Legal software co Relativity snaps up AI startup after private equity infusion

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A boardroom is seen in an office building in Manhattan, New York City, New York, U.S., May 24, 2021. REUTERS/Andrew Kelly

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May 27 (Reuters) - Legal and compliance software provider Relativity ODA LLC said Thursday it has acquired artificial intelligence company Text IQ Inc, touting the promise of its AI technology for law firms and other customers.

The companies didn't disclose the terms of the deal, which comes on the heels of a growth investment in Chicago-based Relativity by private equity firm Silver Lake in March. The Wall Street Journal reported at the time that the investment valued Relativity at about $3.6 billion.

Relativity, best known for its e-discovery services and formerly known as kCura, also acquired data management software company VerQu in January.

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Text IQ will still offer its products after the Relativity deal, which will see its AI technology incorporated into Relativity's cloud e-discovery and communication surveillance products, RelativityOne and Relativity Trace. Relativity said the deal would help it solve more legal and compliance questions for customers and bolster its data breach response capabilities.

"We're merely scratching the surface of what the application of AI to our industry can mean," Relativity CEO Mike Gamson said in a statement Thursday. "Our customers recognize that while AI offers immense possibility, it must be thoughtfully designed and applied to address use cases that yield specific business outcomes."

Relativity provides e-discovery and other software solutions to law firms, companies and government agencies. The company says it has more than 300,000 users in 49 countries and that its customers include 198 of the 200 top-grossing U.S. law firms.

Text IQ also has a legal and compliance focus, using artificial intelligence to help companies manage and reduce risks that might be hiding in their unstructured data, and offering privacy compliance and data breach response services. It says its main product cuts down the time and cost of doing privilege document review by up to 75%.

"The fusion of our companies and technology will deliver on the promise of AI in a way that our industry has yet to experience, all while ensuring that ethical and unbiased AI is at the core of everything that we do," Apoorv Agarwal, Text IQ's co-founder and chief executive officer, said in a statement.

The deal is the latest transaction involving a big player in the e-discovery space in the last year. Among other deals, E-discovery providers Consolio and Xact Data Discovery announced a merger last month, and e-discovery provider Reveal joined forces with visual analytics company Brainspace in January and acquired AI company NexLP last August.

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Sara Merken reports on privacy and data security, as well as the business of law, including legal innovation and key players in the legal services industry. Reach her at sara.merken@thomsonreuters.com