Steno, a tech-enabled provider of litigation support services, whose flagship product, DelayPay, enables law firms to defer service costs until their case resolves, has closed a Series B funding round of $15 million, bringing its total raise to $38.5 million.
This latest round was led by Left Lane Capital. The round also included a strategic investment from Clio Ventures, the direct investment arm of legal technology company Clio.
The company will use the Series B funding to continue its expansion into new geographic markets across the country, develop adjacent service channels for its clients, and expand its tech team.
Financing Deposition Costs
As I wrote about Steno in 2020, Los Angeles lawyer Dylan Ruga, a former Steptoe & Johnson partner who founded his own plaintiffs’ litigation firm in 2016, first conceived of the company as a vehicle for financing deposition costs.
He was conducting so many depositions that the cost of court reporters was affecting his cash flow. But when he could find no court reporting agency willing to defer his payments on a non-recourse basis, he decided to start one.
Ruga took the idea to Greg Hong, an entrepreneur who had previously founded Reserve, a restaurant reservation system, and sold it in 2018 to another restaurant reservation company, Resy, which was later acquired by American Express.
Together with CTO Dan Anderson, they launched Steno in 2018 as a court reporting agency paired with the non-recourse payment option, DelayPay.
After the pandemic shut down live depositions, the company developed Steno Connect, a remote video deposition platform, and then Digital Firm Dashboard, on which a firm can manage all its litigation support services.
While the majority of its customers are plaintiff-side law firms, it has steadily grown its customer base among defense firms as well as general litigation firms.
They have also developed a set of technology tools to support the court reporters who provide services through the platform, including a marketplace for them to claim jobs coming in from law firms.
Along the way, the company has grown to over 100 employees.
Opportunity in Litigation Support
In an interview yesterday with the three founders, Hong said that, almost from the company’s inception, they had seen the opportunity to expand more broadly in litigation support.
“While deferred payment financing is one aspect of how we’ve gone about differentiating on behalf of law firms, I think we realized specifically as it relates to litigation support services that there is a bunch of opportunity in terms of areas for improvement and innovation, not only with financial innovation, but also technology innovation,” Hong said.
“We want to offer differentiation, both in terms of technology and financing, but we want to do it across a broad suite of litigation support services.”
That includes not just areas such as court reporting, e-filing or service of process, but “the range of things that an attorney might do as part of the litigation process and the vendors that they might traditionally work with,” Hong said.
“We believe that if we can deliver those services as a one-stop shop in aggregate, under one umbrella, and with deferred payment where appropriate, that is a meaningful difference for the attorneys that we work with.”