business Factor has a new majority owner, Carrick Capital Partners, which has expanded its investment in the company.

When Factor rebranded in January, it said it its original investors, Benchmark Capital and Carrick, had “doubled down” on their stakes. Factor CEO Varun Mehta said he could not comment on Benchmark’s investment status, but noted the firm’s position in the company dated back to nearly 20 years ago.

Mehta declined to disclose the size of California-based Carrick’s latest investment, but called it “one of the most significant” in the legal technology arena to date. He said the funds would be used to scale Factor to pursue a market with untapped potential.

“We think there is a multi-billion dollar market around transactions and contracting,” Mehta said in an interview. “And if we summed up all the providers in this space today, we’d barely be one AmLaw 100 firm, so we think there is a lot of opportunity ahead of us.”

The smallest AmLaw 100 firms made about $380 million in revenue last year.

Factor’s recent work has included helping the financial industry transition away from the LIBOR interest rate, which requires re-papering deals tied to the erstwhile ubiquitous rate that is now soon-to-expire. In April, the company announced a partnership with Magic Circle firm Allen & Overy to provide a comprehensive LIBOR offering.

Axiom launched more than 10 years ago, largely offering the services of staff lawyers with previous Big Law experience. It branched out into managed services and developed a contract analytics technology platform.

Those three businesses now operate independently. The on-demand legal talent business, Axiom, in September received an investment from private equity firm Permira Funds, scrapping previously announced plans for an IPO. The technology platform, Knowable, which also spun out from Axiom in February, entered into a joint venture agreement with LexisNexis in July.

“With their vision, deep domain expertise, and gold-plated client list, the Factor team combines sophisticated expertise, technology adoption and business process optimization with a nuanced understanding of how lawyers and business leaders think,” Jim Madden, co-founder of Carrick, said in a statement. “Their singular focus on bringing legal innovation to more complex work is unique in the market.”

On Monday, another legal tech-focused company, Agiloft, announced a $45 million investment from FTV Capital as well as a new CEO, Eric Laughlin. He had previously served as global leader of legal managed services at EY, which he joined when the Big Four accountancy acquired Pangea3 from Thomson Reuters last year.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com;

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