Luminance, a legal technology firm, has successfully raised $40 million in a Series B funding round to expand its operations in the US, drawing on the growing interest in artificial intelligence (AI). The round was led by March Capital, with contributions from National Grid Partners and Slaughter and May.

“We had lots of interest from lots of VCs,” Eleanor Lightbody, CEO of Luminance, told CNBC in an interview on Tuesday.

The company, which has seen its annual recurring revenue increase fivefold over the past two years, serves clients like Koch Industries and BBC Studios. Founded in 2015, Luminance offers AI tools to automate legal contract reviews, enhancing efficiency for its clients. Despite the legal tech market’s competitive landscape, Luminance’s unique machine learning models and proprietary large language model set it apart, underscoring its potential for further growth. The company’s valuation has seen a significant increase since its $100 million assessment in 2018.

“Everyone wants to stay competitive,” said Lightbody. “We want to build opportunities they didn’t know existed.”

Lightbody also mentioned that there would be an increase in the emergence of specialized AI companies, highlighting that this is the path her company is taking. She noted the critical importance of domain-specific large language models in the legal field, pointing out that accuracy is paramount. Unlike generative AI, where incorrect answers can be part of the process, legal AI cannot afford inaccuracies due to the nature of its applications.