Thomson Reuters Acquires Casetext, an AI Legal Tech Startup, for $650 Million in Cash

Thomson Reuters, a prominent global provider of information and technology solutions, has announced its definitive agreement to purchase Casetext, an innovative legal tech startup that has gained recognition through its association with Y Combinator.

The acquisition, valued at $650 million in cash, is anticipated to be finalized in the latter half of 2023, pending regulatory approvals and customary closing conditions.

Thomson Reuters CEO Steve Hasker emphasized the significance of the acquisition, stating, "The addition of Casetext aligns with our 'build, partner, and buy' strategy to deliver cutting-edge AI solutions to our clientele. We firmly believe that Casetext will accelerate and broaden our market potential, revolutionizing professional work processes and tasks."

Casetext, established in 2013, initially focused on establishing a community platform for attorneys to exchange knowledge and provided users with free access to legal texts accompanied by lawyer annotations. However, the company subsequently shifted its focus towards artificial intelligence (AI) and machine learning (ML) technologies, developing automated workflows and tools for legal teams.

At the forefront of Casetext's offerings is CoCounsel, its flagship product harnessing AI capabilities to review documents, aid in legal research memos, facilitate deposition preparations, and analyze contracts. Casetext secured early access to OpenAI's GPT-4 language model, which serves as the underlying infrastructure for CoCounsel.

Casetext boasts a customer base exceeding 10,000 law firms and corporate legal departments, as highlighted in a press release. With a workforce of 104 employees, the company successfully raised over $64 million from investors such as Union Square Ventures.

Jake Heller, CEO of Casetext, expressed enthusiasm about joining Thomson Reuters, remarking, "Over the past decade, we have leveraged AI to develop products that enhance legal practice and enable attorneys to better serve their clients. Our collaboration with Thomson Reuters presents an incredible opportunity to advance our mission and the field of generative AI solutions exponentially, benefitting professionals in various fields and ensuring widespread access to this groundbreaking technology."

For Thomson Reuters, the acquisition serves as a crucial step in its long-term strategy to integrate generative AI across its major business verticals, including legal, tax, accounting, and news. The company recently unveiled plans to allocate approximately $100 million per year towards AI initiatives, incorporating generative AI into its products during the latter half of this year. Additionally, Thomson Reuters has set aside $10 billion for mergers and acquisitions, predominantly focusing on AI-related ventures, within the period spanning from now until 2025.

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