US AI-native law firm start-up Moritz has raised $9m in seed funding from investors including Y Combinator, 20VC, Urban Innovation Fund and Inception Fund.
Announcing its fund raise on LinkedIn, Mortiz said it had “assembled the greatest builders of our time, to build the law firm you’ve always dreamt of working; solving complex legal matters in hours, without crippling your spend”.
The firm added that its funding round was also backed by more than 20 unicorn founders, including the founders of Dropbox, Reddit and Instacart.
According to Law.com, Moritz plans to use the seed investment to extend its reach in US and European markets.
The start-up says that its lawyers have closed $2bn in deals with an average turnaround of four hours, and states that no other law firm offers this kind of pace for finalising complicated deals.
Pamir Ehsas, the co-founder of Moritz, told Law.com: “We have a bunch of other companies on the wait list. We really want to expand this offering to other midsize companies, enterprise companies, and we are already present in a lot of countries, but we haven’t opened up the service to local companies yet, so we need to just ramp up our offering to current and new customers.”
Moritz operates as a hybrid law firm, via its management service organisation (MSO) relationship with tech provider Parlai, which received the seed funding.
The MSO model is owned by the investors, and it channels investments into the non-legal parts of a law firm and performs operational aspects of the business including technology development.
In this case Moritz is a subsidiary of Parlai, which supplies its AI technology to Moritz’s platform as part of a prior agreement, which includes AI-powered support for drafting, contractual issues and outcomes, Law.com reported.
Clients are also connected to licensed lawyers within Moritz’s network, with the firm telling Law.com that it has hired attorneys from Cooley, Orrick and Clifford Chance to become part of its team.
In the US an assortment of state laws prohibit non-lawyer fee-sharing and ownership of law firms, as expressed under the American Bar Association’s rule 5.4, leaving the MSO model as a way around the regulation.
Arizona is so far the only state to allow non-lawyer ownership of law firms.
Investors have previously shown a growing interest in professional practices, most typically in healthcare.
The key compliance issues within an MSO agreement and a law firm include avoiding fee-sharing by ensuring that any MSO payments are not tied to a law firm’s fees and ensuring that lawyers retain independence.
In January, another MSO deal was completed between Uplift Investors and New Orleans-based Dudley DeBosier Injury Lawyers, which combined to form Orion Legal.
Under the partnership, Orion Legal provides Dudley DeBosier, and any future partner law firms, with support in several areas including marketing, finance, administration and technology.
San Francisco-headquartered Moritz was founded last year by Ehsas and Stefan Mandaric and was originally known as Arcline.
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