The 17-Year Journey: From Cloud Pioneer to AI-Powered Platform
When Jack Newton and his elementary school best friend Ryan Wong founded Clio in 2008, they were building the very first cloud-based practice management system for lawyers. It was a radically different time: cloud computing was still novel, SaaS was an emerging model, and convincing lawyers to trust the cloud with their sensitive client data was an uphill battle.
Seventeen years later, Clio has transformed from a single-product startup into a multi-product powerhouse with 1,500 employees across five global offices, serving as the “operating system for legal” with over $300 million in ARR and a $900 million Series F fundraise valuing the company at approximately $3 billion.
About the Speakers
Jack Newton is the CEO and Co-Founder of Clio, the leading cloud-based legal practice management platform that has revolutionized how law firms operate. With a background in computer science and a master’s degree in machine learning, Jack founded Clio 17 years ago with his elementary school best friend, Ryan Wong. Under his leadership, Clio has grown from a pioneering cloud-based solution to a company of 1,500 employees with offices across Vancouver, Calgary, Toronto, Dublin, and Sydney. The company now serves as the “operating system for legal,” with over $300 million in ARR and a recent $900 million Series F fundraise. Jack’s vision has been instrumental in driving digital transformation across the legal industry, and he’s now positioning Clio at the forefront of the AI revolution in legal services.
Dave Yuan is the Managing Partner at Tidemark, a growth equity firm with a particular focus on vertical SaaS investments. With deep expertise in software applications and a proven track record of identifying category-defining companies, Dave has been instrumental in supporting high-growth SaaS businesses as they scale. As both a long-term friend of Jack’s and an investor in Clio, Dave brings a unique perspective on the company’s journey and the broader vertical SaaS landscape.
Jack’s Top 5 Learnings on Building a Vertical SaaS Giant
1. Own the Control Point, Then Expand Relentlessly
The single most important strategic decision Clio made was establishing itself as the control point for law firms with Clio Manage. “Lawyers start using Clio as a verb in the law firm,” Jack explains. “They’re anthropomorphizing Clio and saying ‘go to Clio.’ If it’s something we need to know, it’s in Clio.”
This system of record became “the first application they open in the morning and the last application they close at night.” Once you own the control point, you have data gravity and an unfair right to cross-sell multiple products. Clio has leveraged this position to expand from one product to seven, with each new product building on that foundation of trust and integration.
2. Build a Platform Early to Create a Competitive Moat
Inspired by what Marc Benioff accomplished with Force.com at Salesforce, Jack launched Clio’s open platform in 2013—just five years after founding the company. Today, Clio has 300 integration partners building on top of their platform.
“It’s such a powerful thing when you look at something you want to add on like Marketo, and the first and often only integration point they might have is Salesforce,” Jack notes. “We wanted to do that in legal.”
But the platform strategy delivers more than just ecosystem lock-in. It provides perfect visibility for M&A opportunities: “The cheat code that gives us from a corp dev perspective is you can see exactly what kind of product is getting traction with your customers.” You get perfect data on retention, NPS, and customer satisfaction—intelligence you could never get at arm’s length from a company.
3. Map the Customer Journey, Not Just Features
Rather than building a random collection of features, Clio mapped out the complete client journey for law firms and built products to serve every stage. “We looked at that whole journey and mapped out the series of products that we can build out to really eat up that entire customer journey,” Jack explains.
This journey-based approach starts with Clio Grow (their CRM for client intake), moves through Clio Manage (practice management), and extends to Clio Payments (billing and collections). Each product serves a specific stage, but they all connect to create a seamless digital transformation for law firms.
The key insight: “We’re framing what this digital transformation needs to look like in this industry—to take what is a lot of bricks and mortar and analog pen and paper processes and pull that into the cloud.”
4. Payments Is the Ultimate Win-Win-Win
Clio Payments now represents more than 20% of Clio’s annual recurring revenue, with customers processing tens of billions of dollars in aggregate billing. But the impact goes far beyond revenue.
“Payments is probably one of the single biggest win-win-win propositions that any vertical SaaS player can deliver,” Jack emphasizes. The benefits cascade:
- Dramatic increase in retention for Clio
- Dramatic reduction in AR for law firms
- Dramatically reduced time to get paid
- Recovery of previously written-off bills through frictionless online payment
- Better client experience at the final touchpoint
Jack shares a telling example: “Last time we asked you to pay this, we asked you to pay by check. We know that you probably don’t know where your checkbook is. Can you just pay online with credit card?” In two minutes, clients pay bills that have been outstanding for a year or more.
When Clio launched in 2008, “even 5 years into the journey, we had no idea what a huge opportunity payments represented, but it certainly turned out to be one of the most important drivers of our growth.”
5. AI Is a TAM Expansion Opportunity, Not Just an Efficiency Play
When Clio raised their $900 million Series F, the question from investors was direct: “Legal is near the top of the list of industries that’s going to be disrupted by AI. Is this a threat or is this an opportunity for Clio?”
Jack’s answer is unequivocal: it’s a massive opportunity. Goldman Sachs ranked legal as the #2 industry vulnerable to AI disruption (after administrative work), but Jack sees this as TAM expansion, not replacement.
The data point that frames everything: 77% of legal matters go unresolved with the help of a lawyer because lawyers are too expensive, inaccessible, or overwhelmed. “AI will dramatically lower the cost of delivering legal services,” Jack explains. “The amount of demand and the number of people that can then access those goods is dramatically going to expand.”
He draws a parallel to historical industrial revolutions: “It’s in the same vein as what the mechanical loom did to textiles or what the assembly line did to automobiles.” The legal market is currently about $1 trillion annually worldwide. Jack believes AI presents an opportunity to “double, triple, or quadruple the size of that TAM.”
The Deep Dive: Building Clio’s Multi-Product Engine
Starting with the Control Point
Clio Manage launched in 2008 as the very first cloud-based practice management system. The product helps law firms manage every aspect of their operations: tracking matters, documents, to-do lists, client activities, billings, payments, and even a general ledger.
“Clio Manage, as that system of record and system of intelligence for a law firm, has been the backbone of our growth and our expansion story,” Jack explains. This wasn’t just another tool—it became the central nervous system of law firms.
The Platform-Driven M&A Strategy
Clio’s first expansion product came through acquisition: Lexicata, a legal CRM that helped firms intake new clients. The acquisition was de-risked through the platform: Lexicata was already an integration partner, giving Clio perfect visibility into adoption, retention, and customer satisfaction.
“In the six or seven years since we acquired Lexicata, this is a business that on its own is doing tens of millions of ARR, has penetrated into 40+ percent of our base, and is a wildly successful product,” Jack reports.
Since Lexicata, Clio has acquired five additional products, with all but one being integration partners first. This platform-to-M&A flywheel has become a repeatable playbook.
The Revenue Layer Cake
Clio thinks about growth as a compounding layer cake. “In maybe the first year we release a product, it might only do a few million dollars of ARR, but all of the new products we’re launching today, we want to have line of sight to how that becomes a 50 or 100 million ARR business over the course of four or five years.”
The company now frames its growth as: “How do we get from $300 million of ARR to a billion dollars of ARR, basically by executing on this revenue layer cake?”
The most meaningful products to date:
- Clio Grow (CRM): “Almost every law firm needs this”
- Clio Payments: Now over 20% of ARR
- Clio Draft, Calendar Rules, and the broader ecosystem
- ShareDe (recent acquisition): Opens up the enterprise segment (1,000+ lawyer firms) that Clio never directly served before
The Market Reality: It’s an SMB World
Many people think of legal as thousand-person firms in fancy downtown skyscrapers. The reality is radically different: 80% of law firms are 10 lawyers or less, and half of all lawyers are solos.
“It’s a very entrepreneurial, very SMB market,” Jack notes. “And like most SMBs, they’re not great at marketing. They’re not great at intake. They’re not great at following up with clients and getting referrals and follow-on business.”
This SMB focus has shaped Clio’s entire product strategy and go-to-market approach.
The AI Revolution: Threat or Opportunity?
The Case for Optimism
Jack is remarkably bullish on AI’s impact on the legal industry, but not for the reasons you might think. While many see AI as a way to make existing lawyers more efficient, Jack sees something bigger: democratization of legal services.
The World Justice Project stat is staggering: 77% of legal matters go unresolved with the help of a lawyer. Why? Lawyers are too expensive, too inaccessible, and too overwhelmed to serve the full market demand.
“AI will dramatically lower the cost of delivering legal services. Concurrent with that, the cost of accessing legal services will be dramatically lowered,” Jack explains. “That, in turn, as it did with textiles and automobiles, the amount of demand and the number of people that can then access those goods is dramatically going to expand.”
From Augmentation to Automation
Clio is mapping legal work into three categories:
- Jobs that humans will do only (strategic decision-making, client relationships)
- Jobs that will be augmented with AI (legal research, document review)
- Jobs that will be fully substituted with AI (routine document generation, intake qualification)
“In the very near future, you’re going to call a law firm and you’re going to speak to what sounds like a human being helping qualify you and see if you’re a fit for the law firm,” Jack predicts. “A lawyer is going to be sitting down with a cup of coffee in their hand in the morning, interviewing potential clients that that AI intake agent has helped set up meetings with.”
On the practice of law side: “Lawyers are going to have their productivity dramatically amplified by agentic AI that can go do legal research for them, that can go draft briefs for them. Lawyers absolutely need to be in the loop here, but they’re going to be able to get a lot more done in a lot less time.”
The Convergence of Business of Law and Practice of Law
Traditionally, Clio has been a “business of law” platform—helping law firms run their operations. But Jack sees massive convergence ahead.
“The business of law tools are going to get pulled into the practice of law over time, and similarly, practice of law tools—especially as agentic capabilities start emerging—are going to get pulled into the business of law,” he explains.
Customers are already asking: “Why can’t I draft that document directly within Clio? I’ve got all the data that I need to draft that document in Clio. You just need a few AI-based tools to really help support this.”
Jack predicts: “Over the next 2 to 3 years, a massive amount of convergence between the business of law and the practice of law. And there’s a flavor of this pattern happening in many other verticals in SaaS that is going to really dramatically reshape the competitive landscape.”
The Product Management Shift
AI has fundamentally changed how Clio thinks about product development. “We see a really dramatic shift from a world where you listen to what your customers are telling you you should build for them, to really needing to embed yourselves deeply in how a typical law office works.”
The goal: “Look for those opportunities to automate an entire role or automate some substantial portion of how somebody spends their day, and allow them to focus their energy on what they’re great at and what they really love doing.”
Jack references Sarah Tavel’s concept of “doing the work” versus selling software. “We’re selling work rather than software in the age of AI. In order to sell that work, you need to think not so much ‘how do I support a personal injury lawyer in keeping on top of their to-do list,’ but ‘how do I help them draft a demand letter completely automatically?'”
This requires going deeper than ever before: “The job of a product manager, the job of your product organization in general, has radically changed over the last couple years if you want to capitalize on that AI opportunity.”
The Platform vs. Point Solutions: Walking a Tightrope
The Tension Ahead
With a thousand AI-native startups targeting legal, Clio faces an interesting challenge. As the platform, they want to support innovation. But as the control point with all the data, they have an unfair advantage in many AI workflows.
“Our value prop to anyone innovating in legal—whether you’re AI native or more of a pure play SaaS tool—is you don’t need to reinvent the wheel of what Clio as the operating system for legal does,” Jack explains. “You can tie into our APIs and you can focus on the really specific point value you’re delivering to customers.”
But there’s a caveat: “We need to be more deliberate and more strategic about how we’re opening up certain aspects of our data to those partners, because frankly, there’s parts of that AI workflow that we’re going to want to own.”
Why? Two reasons:
- Clio is best positioned to deliver maximum value (because they have the complete context)
- They need to control the customer experience and the data that supports it
The Control Point Advantage
Dave Yuan’s thesis on vertical SaaS is playing out exactly as predicted: “As the control point and as the home to all of that client data, home to all of those workflows, we’ve got an unfair right to win in a lot of these AI-based workflows because we have uniquely broad access to all of that data.”
Jack acknowledges the coming tension: “There’s going to be a really interesting dynamic that starts to emerge over the next few months and years around platforms and the AI players that are building on top of those platforms that are maybe going to demand access to data that, at the end of the day, as the control point, we have an unfair right to win with.”
Jack’s Top 3-4 Mistakes on the Journey
1. Underestimating the Payments Opportunity for Too Long
Jack admits: “When we launched Clio in 2008, even 5 years into the journey, I’d say we had no idea what a huge opportunity payments represented.”
It took the company years to recognize that payments wasn’t just a nice-to-have feature—it was a fundamental driver of retention, customer value, and revenue growth. In hindsight, Clio should have invested in payments earlier and more aggressively.
The lesson: In vertical SaaS, embedded fintech isn’t just a revenue opportunity—it’s a strategic imperative that transforms the entire business model.
2. Not Going Deep Enough on “Doing the Work” Earlier
Jack reflects on the shift from building features customers ask for to truly understanding and automating the work itself. “We needed to get way closer to our customers. We needed to understand how they do the work.”
For years, Clio focused on building tools that supported workflows. But the real opportunity—especially with AI—is to actually do the work, not just facilitate it. A personal injury lawyer doesn’t just need a better to-do list; they need automatic demand letter generation with intelligent extraction of the right demand amount.
“Sarah Tavel wrote a great piece talking about this concept of needing to do the work—we’re selling work rather than software in the age of AI,” Jack notes. The company should have made this shift in thinking earlier.
3. Not Being Strategic Enough About Platform Data Access from Day One
While building an open platform with 300 integration partners created a powerful moat, Jack now sees they should have been more thoughtful about data access policies from the beginning.
“We need to be more deliberate and more strategic about how we’re opening up certain aspects of our data to those partners,” he acknowledges. As AI natives emerge, the question of who gets access to what data—and under what conditions—becomes critical.
The mistake: Building too open of a platform without thinking through the strategic implications of data access in an AI-first world. Now they’re having to rethink and potentially restrict access to data they once freely shared.
4. Waiting Too Long to Address the Enterprise Segment
For 17 years, Clio focused almost exclusively on the SMB market (80% of law firms with 10 lawyers or less). While this was the right initial strategy, it meant leaving a massive market segment (1,000+ lawyer firms) completely unaddressed.
Only with the recent acquisition of ShareDe has Clio opened up “an entirely new enterprise segment.” Jack doesn’t explicitly call this a mistake, but the implication is clear: they could have moved upmarket sooner, either organically or through acquisition.
The lesson: Don’t let your initial ICP become a permanent constraint. The best vertical SaaS companies eventually serve the entire market, from solo practitioners to enterprise organizations.
The Bottom Line
Clio’s journey from a pioneering cloud-based practice management system to a $3 billion vertical SaaS powerhouse offers a masterclass in strategic thinking. By owning the control point, building a platform ecosystem, expanding through the customer journey, and now positioning for the AI revolution, Jack Newton has created a blueprint for vertical SaaS success.
The most powerful insight: AI won’t replace lawyers or diminish the legal industry—it will expand it. By dramatically lowering costs and increasing accessibility, AI can turn a $1 trillion market into a $3-4 trillion market. And the companies best positioned to capture that expansion are those that already own the data, the workflows, and the customer relationships.
As Jack puts it: “I think there’s a flavor of this pattern happening in many other verticals in SaaS that is going to really dramatically reshape the competitive landscape.”
The vertical SaaS winners of the next decade won’t just be the ones with the best software. They’ll be the ones who use AI to do the work itself—and expand the entire market in the process.
