In a strategic move to enhance the operations of law firms, Elite has announced its acquisition of Tranch, an invoice automation and payment platform. This acquisition aims to address longstanding challenges in the legal industry's invoicing and collections processes, which remain largely manual and prone to error.
Tranch, co-founded in 2021 by analyst and management consultant Philip Kelvin alongside software developer Beau Allison, has gained prominence for its innovative payment solutions. These include options such as an immediate bank transfer payment method, card payments through virtual terminals, and a 'pay later' model which allows clients to disperse their payments over an extended period of two to twelve months. This flexible payment structure enables law firms to receive payment upfront while allowing clients to manage their expenses over time. Notably, Goodwin was the first significant law firm to implement this system in November 2022, showcasing Tranch’s capability of providing credit underwriting based on banking data.
The company, initially based in London, shifted its operational focus to New York after receiving backing from the renowned American technology startup accelerator Y Combinator. Recently, Tranch raised $100 million in a seed funding round led by New York investors, indicating substantial growth potential and investor confidence.
Mark Dorman, CEO of Elite, spoke about the rationale behind the acquisition, noting the rising operational costs faced by law firms and the insufficient collection of owed amounts. "Part of the challenge that law firms face is that their overheads are going up, but they’re still not collecting all of the money that they’re owed for the work that they’ve actually done and the fees that they’ve actually billed," Dorman explained to Legal IT Insider. He emphasised that integrating robust payment solutions is essential for Elite’s evolution into a best-in-class Software as a Service (SaaS) model, highlighting that the invoice management and payment processes are critical to this vision.
Philip Kelvin pointed out that the legal sector operates uniquely compared to other industries, particularly in its billing practices. "Unlike your Christmas presents, where you pay and they arrive, law firms have never really worked on that last section," he remarked, indicating that delays in invoicing can significantly hinder timely client payments. He noted the alarming statistic that a significant portion of US law firms still relies on cheque payments, which highlights the urgent need for process modernisation in the sector.
The collaboration between Elite and Tranch is expected to streamline the entire workflow from invoicing to payment, thus reducing friction in the existing manual systems that dominate many firms. Dorman elaborated on this by saying, "While firms may get all of the information digitally... there’s a manual process that involves lots of people in the firm." The hope is that Tranch's technology will bridge the gap between invoicing and payment processes, thereby enhancing overall efficiency.
Despite the acquisition, Elite has clarified that Tranch will maintain its partnerships with other Enterprise Resource Planning (ERP) solutions, including Aderant, SAP, Oracle NetSuite, and HubSpot. Dorman reassured customers that Tranch’s existing client relationships would remain unaffected, asserting, "Just like eBillingHub doesn’t have to work with 3E, if Tranch customers work with other ERPs obviously that just continues."
Furthermore, Dorman addressed the financial aspects of Tranch's 'buy-now-pay-later' solution, asserting that Elite would continue to support this functionality while reiterating that their role would not transform into that of a financial institution. "No we’re not going to be turning into a bank. That’s not our job," he clarified.
Tranch boasts an impressive client roster that includes prominent firms such as Gunderson Dettmer, Paul Hastings, Perkins Coie, Akin, Goodwin, Wiggin, and Fenwick, underscoring its credibility and appeal within the sector. The acquisition is seen as a significant step in modernising billing practices within the legal field, positioned at the intersection of technology and legal services. The conversation around such innovations echoes a broader trend where legal practice management vendors seek to integrate payment functionalities to enhance operational efficiency, mirroring movements seen in the industry, such as AffiniPay’s acquisition of MyCase in 2022.
Source: Noah Wire Services