2 legal-tech companies just filed to go public. Here's everything you need to know about Intapp and LegalZoom, and their plans for growth.

Thad Jampol Intapp

Summary List Placement

Intapp has expanded into financial services and accounting through a series of strategic acquisitions

Intapp is a cloud-based software platform for law, accounting, and financial services firms, helping them manage and synthesize information on clients, deals, and processes across the company.

Launched in 2000 as a management platform for law firms, Intapp has since expanded into other industries like banking and marketing through a series of strategic acquisitions.

Intapp’s expansion began in 2012 following an investment of an undisclosed amount from the private-equity firm Great Hill Partners. The money enabled Intapp to become “more aggressive” with its growth strategy, Thad Jampol, Intapp’s co-founder and chief product officer, previously told Insider.

As of March 31, Intapp had over 1,600 clients, including nearly all of the Am Law 100 firms like Baker McKenzie and Perkins Coie; KPMG, one of the Big Four accounting firms; and financial firms like banks and private-equity firms. These various sectors collectively make up a whopping $3 trillion in total global revenues, according to the company’s S-1 filing.

Intapp’s revenue growth was spurred by SaaS subscriptions as companies looked to the cloud

Intapp earned nearly $187 million in total revenue for fiscal year 2020 — a 30% increase from the previous year. Its annual recurring revenue (ARR), which is a key metric used specifically by software-as-a-service (SaaS) or subscription businesses, grew by 22% over the past year to $201 million as of March 31.

As businesses across industries sought to migrate their work online during the pandemic, Intapp doubled down on the cloud, announcing that it will only sell cloud-based solutions starting in 2021.

The move paid off: 49% of Intapp’s ARR growth came from its cloud-based SaaS subscriptions. The company raked in more than $99 million in cloud revenue as of March 31, representing a 52% increase from the year before.

The company said there’s a “compelling” market opportunity given companies’ shift away from legacy, point solutions to more modern, holistic platforms. Intapp’s total addressable market clocks in at nearly $24 billion, according to the S-1 form. It estimated that if its largest 100 clients fully adopted its platform across their businesses, it could rev up sales by more than $1 billion of ARR.

That said, while the market for SaaS solutions for its target client base is growing, Intapp acknowledged that it’s “not as mature” as legacy on-premise companies, and that it operates in “highly competitive” markets.

“It is uncertain whether our SaaS solutions will achieve and sustain high levels of client demand and market acceptance, particularly in the professional and financial services industry,” the filing states.

LegalZoom aims to ‘democratize’ law for small businesses

LegalZoom, which also filed its IPO on Friday, was founded in 2000 with a mission to “democratize law” through flat-fee subscription services for small businesses. Robert Shapiro, who is best known for serving as one of O.J. Simpson’s lawyers, is one of the company’s co-founders. LegalZoom’s network of more than 1,300 independent attorneys and 75 in-house tax advisors helps companies from inception through their entire lifecycle.

In 2020, 10% of new LLCs and 5% of new corporations in the US were formed via LegalZoom, according to its S-1 filing. Small businesses have become “the engine of the US economy,” making up 65% of new jobs since 2000, per the Bureau of Labor Statistics. The burgeoning small-business market means a $48.7 billion serviceable addressable market, according to LegalZoom.

Over the years, LegalZoom has expanded to provide more legal, compliance, tax, and business services. Its compliance solutions are now the largest group of its subscription services, helping companies and individuals navigate federal, state, and local regulations. For instance, in most states, small businesses must have a registered agent to receive mail and court documents at a physical address during normal business hours. LegalZoom offers a registered agent subscription to digitize this process.

LegalZoom earned more than $134 million in the first three months of 2021 — up 27% from the same period last year. The growth was spurred by the pandemic, said legal-tech expert Scott Mozarsky.

“The pandemic really accelerated a secular shift to online legal services, as people became more comfortable doing everything online,” Mozarsky said.

As the pandemic winds down and the “offline” economy reopens, however, LegalZoom fears that the “tailwinds” created could slow down, according to its S-1 filing.

LegalZoom has faced several lawsuits and could encounter more legal hurdles

In the US, only licensed lawyers can provide legal services. LegalZoom has been sued multiple times for alleged unauthorized practice of law.

A Missouri resident who used LegalZoom to prepare a will and two other individuals who used it to organize a remodeling business filed a class-action lawsuit in 2009, alleging the company goes beyond simple form-production and broaches into practicing law. Another class action was filed in 2010, accusing LegalZoom of drafting a flawed estate plan. Both cases were ultimately settled in 2011.

“While we have denied and continue to deny all of the allegations and claims asserted in these proceedings, and we believe our services do not constitute the practice of law, unfairly compete, or otherwise violate the law, we cannot predict the outcome of such proceedings or the amount of time and expense that will be required to resolve these and other proceedings,” said LegalZoom in its S-1.

In some jurisdictions, LegalZoom has already begun taking on the role of a licensed lawyer. In the UK, its subsidiary operates under an alternative business structure that allows non-lawyer entities to become licensed providers of certain legal activities.

Despite the lawsuits it’s faced, LegalZoom has said it may consider implementing similar alternative structures in the US. Utah and Arizona recently began allowing non-lawyers to provide legal services.

Another potential legal hurdle concerns the gig economy. While the gig economy accelerated small business creation and expanded LegalZoom’s target market, recent legislation on companies’ treatment of independent contractors — like the attorneys and accountants on LegalZoom’s platform — could also expose it to employment liability.

Both Intapp and LegalZoom declined to comment for this story.

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