A unicorn in waiting? Why $100m value of Scottish legaltech firm Wordsmith AI matters

A huge cash injection into a Scottish legaltech firm is a watershed moment — is the future of AI in law firms finally clear? And can they put an AI agent in every in-house team?

Meetings about integrating AI into our work. We’ve all had them. Countlessly, I’d wager. It is the next technological frontier and — depending on which academics, engineers or zealots you listen to — could result in improved efficiency or the wholesale replacement of human beings.

Legal practice is not immune to this change. Legaltech startups have sprung up to offer to solve problems real and confected in the sector with an AI salve. Some of it is snake oil, some of it sensible. But how do we divine one from the other?

Enter a future Unicorn?

Let’s follow the money. This week Wordsmith AI, an Edinburgh startup with real pedigree at the helm, hit a $100 million (£73.64m) valuation after just 18 months of trading. It’s understood to be a record sprint to that figure for a Scottish startup.

There’s huge money forecast in the sector. Last year, Gartner, Inc. estimated that the initial explosion of consumer-use generative AI like ChatGPT would eventually open up a legal technology market worth $50bn by 2027.

Wordsmith AI co-founder Ross McNairn — formerly head of product at Scottish flagship Unicorn, Skyscanner — likens his product to an “air traffic control” system for general counsels and in-house teams, guiding them to decisions faster than ever before. The jet-set analogy is a nice nod to his previous success.

It’s a bold claim but appears to be matched by both by funding and client credibility. Wordsmith AI’s Legal Enablement Platform is already used by Trustpilot, Remote.com, Deliveroo, Multiverse and Docplanner. Last week the firm secured a $25 million (£18.41m) series A led by Index Ventures to scale up its infrastructure.

McNairn and his team now say they can embed “fleets” of AI agents in corporations the world over — and train staff how to harness the technology.

McNairn, who has revealed the firm will open London and New York offices this year, said: “For the first time, AI infrastructure can be embedded across companies, with fleets of agents that you can train to support every corporate function - cutting deal cycles, answering queries, and processing complex workflows. Our Legal Enablement Platform is like air traffic control for GCs and in-house teams, helping them guide teams to the right decisions faster."

We are helping GCs embed their legal intelligence across the business. Gone are the days of legal being seen as a blocker, it is now a revenue accelerator.

McNairn knows a thing or two about how law is perceived in the market. A qualified lawyer 10 years ago, he left the sector to develop software and systems to deliver what he learned at scale. He claims legal can now be not the “bottleneck” but the “engine room” of business. He has worked to scale three tech unicorns: as Chief Product and Technology Officer at TravelPerk, VP of Product at letgo, and Head of Product at Skyscanner.

What does all this mean for legal jobs?

The natural concern is that technological development leaves workers behind, replaced and discarded. It’s hardly a novel fear — the Luddites were, of course, textile works who protested the introduction of machines and the impact on their livelihoods (perhaps wrongly pilloried for centuries, a sunnier view of the Luddites is put forward by Brian Merchant in his impressive Blood in the Machine: The Origins of the Rebellion Against Big Tech). But is it a legitimate fear for legal practioners?

Wordsmith chiefs say their product will create new jobs: legal engineers. These roles will focus on training, deploying and supporting their AI agents and require new skills. But of course the efficiencies of AI and the work it handles will mean somewhere in the system someone has less work, and perhaps, no job left.

McNairn says: “We’re witnessing the birth of an entirely new role in legal: the legal engineer. These are the people training, deploying, and managing fleets of AI agents. We’re helping to re-skill an entire generation to do it.”

In its current form, Wordsmith and agent AI models are not equipped to wholly replace solicitors nor are they designed to do so. In the short- and medium-terms, the technology will likely streamline elements of the job and introduce others. In the longer term? AI models will only get smarter from here.

For now the focus is on in-house and GC teams. How a full-service firm would implement Wordsmith AI is less clear.

Why are investors backing Wordsmith AI now?

Entrepreneur and LawscotTech Advisory Board Member Aleks Tomczyk described the deal as a “milestone” for the legaltech sector in Scotland.

Hannah Seal, Partner at Index Ventures, said: “AI is revolutionising the legal profession, and Wordsmith is leading that charge. They’re not just building a co-pilot, they’re creating the foundational infrastructure for how entire organisations inter-act with legal.

“This is about reshaping enterprise operations, not just supporting legal teams. We’re excited to back Ross and the Wordsmith team as they define a new category at the intersection of law, technology and AI.”

And Scotland’s leaders aren’t surprised. Deputy First Minister Kate Forbes added: “Private investment is an essential building block of a strong and growing economy – and fundamental to ensuring businesses can grow and succeed.

“Scottish companies bucked the UK trend last year by attracting more than £700 million of investment – up by a fifth on 2023 - and it is fantastic news that Wordsmith AI, a Techscaler member, has secured its $25 million Series A funding round in such a short space of time.

“There can, must and will be many more success stories like this. From the Techscaler programme and our wider pipeline of support for entrepreneurs, to continuing to position Scotland as an investment destination, the Scottish Government will continue to help our start-up companies grow and prosper.”

Where now from here?

That’s the $100m question. Or more accurately, that’s the $1bn question. Can McNairn and his team dream of a true Unicorn valuation? There are huge challenges ahead.

Wordsmith will need to solidify its market leadership and expand what they’re able to offer customers. Revenue needs to rise, as does the variety of products. Could mergers and acquisitions follow? The AI market is in good shape for a period of consolidation. But Wordsmith will likely face stiff competition from other legal AI software as service providers who innovate or imitate similar products.

Yes, this Scottish legaltech firm has enjoyed and deservedly so a period of hypergrowth. The road to Unicorn status will prove rockier but Wordsmith may be engineered to ride it all the way.