An ex-lawyer has raised $70 million from VCs to take work away from law firms

In a significant shift within the legal industry, a new startup named Wordsmith has successfully raised $70 million in funding to empower corporate legal teams by bringing more work in-house and reducing reliance on traditional law firms. Supported by investors such as Index Ventures and Highland Europe, this latest funding round elevates the company's total capital to $100 million within just two years. Founded by Ross McNairn, a former lawyer turned tech entrepreneur, Wordsmith offers innovative software solutions that streamline the operations of in-house legal departments. The platform consolidates requests from various communication tools, including email, Slack, Microsoft Teams, and Salesforce, automating the drafting of contracts and the answering of legal inquiries. Since its inception in Edinburgh, Scotland, Wordsmith has expanded its reach significantly, now servicing over 500 companies, including notable clients like Canva, Financial Times, Safelite, Trip.com, and BT. The startup's focus on assisting corporate legal teams marks a distinct departure from the early days of legal AI, where many startups aimed their products at law firms. While competitors like Harvey and Legora have sought to bridge the gap between law firms and corporate legal departments, McNair has chosen a clear path: to exclusively support businesses looking to minimize their dependence on external legal services. He believes that attempting to serve both sides creates an inherent conflict of interest, leading him to turn down lucrative contracts with law firms. McNair's journey into the tech world began after he recognized that software could scale operations more effectively than traditional legal practices. He previously founded Dorsai Travel, which was acquired by Skyscanner, and later held senior positions at both Skyscanner and TravelPerk. His exposure to OpenAI's technology further fueled his vision for Wordsmith, leading to the creation of tools that significantly enhanced operational efficiency. As the legal tech landscape evolves, Wordsmith competes with various emerging startups targeting niche areas such as contract management. However, the looming presence of companies like Anthropic, which are developing AI agents capable of performing various legal tasks, raises questions about the future of specialized legal software. Despite these challenges, McNair remains optimistic, arguing that the rise of general-purpose AI tools only highlights the necessity for tailored legal solutions that can manage workflows, track permissions, and enforce compliance. He asserts that while tools like Claude may assist individual legal tasks, a comprehensive system is essential for the effective functioning of legal departments. "Wordsmith runs the function," he states, emphasizing the need for dedicated software that caters specifically to the complexities of legal work.