According to Business Insider, venture capital funding for legal technology companies hit a massive $3.2 billion in 2025. The sector saw a frenzy of deals, including Legora’s $150 million Series C and Eudia’s unusual $105 million Series A that was contingent on making acquisitions. Other notable fundraises included Bench IQ’s $5 million seed round for predicting judge behavior, Casium’s $5 million seed for visa processing, and Covenant’s $4 million round to build an AI-native law firm. Startups like Marveri and Theo Ai also emerged from stealth with millions to automate document review and lawsuit pricing. This surge was driven by law firms and corporate legal departments standardizing AI tools for research, drafting, and due diligence.
Beyond The Buzzword Bubble
Here’s the thing: whenever you see a sector explode like this, the “bubble” talk is inevitable. And with some of these valuations, sure, maybe it’s warranted. But the key detail in Business Insider’s report is the shift from pilots to production. That’s huge. For years, legal tech was about promise. Now, it seems the bills are actually getting paid by real law firms with real problems. They’re not just experimenting with a chatbot; they’re wiring these tools into their daily workflow. That suggests there’s real revenue underneath the hype, not just speculative investment. The question is whether the current crop of startups can grow into those sky-high valuations before the next funding cycle.
The New Breed Of Legal AI
So what are these companies actually doing? It’s moving beyond simple document search. Look at Bench IQ: they’re not just finding past cases, they’re using LLMs on a proprietary dataset to forecast how a specific judge thinks. That’s a different level of insight. Theo Ai is trying to take the black art of litigation pricing and make it data-driven. And Covenant, founded by WeWork’s former top lawyer, is fascinating—it’s not a tool for lawyers, it’s building an entire AI-native law firm from the ground up. That’s a direct threat to the old business model. These aren’t just efficiency gains; they’re potentially changing how legal services are structured and sold.
The Acquisition Play
Then you have the really interesting strategy from Eudia. Their $105 million Series A from General Catalyst was basically a blank check to go shopping, with $75 million tied to acquisitions. They immediately bought an alternative legal services provider. That tells you they’re not just building tech in a silo; they’re trying to consolidate service delivery. It’s a roll-up play, combining software with human-powered legal services. In a fragmented market, that could be a way to scale fast and own the entire client relationship. But it’s also a complex, execution-heavy path. Can they integrate these companies and their tech effectively? That’s the billion-dollar question.
Is This For Real?
I think the momentum is real, but a shakeout is coming. Some of these startups are tackling massive, fundamental processes—like Marveri claiming it can cut manual document review from months to minutes. If that even halfway delivers, it’s a no-brainer for any large corporation dealing with litigation or M&A. But they’re all racing against the incumbents like LexisNexis and Thomson Reuters, who have deep pockets, existing relationships, and are making their own aggressive AI moves. The winners will be the ones who can demonstrate undeniable ROI in a field that’s notoriously risk-averse. The 2025 funding surge bought them the ticket to the game. Now they actually have to play.
