Ep 253: Exclusive: CEO Jack Newton on Clio's Record-Setting $900M Raise

This episode features an in-depth interview with Jack Newton, CEO of Clio, discussing their recent $900M funding round.

1. Clio secured the largest ever investment for a legal tech company, emphasizing its market strength.
2. The investment is seen as a validation of Clio’s existing successful strategies and market expansions.
3. AI technology, particularly Clio Duo, is set to play a crucial role in Clio’s strategy to enhance legal practice management.
4. The funding will enable Clio to pursue more ambitious growth targets and further innovations.
5. Clio remains committed to its foundational customer base of solo and small firm lawyers despite its growth.

1: Introduction

Bob Ambrogi introduces the episode's focus on Clio's significant funding round and its implications for the legal tech industry. Bob Ambrogi: "Today on Law Next, as Clio today announced a record $900 million funding round."

2: The Funding Round

Jack Newton discusses the details of the $900M funding and its strategic importance for Clio. Jack Newton: "This is the largest venture investment in a company ever in Canada."

3: AI and Future Technology

Discussion on the role of AI in legal tech, specifically Clio's AI tool, Clio Duo, which is designed to streamline operations for legal professionals. Jack Newton: "Our foray into AI in the form of Clio duo has been a wild success."

4: Growth and Expansion

Newton outlines Clio’s growth strategies and its expansion into mid-market and international arenas. Jack Newton: "We've seen entirely new markets for us, like the mid market open up."

5: Customer Impact and Industry Transformation

How the funding and Clio’s technologies impact customers and the broader legal industry. Jack Newton: "It’s really exciting for both Clio as a company as well as everyone in the Clio ecosystem."

1. Leverage AI: Utilize AI tools like Clio Duo to enhance efficiency in legal practices.
2. Focus on Core Strengths: Like Clio, firms should concentrate on what works well and look for scalable growth opportunities.
3. Explore New Markets: Consider expanding into new geographical or sectoral markets to drive growth.
4. Engage Investors: Attracting the right investors can provide not just capital but also strategic guidance and validation.
5. Prioritize Customer Feedback: Use customer insights to guide product development and improve user experience.

As the law practice management company Clio today announced a record $900 million funding round, the largest ever for a cloud legal technology company, at a whopping $3 billion valuation, Clio’s founder and CEO Jack Newton joins LawNext for an exclusive podcast interview.

In a conversation recorded last week, ahead of today’s announcement, Newton and host Bob Ambrogi dive deep into this investment and what it means for Clio, its customers, and the legal industry. Newton founded the company 16 years ago and has overseen its growth into a global legal tech powerhouse, with more than 1,100 employees worldwide.

“My ambition was always to build this into something that would be a multi-decade company, a hundred-plus year company, and a company that would leave a lasting impact on the legal industry, and a company that would transform the legal industry in a really positive way,” Newton says in the interview. “And what I see this investment round as being is, number one, a huge validation of the success Clio has had in driving that transformation, but more importantly, positioning us to even have a more transformative and more impactful next chapter to our story.”

People

Jack Newton, Bob Ambrogi

Companies

Clio

Content Warnings:

None

Jack Newton
With Clio, you don't need to bet on some wild pivot in strategy to make things work. Things are working really well. We've been executing very well over our entire history and especially over the last few years. We've seen revenue growth accelerate. We've seen entirely new markets for us, like the mid market open up, the international market is exploding for us. Our payments business is doing amazingly well, and our foray into AI in the form of Clio duo has been a wild success as well. So in a lot of ways, what our incoming investors in this round are so excited about is really doubling down on what's already working with Clio and setting us up to continue to scale from the scale we're at today, which is now north of $200 million of annual recurring revenue, and figuring out ways that they can help us reach that next major milestone, which we're framing as a billion dollars of ARR.

Bob Ambrogi
Today on law next, as Clio today announced a record $900 million funding round, the largest ever for a cloud legal technology company at a whopping $3 billion valuation. I have an exclusive podcast interview with its CEO, Jack Newton, who founded the company 16 years ago and has overseen its growth into a global legal tech powerhouse with more than 1100 employees worldwide. Over the next hour or so, we'll dive deep into this investment and what it means for Clio, its customers, and the legal industry.

This is Bob Ambrogi, and you're listening to law next, the podcast that features the innovators and entrepreneurs who are driving what's next in law.

Before we get to that conversation, please take this moment to learn about the sponsors whose generosity supports this podcast.

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now on to today's conversation with Jack Newton.

Jack, welcome back to Lawnext.

Jack Newton
Thanks for having me, Bob.

Bob Ambrogi
Back for the umpteenth time, I've had you on this podcast a number of times. I've lost track of how many, but it's always a pleasure to speak to you, and there's always something exciting to talk about, so that always makes it fun today you've got some big news and we'll dive into it. But I'm just kind of curious, kind of. I don't know where your head's at now. I mean, you've just closed this record setting deal for the legal technology industry. I know you're, you're just back from a well deserved, I'm sure, vacation. You probably had a lot of work to do to get, get this deal done. So when you went running this morning, what are you thinking about? Are you thinking about the next phase, or is it business as usual? What are you looking ahead to right now?

Jack Newton
Well, I think it's a lot of continuing to double down on what we've already been doing and seeing a lot of success with. And I think that's one of the things our incoming investors, as well as our existing investors are super excited about, which is with Clio, you don't need to bet on some wild pivot in strategy to make things work. Things are working really well. We've been executing very well over our entire history and especially over the last few years. We've seen revenue growth accelerate. We've seen entirely new markets for us, like the mid market open up, the international market is exploding for us. Our payments business is doing amazingly well, and our foray into AI in the form of Clio duo has been a wild success as well. In a lot of ways, what our incoming investors in this round are so excited about is really just doubling down on what's already working with Clio and setting us up to continue to scale from the scale we're at today, which is now north of $200 million of annual recurring revenue, and figuring out ways that they can help us reach that next major milestone, which we're framing as a billion dollars of ARR as the next major milestone. And that's what is kicking around in my head on my morning run this morning and on many mornings previous, is what are both the existing growth levers that we continue to invest in that will pave the path to a billion dollars of ARR? And what are some of the new bets that we need to make. But you don't need to underwrite anything crazy around the business to see that path to a billion dollars of ARR.

That's really the course and trajectory that we're on today that I'm really excited to continue executing against.

Bob Ambrogi
Well, I remember it was just a couple of years ago that we were talking about you having achieved unicorn status, and here we are now talking about this $900 million series F rounded $3 billion valuation.

Cleo is describing this as the largest ever investment in a cloud legal technology company. I'm racking my brain to think of a larger investment in any legal technology company. I guess it may be depends on how you define legal technology company. But this is a record by any standard.

Jack Newton
Yeah, it's certainly a record by any standard, depending how, and like you mentioned, there's maybe a few different ways you could, you could categorize a legal tech company, but it's certainly one of the largest, if not the largest investment in legal tech history here in Canada. This is the largest venture investment in a company ever in Canada.

So setting a number of new records for the history books for this round.

Bob Ambrogi
What's been bigger in legal tech? Has there been a bigger deal? I just can't, I literally can't think of one.

I was reading through my own blog trying to find it and I couldn't find one.

Jack Newton
You may be right. You may be right.

Bob Ambrogi
All right, well, I won't push you on that, but put that in perspective. I mean, what do you think this means for Clio? And more importantly, what does it mean for your customers now and your potential customers?

Jack Newton
Well, I think it's really exciting for both Clio as a company as well as everyone in the Clio ecosystem to see this outside mark of what an important generational company Clio has become. And as you know, we've been talking for 16 years now, Bob, I've always talked about Clio being a hundred year enduring company. And my ambition was always to build this into something that would be a multi decade company, a hundred plus year company, and a company that would leave a lasting impact on the legal industry and a company that would transform the legal industry in a really positive way. And what I see this investment round as being is number one, a huge validation of the success Clio has had in driving that transformation. But more importantly, positioning us to even have a more transformative and more impactful next chapter to our story. The investors we're bringing on board in this round are some of the best investors on the planet with a track record of building really scaled, excellent industry transforming companies. If you look at our lead investor, NEA, they've taken over 250 companies public. They've made over 1000 investments over the course of their history. They were some of the first money into salesforce.com back in its early days. They were early investors in workday which created the HR cloud. There were early investors in databricks, which has become one of the leaders in the data cloud. Early investors in Cloudflare, which is an important Internet infrastructure company, early investors in coursera C Vent and the list goes on everyone from Box.com to Mulesoft to Appian to Opendoor.

Their track record of really amazing investments is really unprecedented. And then to have NEA joined Goldman Sachs growth, obviously one of the top names in investment on the planet, 6th Street Capital G, Google's venture arm and Tidemark, one of the very best, if not the very best vertical SaaS investors on the planet.

I couldn't be more excited about the roster of investors and the roster of portfolio companies and now sister portfolio companies that we're positioned to learn from as we really grow into this next stage of growth for Clio.

Bob Ambrogi
I know that NEA, as far as I could tell, has not done a lot of investments in the legal tech sector or the legal sector rather, at least from what I could say they did some early or seed investments in logical back in 2018 and way back when in Ravel law, Daniel Lewis's company, legal research company. Let me ask the first question. Does that matter? Does the fact that they haven't previously invested in the legal sector in any significant way matter at all in terms of their involvement with your company and going forward from here?

Jack Newton
No. In fact, I see that as a feature. If anything, what I really look for in investors is not necessarily investors that have a lot of experience in legal or legal tech, but rather have experience in the creating generational, transformational companies in their respective verticals. One of my favorite sayings is history doesn't repeat itself, but it does rhyme. And what these investors are able to bring is from the experience they have in other verticals, other parts of the software space bring that experience to bear on legal and legal tech in the form of Clio. So what we see the opportunities being is NEA got to see the story of Salesforce back when they invested at a $400 million valuation, by the way, so very early in Salesforce got to see that whole story into what sale that the absolute giant sales force is today. How can Clio learn from some of those lessons and learn from both Salesforce and the thousand plus other portfolio companies that NEA has helped scale into really industry transforming, industry defining companies?

Bob Ambrogi
And I guess the second part of that question I was going to ask, which is actually a different question altogether, but does the fact that NEA and some of these other investors that participated in this round were interested in this signify perhaps a new era in VC interest in legal tech? I mean, there was a truism for a long time that a lot of the big VC's just would turn their heads the other way when illegal tech founder would come knocking at their door. Has that changed?

Jack Newton
I think it has changed. And I noticed what I would describe as a sea change in that regard, starting with Cleo's series D back in 2019. Also a record, also a record at the time. And I remember being on this podcast with you five years ago talking about that round, and that felt like a real coming of age moment for the legal tech industry. Having a $250 million investment round at that time coming from TCV and JMI, two very well known investors, again, that hadnt played in the legal space all that much, but did have experience in building really transformational companies like Netflix and Peloton and Air Binb. And the list goes on of companies theyve invested in and backed. And I think that helps shine a spotlight on legal tech landscape. And in the intervening five years now, we've seen a real explosion in investment in legal tech. And I think AI has further catalyzed investor commitment around the opportunity that exists in legal tech and that legal in many regards. And this is a drum I've been banging for a decade plus. Now, I really believe legal is the last major industry to be fundamentally transformed by technology.

And we're starting to see the green shoots of that transformation really starting to happen across the board. Over the course of the 16 years that you and I have been talking, Bob, the cloud has gone from what felt like a heretical idea to what is finally, I think, generally accepted as table stakes.

And AI is going through very similar adoption curve and it feels like in a much more compressed timeframe. Likewise getting to table stakes from a technology perspective. So we're seeing lawyers embrace technology in a way that they never have before.

And this old notion, I think that is rapidly becoming antiquated, that lawyers are technology resistant, that lawyers don't want new technology, I think is fading into the background. And what the industry, the technology industry is bringing to the table now is great tools that lawyers can immediately benefit from and immediately see massive productivity increases from, can immediately see massive improvements in the client experience they're able to deliver. And lawyers are showing that when they're provided with great tools to adopt, they will embrace those rapidly. And I think investor sentiment is further gaining excitement around this idea that there's now a fundamental transformation happening in legal. Lawyers are perhaps belatedly going through a massive adoption cycle when it comes to technology, and there are going to be some really scaled companies that come out of this transformation.

Bob Ambrogi
As a result, it is part of what makes Clio's story particularly fascinating, that you did start as a company that was really bucking the trend in a way, by putting practice management in the cloud at a time when nobody was doing that, and when, and so many were still fearful of it and distrustful of it, and waiting for ethics authorities to tell them that it would be okay to do that.

And now look at you.

Jack Newton
It's been a journey, but it's been a long journey, but very excited about where we've been able to get to.

Bob Ambrogi
In one of those prior conversations, I think it was when you and I talked, I think it was maybe in 2021 when you hit the $1.6 billion valuation. I asked you about an eventual ipo, and at the time, you said that part of your concept of what an enduring company is is that it should at some point be a publicly owned company. Where are you now on that thinking, and where do you see that fitting into Clio's future?

Jack Newton
That's still very much my thinking.

I believe the public markets are a great place for enduring companies to live, and I think that's an eventual milestone for Clio. In our growth journey.

We're in a very fortunate position to have a lot of optionality around when and how we raise money. We're profitable today.

We have over $100 million on the balance sheet, and we're growing quickly. And that puts us in the enviable position of not needing to IPo. We don't have any kind of existential need to go public or to raise money from any source, for that matter. But in the long term trajectory for the company, I certainly see going public as a milestone that makes a lot of sense for Clio. And our incoming and existing investors also believe in that potential milestone as being a really viable option for the company. As you know, over the course of the last couple of years, the market for tech ipos has been extremely shaky. There's been a vanishingly small number of tech ipos in the last 18 months as we've exited the zero interest rate environment and gone into a much more volatile, high interest rate environment.

And we'll just continue to monitor what that that IPo, market and environment looks like. But we've been making many of the investments on a governance and compliance standpoint. We certainly have a revenue scale and a growth profile and a profitability profile that is attractive to the public markets, and again, see that as a milestone that I'd be really excited to mark down for Clio. But again, I would emphasize that we view an IPO, and not every company, not every founder looks at it this way. We look at an IPO as really a green flag rather than a checkered flag. It's not a destination or a finish line for us as a company. It's what, at the end of the day, a financing event and a financing event that could set us up for becoming the truly generational company I want to build. But there's a variety of other paths that are equally viable for Clio. And as this round demonstrates, you can achieve a lot of what you might want to do in the public markets. In the private markets today, if you look at this investment round at $900 million, this is four or five times at least the size of the average IPO. The average IPO is between 100 and $200 million.

We've raised a multiple of that in a private environment, and there's a lot of dry powder in the private market environment, seeking out high quality companies that are growing quickly, driving durable growth, and driving that growth profitably.

Bob Ambrogi
We alluded to you start 16 years ago. I know you often in your talks at the Clio conference, will show that picture of you and your co founder Ryan, standing at the table at ABA Tech show 16 years ago when you were pretty much the entirety of the company.

One of the things that I've always respected about you as a founder and as a CEO in the legal tech space is that you seem to have maintained that connection to rank and file lawyers. You're out there going to places, talking to lawyers. You're approachable.

You're not up in some ivory tower somewhere hiding out from people. Do you think that lawyers, sort of the rank and file lawyers who have always been your customers, especially smaller firm lawyers, have anything to fear about you becoming so big, too big?

Is there in any way a detriment to them? Or should they be concerned that you're going to get so big that you forget about them? Basically?

Jack Newton
No, there's absolutely nothing to worry about in that regard, Bob. And although we're continuing to expand into new markets and new opportunities, the foundation of Clio continues to be the solo small firm lawyer that we built the company on 16 years ago. And as you'll recall, our initial press release talked about being targeted at solos and the way Ryan and I looked the market back in those days. And you're right. When that old photo of Ryan and I standing by the tech show 2008 trade show booth, it wasn't that we were almost the entire company. We were the entire company at that point. And what we looked at was the fact that half the legal market is made up of solos. And that seemed to be a completely overlooked segment of the market by all of the incumbent players at that point. Not only that, but 80% of the market is made up of lawyers practicing in firms of ten lawyers or less.

The way Ryan and I looked at it really simplistically in those days was, hey, if we start out just targeting half the market and win half the market, that's a win. And if we expand beyond that and start to go into the two to ten segment of the market and win an incremental 30% to get 80% of the market, again, that would be an amazing outcome for us. And it's again seemed to us, and I think it proved to be the case, that this was a vastly overlooked segment of the market.

I think part of that was structural with on premise software. The customer acquisition costs of those solo small firm lawyers just didn't make sense. So those companies, the incumbents at that time, really couldn't effectively address that segment of the market. But the thing that really changed the game and changed that calculus was the cloud and the fact we could deliver this technology so efficiently to the solo small firm market. And although we're seeing a huge amount of success in the mid market, although we're seeing a huge amount of success with our new products, and some of which are targeted more at the larger firms, our core customer base continues to be that solo small firm customer, and that will never change.

And it's both in our interest as a company and in the interest of us servicing the customers that have been loyal to us for, in some cases, 16 years. We've got customers that were signed up in 2008 that are still happy customers today.

We will never leave those customers behind.

Bob Ambrogi
I think I've met customer number one. Right, she comes to your conference.

Jack Newton
Kathryn Marino Reisman. Absolutely. She comes to almost every Cliocon, and we have a whole awards program named after her. And I would just reinforce the fact that I get a huge amount of energy and inspiration from talking to our customers. Getting face to face with customers is how we create our roadmap. It's how we create empathy across our entire team in terms of how we're trying to help our customers, help them drive great outcomes for their clients, help them create thriving law firms. This is something that is really a source for my energy at the end of the day, and something I try to spend as much time as I can every day speaking to customers, connecting with customers, and as much as I can, meeting them face to face.

Bob Ambrogi
The $900 million funding round that Clio announced today is a record for the legal tech industry.

But what does it mean for the 16 year old company as it continues to build its market and develop new products?

I'll talk about that with Jack in just a moment. But first, please take this opportunity to learn about the sponsors who make this podcast possible.

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welcome back to law. Next. We've talked so far about the big picture of this big deal, a record $900 million investment in Clio at a $3 billion valuation. Now we'll get into some of the details, what it means for market growth and product development and plans for the company going forward.

Let's get back to my conversation with Jack Newton.

Hey, I was looking around NEA's website and I. They, they have on their website a manifesto. And their manifesto begins with the phrase, to be a founder is to imagine the future and to have a plan to build it.

I know.

I know, again, for many times, talking to you, that you spent a lot of time imagining the future. Does this investment, how does this investment impact your plan for building? I mean, what is the plan going forward? Obviously, you want to continue to grow your market. You want to continue to grow your products. What's the focus, starting from here on going forward?

Jack Newton
Yeah, I would say that I strongly resonate with that idea of what a founder is supposed to be doing, is imagining a future, and in some cases seeing a future that is so obvious to them that they can't believe it's not here already. And then dragging other folks along, whether that's developers, product managers or customers along in that vision, trying to engage other people in that exciting new world that they see as being so, so obvious. And for me, what I see in the legal industry, just as the macro level opportunity is this industry, this profession still needs to go through a fairly profound shift away from being very mired in the world of bricks and mortar to being more cloud based. And this will help ultimately improve access to justice. This will ultimately help improve the client experience. And I see every aspect of the legal journey ultimately belonging on the Internet. And this will allow clients from anywhere they have an Internet connection. And again, if you listen to Richard Suskind, he makes a similar point, which is the lowest common denominator we can lean on in terms of creating access to justice is access to an Internet connection. And if we can get access to an Internet connection, and we can somehow get a lawyer on the other side of that Internet connection, we can create a vastly more just society and an opportunity for lawyers to deliver against the vast unmet demand that exists in the legal market. And another drum I've been banging away on for over a decade now is this latent legal market.

And the fact that 77% of all legal issues do not get resolved with the help of a lawyer. And when I look at the supply and demand halves of this equation, when I look at the demand side, and 77% of legal issues not being resolved by a lawyer, I wonder, what can we do to better connect those legal issues with a lawyer that can help solve those issues? And what's so surprising is when you look at our own legal trends report, over 80% of lawyers say the number one thing they need to grow their firm is more clients. So on the supply side, you have lawyers saying, I need more clients, I need more legal cases. And ultimately, I think one of the reasons there's this huge and inefficient mismatch between supply and demand is there's just so much friction involved in finding a lawyer and in actually working with a lawyer, once you've found a lawyer. And the macro level opportunity I see for Clio over the course of the next series of years and decades is just eliminating friction in every step of that journey. Every step of a client finding a lawyer, and every step in a lawyer delivering great legal services and great legal outcomes to that client. And there's a constellation of products and technologies and capabilities that will help us realize that vision. But at the end of the day, if you just distill down what we're trying to do in order to achieve our mission, to transform the legal experience for all, I think the way we achieve that is by eliminating as much friction from every stage of both the client journey and the lawyer journey, in delivering legal services to consumers and in consumers accessing legal services.

And if we do that and do a good job of that, we will tap into this vast latent legal market and dramatically improve access to justice.

Bob Ambrogi
Obviously, you built out Clio, managing Clio grow and other products that you've been bringing to market a lot over the last few years. In particular, are there particular areas of friction that you have yet to address or that youre a really itching to address?

Jack Newton
Well, I would say a journey that we started on several years ago with Clio for clients as a native mobile app that is enabling clients to interact with Laurie's in a seamless way is a first foray into helping eliminate friction in client communications and in collaborating with a lawyer. I see this as one major opportunity that we've made some headway on over the course of the last few years, but I still see a huge amount of opportunity to continue to eliminate friction in the client experience. I think another area we're very excited about at Clio is the opportunity generative AI presents to eliminate friction for lawyers in responding to clients, in generating, whether it's an email or a text message response to a client. Generative AI can, it can be hugely helpful in helping draft client communications, it can be helpful in helping draft legal documents and so on. So I'd say the other, the second major area of friction and opportunity we see is around actually creating legal documents and legal communications.

Bob Ambrogi
Last October at Cliocon, you announced the launch in 2024 of Clio Duo, the generative AIH assistant that you would incorporate within within Clio. We're fast approaching the next Clio con. Amazing how fast that is coming up. Where are you in the development of Clio Duo, and how has the concept evolved at all, at all since you talked about it back in October?

Jack Newton
Yeah, the concept certainly evolved and continued to iterate as we've gotten the technology in front of customers, received feedback from customers as they've played around with Clio Duo and integrated it into their workflows, we've gotten to a point over the course of iterating on Clio Duo over the course of the last nine plus months since Cliocon, to a point where we're ready to release the product officially this quarter.

We're just putting some of the finishing touches on the the product right now and getting a last round of customer feedback, but the feedback has been extremely positive. The product our customers are finding is extremely helpful in helping them answer questions and streamline workflows and interact with clio in a more efficient way. And I would say that with the benefit of now nine months of really intense experimentation with Clio Duo and nine months of really intensive collaboration with our customers and understanding both what their vision of how AI could be helpful to them in the context of Clio as well, as really playing our role of innovators and inventing on our customers behalf, we're very excited about an expanded opportunity for artificial intelligence in Clio that is much broader than Clio Duo.

And I'll be talking more about that at our upcoming Clio cloud conference. But I would say the net of it is we're even more excited about AI now that we've had a chance to really lean into what this looks like in a production environment and the real concrete ways we can augment our customers lives and make them more productive with the help of AI.

Bob Ambrogi
So Cleodo should be released before Cliocon, is that what you said? Yeah.

Jack Newton
Yes, absolutely.

Bob Ambrogi
And I know you've been, again, working on any number of product launches, just launched accounting software within as an add on to clio manage, and there have been a number of other launches Clio draft this year. Again, knowing that there are various ways you can expand. You could expand to different parts of the market, and you can expand through adding different products to what you're doing or to your quiver of products that you have. Are there other ways in which you're looking to expand the product at this point, especially with this new funding?

Jack Newton
Absolutely. And I wouldn't necessarily say any of the product expansion has been catalyzed by the new funding round, but we're looking very ambitiously at our roadmap and the ways we can continue to, to offer incremental value to our customers. So, in addition, as you mentioned, we've got Clio grow, we've got Clio draft.

This morning, we announced Clio accounting, which I think will be last week by the time this podcast publishes. But we've launched an exciting new accounting product that we're very excited to bring integrated accounting to our customers. And this is a feature we've had a longstanding demand for. And we're really excited to bring this to the market and provide what we think is a really revolutionary and accessible take on accounting that will make accounting more accessible to the average lawyer that is often intimidated by accounting.

And we've, I think, done some really innovative, interesting things with accounting on that front. And we'll continue to grow the product portfolio over time, really in response to what our customers are asking for. And one of the exciting things we've seen with Clio is once a law firm adopts one of our products, whether that's Clio manage or Clio grow or Clio draft, they start to come back to us over and over again and say, hey, I want everything in my practice to come from Clio, or at least to be integrated into Clio. So we see a real natural opportunity for us to continue to expand the footprint of what our technology solution is offering. And as we expand that footprint, you'll see the number of products that we offer start to expand in a really organic way.

Bob Ambrogi
Another area that you expanded into this year is court filing and electronic filing and service.

Just so far you've launched in Texas, and I know there's a whole lot more states to try and get to maybe talk a little bit about why you wanted to do that and what your plans are for building that further.

Jack Newton
Yeah, court filing was, again, a really natural thing for us to arrive at, thanks to feedback we were getting from customers that this process of e filing was a laborious, friction filled process, and they'd like to see that integrated directly into Clio and something we can make really straightforward and really streamlined directly into the practice management system. And when we looked at the value add we could provide to our customers by integrating this directly into Clio, and how we could turn what was dozens of clicks and many products into one click and one product, we just had a light bulb moment, a bit of an epiphany that this could be really transformative to our customers workflows and something that we eventually will be able to expand to all states as e filing. I would say that the macro level trend that we also wanted to help drive forward, Washington one from paper filing to e filing, as part of this broader digital transformation and reduction in friction that I was referring to earlier, we saw this just as a macro level trend that we not only wanted to participate in, but actually helped drive forward in a really constructive way and actually partner with states, partner with courts, and become a catalyst that helps drive adoption of e filing in more and more states, more and more jurisdictions embed this as deeply as we can into the Clio workflow in a way that it really does help streamline our customers lives.

Bob Ambrogi
I haven't had a chance to write about it yet, but I did get a demo of it last week and it looks really good.

Jack Newton
Yeah, it's great. We've been getting some early feedback from customers that are running their first e filings right from Clio, and it's the game changer we hoped it would be. They're very excited by it, something I.

Bob Ambrogi
Know I've asked you about before, but that this efiling feature raises it again, which is the kind of interplay or balance between your integration partners and your own internal native product development and e filing is an example of one where you've launched your own product, but you did have an integration partner that also offered it through Clio. How do you see the future of that relationship with integration partners? Do you continue to build that out? And how does that interplay with your own product roadmap and your own product development?

Jack Newton
At one level, this is a long standing and somewhat unresolvable tension between anyone that is a platform and anyone that builds on top of that platform. There's a shorthand at Apple that refers to this phenomenon you may have heard of called being sherlocked. And there was a product called Sherlock that was effectively the spotlight search that you now have in macOS. And one day Apple released Spotlight and effectively Sherlock out of existence.

There's, I think, a core concept here, which is if you're building an integration or building a product that is too close to the core value that the platform you're building upon will eventually want to provide to its customers, you probably have a limited time window to execute on that opportunity. And then hopefully you parlay that into maybe getting acquired by the platform. Or you may end up in a position where you're competing with a platform. But even in a situation where you're competing with a platform, I think there's a huge opportunity for companies to exist in their own right. Maybe a classic example would be Salesforce and they acquired their own email marketing company at one point, and a lot of people thought that would spell the end of the likes of Marketo and so on. And as it turned out, it didn't. The likes of Marketo and Mailchimp and others were able to thrive and continue to integrate with Salesforce even though they had their own embedded email marketing solution. I very much take the approach that an app integration ecosystem should be a meritocracy.

And it's fine to have products on the marketplace that directly or indirectly compete with the core platform in some way. If you look at e filing in Clio, there are other products on our integration ecosystem that offer e filing that may support different jurisdictions or may have different pricing and packaging that is a better fit for certain law firms or a different set of capabilities that are a better fit for certain law firms. And at the end of the day, what we're trying to create with a platform with over 250 integration partners is that customer choice. We ultimately want the customer to be in a position they can choose the tool that is the best fit for them, whether that's the e filing add on directly from Clio or any other product that Clio offers or somebody from our app integration ecosystem that might be a better fit for their needs. And we ultimately see that as a win for Clio in either case, because they're ultimately able to benefit from being in a position to advance their business and see the outcomes that they want to see. And whether that's CRM or e filing or other product categories, our customers ultimately do have the choice of using the native Clio solution or somebody that has built on top of our platform that may offer a competing set of functionality that's a better fit for their needs.

Bob Ambrogi
Inexperienced podcast host that I am and occurred to me that I never asked you at the beginning, before we started recording of how much time you have, and I'm looking at the clock here, I think I have you for another maybe ten minutes or so. Is that right?

Jack Newton
Yeah, I'm good until 1130.

Bob Ambrogi
Someday I'll get the hang of this.

I did want to ask you a little bit more about your growth into the sort of the middle firm segment.

I think either you said, or I read, that you now have more than 1000 mid sized firms as customers.

How important is the sort of upmarket growth going to be to the future of Clio? As we from this point on, we.

Jack Newton
See the mid market in again, using that phrase, history doesn't repeat itself, but it does rhyme. When we look at the mid market and the needs of the mid market and the technology landscape in the mid market, it reminds me a lot of what the solo small firm market looked like 15 years ago.

There's a bunch of incumbent on premise solutions that are clunky and hard to use, if you're being generous with your language. And there's customers that are unhappy, deeply unhappy with these products where they've seen prices steadily ramp and innovation steadily decline. And again, this is exactly the landscape we saw in 2008 with the solos and small firms. So I pattern match and say, hey, this is a natural opportunity for Clio. And we have over the course of the last ten plus years at Clio, really been innovating and investing and iterating on the platform and making it a better and better fit for larger and larger firms. So again, in 2008, we really focused on solos, and we grew in a very iterative, progressive way to two person firms, five person firms, ten person firms, and now we regularly close deals in the hundred plus employee size range. We have some customers that have hundreds of users on our platform, and we see the core product capabilities thanks to the investment we've made over the last five years, as well as the investments we're making this year to make the product an even better fit for the mid market. And we see this as a really substantial portion of the market that has a very similar set of needs to solos and small firms in some ways, but then a distinct and unique set of needs around reporting and permissions, and some more advanced capabilities that we've been building out that ultimately make Clio a great fit for these firms. And again, in a relatively short amount of time, Clio has grown to become the leading cloud provider of technology, these mid market law firms, with now over 1000 mid market firms under our belt.

So we're just getting started on this journey with mid market law firms, but already seeing a lot of success and have already quietly become the leader in this category, which we see as a very exciting category to expand into. And that dovetails really nicely with our international expansion effort as well. By the way, where we see many of the firms that we want to address in our international markets tend to be multi country operations that are typically larger law firms.

Bob Ambrogi
You alluded to the fact that mid sized firms have different needs. They have more complex reporting capabilities, often have more complex, perhaps back office capabilities that they need. Can one platform continue to be all things for all people, or do you need to branch off at some point and develop a different product for that market?

Jack Newton
Our view has been to this point, and this is a great question because it's very hard to do. Right, but what we're trying to do at Clio is build one platform that does meet the needs of all size law firms and eventually all practice areas with practice area specific functionality as well. And we see there as the path to doing this well, we believe is on the user experience side of things, something you call progressive disclosure. But the idea is, as customers need more complexity, you reveal that complexity to them in a progressive way. And I think where many products, not just in legal, but in all sorts of segments, have kind of run afoul of this rule, they've ended up creating their own demise, because what they end up doing is making the products so hard to use for the entry level customer that they can't get started with it, and they end up almost pigeonholing themselves into the larger, more complex use cases because they've made the product basically unusable for the more basic use cases. So what we're trying to do is thread that needle where we've got, we're maintaining Clio as a very accessible, easy to use product for the solos and small firms, but for the mid market customers, we're able to progressively enhance the product and reveal some of the additional complexity that they may need for the personal injury law firm that needs specialized PI capabilities. We're able to enrich the user interface with a whole new set of capabilities for those practice area specific customers.

But those features aren't getting in the way for the non PI customers. And that's our belief in terms of how we ultimately evolve the product. And at the end of the day, what we believe is a huge competitive advantage for Clio is unlike almost our entire competitive set, we are not trying to juggle and maintain five or six different products that are a so called portfolio of products.

We're investing in one product, really one core technology platform that is deeply integrated. And the benefit of that is we release one feature that benefits our solo customers and that benefits every single customer on our platform. And we're able to really start to build what I like to describe as a compounding company in the sense that as we invest in one technology platform, that investment compounds in a really significant way over time and benefits every single one of our customers, whether they're a solo, or whether they're a 500 person law firm, or whether they're a thousand person law firm, whether they're a family lawyer or a personal injury lawyer or a general practitioner.

Bob Ambrogi
Well, I know our time is about out. I could sit here and talk to you all day, and I'm sure we'll get another chance to talk at the Clio cloud conference and follow up a little bit on all of this. But was there anything else that you wanted to say about the news this week before we wrap up today?

Jack Newton
No. Cliocon is only a few short months away, Bob, so I look forward to seeing you there and talking you there. We'll have a whole bunch of new, exciting news to share. And no, thanks for helping us share the news of this round. And thanks your support over the years as well, all the way back to your first blog post about Clio in 2008. It's been a wild ride.

Bob Ambrogi
It's been a while. Well, thanks a lot. Congratulations, Jack. It's really exciting news and I look forward to the next stage for the company.

Jack Newton
Thank you.

Bob Ambrogi
My sincere thanks to Jack Newton for sitting down with me to share his perspective and insights on this record setting deal and what it means for the legal industry. I hope you enjoyed the conversation. If you'd like to share your own thoughts or comments on today's show, please do so by messaging us on LinkedIn or X or wherever you're on social media or email me directly ambrogiomail.com.

if you're a fan of the show, please leave us a review wherever you get your podcasts. Lawnext is a production of LawNext Media. I'm your host, Bob Ambrogi. We hope you'll join us again next time for another episode of Law. Next.