European private equity firm CVC Capital Partners said Thursday it had acquired a majority stake in Overland, Kansas-based UnitedLex Corp., an enterprise legal services provider that during the past 18 months has signed contracts worth $1.5 billion.
UnitedLex CEO Daniel Reed said the transaction will give his company access to $500 million in debt and equity that he will use to invest in the company’s technology, target businesses for acquisition and to invest alongside the clients it serves.
“It’s enough capital to allow us to really do some transformative things,” Reed said. “It puts us in a situation where we don’t have any constraints anymore. It allows us to think as big and as aggressive as anyone can.”
The two firms said in a joint press release that CVC’s investment “was one of the largest transactions to date with any legal services provider.” Luxembourg-based CVC, with more than $110 billion in committed funds, is one of Europe’s largest private equity firms.
The announcement said UnitedLex’s leadership team had “fully reinvested in the transaction,” which Reed said was indicative of their belief that they can create ”the largest legal services company in the world.”
“That’s what we’re committed to do,” said Reed, a former senior associate at Greenberg Traurig. “It’s just a lot of self-confidence, and probably borderline idealism, in terms of what we believe we can do.”
UnitedLex, founded in 2006, had been backed by a private equity arm of JPMorgan Chase & Co. The company’s clients include more than 25 percent of global Fortune 500 scattered across 18 countries, according to Thursday’s announcement.
“UnitedLex has a multi-billion-dollar opportunity ahead of it, with legal services being one the few remaining verticals that is early in the penetration curve of technology, consulting, and solution delivery,” said a statement from Siddharth Patel, a Singapore-based CVC senior managing director for telecommunications, media and technology. “UnitedLex continues to innovate with game-changing engagements with the world’s leading companies. Now is the perfect time for us to provide significant capital to enhance its growth and scale, the beginnings of which we’ve already seen in its impressive financial performance, customer wins, and pipeline of opportunities.”
The deal marks the third major investment this month in the legal services space. Kira Systems Inc. raised $50 million in its first round of fundraising, and Silicon Valley startup Atrium Legal Technology Services Inc. received $65 million in funding from several big-name investors.
UnitedLex has made legal business headlines within the past year securing long-term deals to outsource major portions of Fortune 500 legal departments. The so-called New Law company announced a five-year deal last December with DXC Technology Inc. to provide a team of about 250 lawyers for its corporate legal department.
And this past March, UnitedLex struck another deal to outsource portions of General Electric Co.’s in-house legal department including document review, electronic discovery, litigation and operations. In June, UnitedLex and LeClairRyan unveiled a new venture called ULX Partners LLC that seeks to outsource non-legal operations.
Legal industry observers have anticipated the sale of other New Law companies. Axiom Inc., for instance, has toyed with the idea of going public. Private equity companies hold their invest in companies, on average, for about six years, according to data from PitchBook.
UnitedLex’s investors had held the company much longer—as have investors of Axiom—which had been the source of speculation that both companies would be involved in a transaction.
Reed said CVC had approached UnitedLex as far back as 18 months ago as the buyout firm was looking into making investments in the legal market. He said CVC was interested in companies that had “democratized” the way consumers access products, such as the way Uber had made cab rides more readily available.
“And they looked at our platform and thought what we’re doing is enabling companies to get legal support in ways they haven’t historically been able to,” Reed said. “And you’re allowing professionals to access a new kind of training and expand their careers in ways they weren’t able to do either. It’s an interesting way of approaching the market.”