U.S. law firm Wilson Sonsini Goodrich & Rosati has sold its technology unit SixFifty to human resources software firm Paychex, calling it one of the largest-ever deals for a law firm tech subsidiary.
Wilson Sonsini announced the finalized sale on Wednesday without disclosing the terms or the buyer. A source familiar with the deal told Reuters that Rochester, New York-based Paychex acquired SixFifty in May in an all-cash transaction worth between $70 million and $85 million.
Paychex, which has not announced the acquisition, did not immediately respond to a request for comment.
A Wilson Sonsini spokesperson declined to comment beyond the firm’s announcement, which said the deal “ranks among the largest involving a law firm technology asset.”
The Palo Alto-founded law firm, which is known for its work in the technology sector, launched SixFifty in 2019 led by legal technologist Kimball Dean Parker. SixFifty markets a platform that automates employment compliance for companies. The company offers customers an employment law database to do research and the ability to generate documents such as hiring and separation agreements.
Law firm businesses known as “captive” providers or affiliates generated $1.8 billion in 2023, according to a January report by the Thomson Reuters Institute, the Center of Ethics and the Legal Profession at Georgetown Law and the Said Business School of the University of Oxford.
About one-third of the 424 law firms surveyed said they had such an affiliate. The Thomson Reuters Institute and Reuters share the same parent company.
Law firms have formed the ventures over time to provide legal and technology services such as electronic document review that can bring in business from clients that may fall outside a law firm’s traditional model, said Brad Blickstein of legal industry consultancy Blickstein Group.
“Smart firms are looking for new ways to do business like this,” he said.
The SixFifty deal is among only a few known sales of a law firm subsidiary or affiliate business.
Large London-founded law firm Allen & Overy, which is now A&O Shearman after a merger, spun off its online legal information business in 2023 in a sale to private equity firm Inflexion and investment firm Endicott Capital.
In 2022, midsize New Jersey-based law firm Porzio, Bromberg & Newman sold its life sciences compliance technology business to private equity-backed company RLDatix.
Other law firms have split off such ventures into independent companies in recent years. Orrick, Herrington & Sutcliffe spun off an in-house software platform in 2021, which was acquired by legal tech company Brightflag later that year.
Some law firms have made legal technology acquisitions. Cleary Gottlieb Steen & Hamilton in March acquired Springbok AI to help the firm build its own artificial intelligence tools. The firm also has a technology subsidiary that works on projects directly with clients. Fisher Phillips in January 2024 acquired Blue Pencil Box.
Paychex in June forecast full-year revenue and profit above Wall Street estimates, but its $4.1 billion acquisition of rival Paycor in January dragged down fourth-quarter profits. (Reporting by Sara Merken)
