Toronto-based legal technology company Spellbook has secured $40 million in debt financing to support acquisitions of smaller competitors as the company scales its AI-powered contract software platform.
The credit facility was provided by RBCx, the innovation banking division of Royal Bank of Canada. Spellbook plans to use the funding to consolidate emerging players in the contract-focused legal AI market while continuing its own rapid growth.
What The Company Does
Founded in 2018 in St. John’s under the name Rally, Spellbook develops artificial intelligence tools designed to assist legal professionals with drafting and reviewing contracts. The company later rebranded as Spellbook as it expanded its product offering.
Its platform functions as an AI assistant integrated directly into Microsoft Word, allowing users to analyze contract language, generate clauses, and review legal agreements within the document environment where most legal work already occurs.
Spellbook describes the software as an AI co-pilot for legal professionals, designed to automate repetitive aspects of contract preparation and review. The platform supports tasks such as identifying risks in contract language, suggesting revisions, and generating draft clauses based on context.
While many legal AI products target traditional legal research workflows, Spellbook focuses specifically on contract creation and negotiation. According to the company, its tools can be used not only by lawyers but also by procurement, sales, and business teams that regularly work with commercial agreements.
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Market Context / Industry Background
The adoption of artificial intelligence across legal services has accelerated significantly over the past few years. Advances in generative AI models have enabled software providers to build tools capable of drafting, analyzing, and summarizing complex legal documents.
According to a joint report released in June 2025 by Spellbook and legal network Counsewell, nearly 90 percent of legal department professionals are either already using AI tools or planning to adopt them in their workflows. The report also found that 97 percent of in-house legal teams consider AI tools effective in supporting legal tasks.
This rapid adoption has contributed to a growing and competitive legal technology landscape. Established legal research providers, including large software companies, have begun introducing their own AI-powered tools, while newer startups continue to emerge with specialized offerings.
Competition has intensified further with the entry of advanced AI models capable of performing complex legal analysis. Developments such as Anthropic’s legal AI plug-ins have demonstrated increasingly sophisticated capabilities, prompting both startups and established software vendors to accelerate development and consolidation strategies.
Within this environment, some companies are seeking to expand their capabilities through acquisitions, combining complementary technologies and customer bases.
Founder / Investor Commentary
Spellbook co-founder and CEO Scott Stevenson said the company’s recent growth has created an opportunity to expand through acquisitions.
“Growth has accelerated faster than what we expected and we do see an opportunity to acquire a lot of small competitors,” Stevenson said.
According to Stevenson, the legal AI sector has expanded rapidly as new startups have entered the market in recent years. Spellbook expects to acquire several companies over the next two years, with the potential to spend around $60 million on acquisitions, though Stevenson noted that these plans could change as opportunities develop.
He also indicated that acquisition interest is already emerging from smaller companies seeking consolidation.
“Once every two weeks, we hear from a company looking to get acquired right now,” Stevenson said, adding that Spellbook is currently evaluating several potential targets.
Stevenson also pointed to the company’s recent partnership with the Canadian Bar Association as an indicator of market adoption.
“The fact that they selected Spellbook as the best tool shows our leadership position in the market,” he said. “It’s hugely validating.”
Growth Plans / Use Of Funds
Spellbook plans to use the $40 million credit facility primarily to acquire contract-focused legal AI startups that complement its platform. The company expects acquisitions to strengthen its product capabilities and expand its presence in a rapidly evolving legal technology sector.
In addition to pursuing acquisitions, Spellbook is expanding its workforce. The company currently employs about 150 people and plans to hire between 130 and 140 additional employees by the end of the year.
The company is also experiencing strong revenue growth. Stevenson said Spellbook tripled its revenue over the past year and is on track to reach $100 million in annual recurring revenue by 2026.
A recently announced partnership with the Canadian Bar Association is expected to support further expansion. Under the two-year agreement, Spellbook will serve as the association’s exclusive provider of AI-powered contract drafting and review tools, offering its software to more than 40,000 legal professionals across Canada at a discounted rate.
Spellbook says its platform currently serves more than 4,000 customers across 80 countries.
About Spellbook
Spellbook is a legal technology company developing artificial intelligence tools for contract drafting and review. Founded in 2018 and headquartered in Toronto, the company provides AI-powered software integrated with Microsoft Word that helps legal professionals and business teams analyze, draft, and negotiate contracts. Its platform is used by organizations across more than 80 countries to streamline contract workflows and reduce manual legal review tasks.
