The United States is famous (or infamous) for its litigation capacity: the country may not have the most lawsuits per capita (i.e. Germany), but it has the most of any country overall, in the midst of an industry very active legal system whose caseload is growing at a rapid pace. market worth many tens of billions of dollars. Now, an AI-based startup that’s leveraging that data for its own business is announcing a funding round.
Darrow, which has developed an AI-based data engine that pulls in large amounts of publicly available documents to search for potential class-action litigation in areas such as data privacy breaches and environmental pollution, has raised $35 million.
The funding comes after a strong run in recent years: Darrow says active cases brought as a result of its data insights currently total around $10 billion in claims.
It now plans to use the funds to hire more engineers and business development talent; add more focus areas (new legal domains) to your search and analysis tools; and invest in the expansion of its large language models and other technological assets.
This Series B was led by B2B specialist Georgian, and Entrée Capital and NFX also participated. Including this latest round, Darrow has raised just under $60 million from investors that also include Y Combinator (where he was part of its W21 batch) and R-Squared Ventures.
Image credits: darrow (Opens in a new window) under a license.
The startup, based in New York with offices also in Tel Aviv, was founded in 2020 as a result of Covid-19. The pandemic marked a change in the way lawyers work, according to Evyatar (Evya) Ben Artzi, the CEO who co-founded the company with CTO Gila Hayat: “They started looking for leads online, for cases, all the time. “, said. he said in an interview.
Darrow does not disclose his valuation or any details about income. But Ben Artzi said there are currently about 50 law firms using the product, covering hundreds of attorneys, to be more proactive in how they find and develop new cases to pursue.
“There are many other violations out there. We still haven’t found everything. That’s why we want to expand our big language model to detect other egregious activities,” Ben Artzi said in an interview. “We want to be the preferred choice for law firms. Right now there is a lot of legal labor that wants to be deployed. Lawyers want to work and fight for society’s most pressing issues. “We want to be the place where they can find cases that have impact.”
The idea of a firm looking for people to sue might bring a bitter taste to some people’s mouths, with thoughts of how the court system is sometimes abused with expensive and spurious lawsuits in areas like personal injury and patent infringement. Perhaps anticipating that, or perhaps because Darrow actually has a moral purpose, the startup has a very different spin on the matter.
Class action lawsuits are often perceived as too expensive and risky for law firms to take on, and it is often only the largest firms that have the teams to proactively seek out interesting cases and the resources to fight them; On the attorney side, typically only the biggest names are proactively sought out by potential plaintiffs to begin any process, leaving smaller players on the sidelines.
But as Ben Artzi sees it, every lawyer wants to find and fight the good fight (the startup’s name itself is a reference to Clarence Darrow, the famous civil liberties lawyer). And just because something is harming only dozens of people, and not millions, doesn’t mean it’s not worth investing in fighting for.
However, because costs and other requirements are high, “only the most important cases get to be the focus,” he said.
The company describes its technology as a “judicial intelligence” platform—in effect, a predictive analytics engine optimized not for business intelligence, but for patterns that indicate a legal violation and potential litigation—business development for lawyers.
Darrow works by trawling through thousands of sources of publicly available information (news feeds, social media chatter, consumer complaints filed with regulators and other organizations, management reports, SEC filings, environmental reports, court filings, and more), ingesting it all and “connecting dots”. between data and evidence of violations and harmful outcomes, or the potential thereof. He also provides an anticipated legal outcome of a potential case and what its value might be.
Lawyers whose interest may be piqued by all of this can use the platform to begin their review and discovery process. Darrow does not act as a “black box”: it also employs a team of legal data specialists, including former lawyers, to review insights and patterns.
Image credits: darrow (Opens in a new window) under a license.
The startup has identified environmental violations, examples of personal data breaches, examples of discrimination in banks, employers paying women less than men, scammers, antitrust violations, and more.
Darrow has chosen lawyers as its initial target client segment. This is not just because they are becoming more accustomed to using other AI tools, although many of these are for handling workflows, administration and compliance (examples include Doctrine, Aware, Casetext and Juro. They are also the who are most financially motivated to find new cases. They pay in advance for the data, on a case-by-case basis, i.e., not pro bono model.
But since the idea is to help people have a stronger legal voice, over time the company could very well create a portal and business model for people to search for data that may be relevant to them and report their own data.
“We sought to identify the most impactful actors and realized that the missing link begins with litigants, but consumers are part of the long-term vision. They are crucial. They are the reason we started this,” Hayat said in an interview. In fact, his and Ben Artzi’s approach came from his own personal experience. “He’s the litigant and I’m the angry consumer, and my contribution here was the software,” he added. Of course, as with any AI project, the key will be to see how closely the company and the technology it has created stick to its ideals, but for now his positive approach points to a pretty big opportunity.
“Darrow’s founders recognized a gap in the $63 billion mass and class action market and developed an innovative language model to transform the scale and impact of litigation teams,” said lead Georgian investor Margo Wu. it’s a statement. “The company’s mission-driven team of lawyers, technologists and product developers was a key reason to invest.”
