Toronto Startup Alexi Technologies Accuses Clio of Business Sabotage

Toronto legal artificial-intelligence software startup Alexi Technologies Inc. says a lawsuit against it by B.C. legal technology powerhouse Clio has forced it to slash staff and scared off clients and suitors. Alexi made the claim in its legal reply and countersuit against Clio’s Fastcase Inc. subsidiary, filed Friday in the U.S. District Court for the District of Columbia. Alexi refuted allegations Clio made in its claim, which was filed in December, that Alexi had misused access to the Fastcase’s research database to build a rival AI-powered tool for lawyers. Alexi in turn accused Fastcase/Clio of breach of contract, interfering with its business and acting anti-competitively. Calling the Fastcase suit “sham litigation,” Alexi accused Clio in its statement of causing “irreparable and compounding harm” and trying to drive it out of business and eliminate a rival. “Alexi’s growth trajectory, revenue, fundraising prospects and valuation all have been materially impaired” by the suit, its claim reads. Canadian legal tech vendors duke it out in D.C. court as Clio unit sues Alexi Alexi CEO Mark Doble said in an interview his company, which has raised US$20-million in venture capital over its nine-year existence and generates less than $10-million in annualized revenue, had cut staff to around 20 people from 50, putting Alexi in “survival mode” as it fights the legal battle. Burnaby, B.C.-based Clio, legally named Themis Solutions Inc., picked up Fastcase – one of three companies, along with Thomson Reuters and LexisNexis, that sell extensive libraries of U.S. legal cases to lawyers – as part of its US$1-billion purchase of Barcelona-based vLex LLC last fall. (Thomson Reuters’ controlling shareholder, the Thomson family, owns The Globe and Mail.) vLex, a maker of AI tools for lawyers, merged with Fastcase in 2023. Clio, previously a vendor of legal practice management tools, now bills itself as an intelligent work platform that enables lawyers to manage their business and perform their jobs. Alexi, entered into a data-licence agreement in 2021 with Fastcase, giving it access to the U.S. company’s law database. Fastcase claims that access was restricted to internal research purposes for Alexi’s staff lawyers to prepare memoranda for clients and not for commercial purposes. But after Fastcase and Alexi explored deepening their partnership – and after vLex bought Fastcase – Alexi “began pivoting into direct competition” by offering its own generative AI product to produce memos, Fastcase claims. The Fastcase claim alleges Alexi used its data to build and scale its own legal research platform and eventually began publishing and distributing Fastcase-sourced case law directly to its users “in clear violation of the agreement’s core restrictions.” It accuses Alexi of acting “knowingly and deliberately” using Fastcase’s proprietary database “to shortcut the massive investment required to build a comprehensive commercial legal-research platform” and compete with it – which Fastcase alleges is contractually forbidden. Alexi’s reply and countersuit calls the Fastcase action “baseless litigation designed to extinguish a formidable competitor in AI legal research.” It states that Fastcase/vLex had no issue with their relationship until Clio bought vLex. Clio closes US$1-billion acquisition backed by new financing as it seeks to become ‘everything app’ for lawyers Alexi claims a key issue is that, under the contract with Fastcase, if the Toronto company is sold, the acquirer gets the right to buy the latter’s comprehensive legal database “without restrictions.” It claims that Clio tried to pressure it “to give up that bargained-for right for absolutely nothing in return” after the vLex acquisition, quickly escalating matters by accusing it of contract breach, terminating the contract, then suing. Alexi stated in its court filing it had not breached its contract, but that the purchase right would give an acquirer the ability to create a rival “fourth comprehensive primary-law database” and “compete head-to-head” against Clio. One of Clio’s main concerns in its claim is that its database could be used by Alexi to create a rival legal research provider, which it alleges is not permitted in the contract. Clio spokeswoman Pamela Smith called Alexi’s claims “baseless,” saying they “add noise beyond what is, at its core, a dispute about compliance with a straightforward licensing agreement that explicitly prohibits use of the data for commercial or competitive purposes. Alexi’s own public statements indicate the data was used for commercial purposes. This counterclaim shifts attention away from that misuse and challenges Fastcase for enforcing its contractual rights and protecting intellectual property it has built over many years.” None of the claims have been tested in court.