The AI Problem at Law Firms Isn't Hallucination. It's Honesty.

Key Points Intapp bootstrapped for two decades without venture capital, and its first salesperson was a law firm CIO who quit his job to sell the product. The Celeste AI platform reached general availability on July 15, after the fiscal year ended, so its revenue contribution will show up in the next fiscal year's results. The stock trades at roughly 5.3 times sales and 20.4 times forward earnings, though the average analyst price target now sits below the share price. 10 stocks we like better than Intapp › Some companies are built from a business plan. Intapp (NASDAQ: INTA) was founded in response to a complaint. Back in the early 2000s, a small Silicon Valley outfit with a data integration product went to file a patent. The attorney handling the paperwork read the application and said that his law firm was a disaster in exactly this area. "Can I license this thing?" he asked. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Intapp said yes. The chief information officer at that law firm liked the product enough to quit his job, join Intapp as its first salesperson, and introduce the company to every law firm he knew. Referrals did the rest. The company never raised venture capital , which is unusual for a Silicon Valley software business. Its first outside money arrived with the 2021 IPO. That history matters for reasons beyond color: Two decades of serving one narrow market produced the accumulated firm data and compliance infrastructure that management now calls Intapp's competitive moat. A big market with an awkward shape The company builds software for law firms, accounting firms, investment banks, private equity shops, and consultancies. CEO John Hall describes the customer base as "large partnership firms," a category he estimates at around $4 trillion in annual revenue in the United States. So it's a large market but also a tricky one to serve, and most software companies simply don't chase it. Building the model is not the hard part. Knowing which of a firm's 3,000 employees may see which document, and proving it afterward, is. Large multipurpose AI vendors don't have the lived-in data set to copy Intapp's approach. A generic AI assistant will tell you what it knows. That is the problem. Image source: Getty Images. What "governed AI" actually means Intapp launched its agentic AI platform, Celeste, at a February product event. It reached general availability on July 15. In a call with The Motley Fool, Hall outlined the distinction between Celeste and AI tools like Harvey (an Intapp partner) and Legora, which target the practice of law, as well as horizontal assistants like ChatGPT Enterprise. The difference is permission. A generic AI assistant answers the question it is asked to the best of its automated ability. "One of the problems with the horizontal systems is that they tell the truth," Hall said. "But you may not be a person who is supposed to get that answer inside the firm." The failure mode of a chatbot at a law firm is not hallucination. It is honesty. Somebody asks about a deal they are ethically walled off from, and a regular AI assistant helpfully tells them about it anyway. It may take some prodding and creative prompting, but the info is there to share. Celeste is designed to know who is asking. Ethical walls, material nonpublic information rules, and independence requirements apply to the software the same way they apply to employees. A partner walled off from a deal gets the same answer from Celeste as a colleague would: no answer at all. Every interaction leaves an audit trail, because regulators may have questions about it. Building a large language model is hard. Building one that knows which of a firm's employees may not know a given fact and can prove it in an audit two years later is a different kind of hard. That is the bet. The report card Intapp's fiscal year closed on June 30, and the numbers were robust. Cloud annual recurring revenue (ARR) reached $495.7 million, up 29% year over year. Total ARR was $590.5 million, up 22%. Top-line revenue came in at $577.8 million for the year, a 15% increase. And Intapp is profitable on an adjusted basis. Adjusted net income was $103.6 million. Free cash flow hit $144.7 million, or 25% of revenue, three years ahead of management's long-term targets. The number of clients paying more than $1 million a year grew from 109 to 142. Microsoft co-sold eight of the 10 biggest deals. More than 30 cloud migrations were signed in the fourth quarter, a company record. The stock has responded. As of Aug. 14, shares are up roughly 20% since the report and 93% over the past three months. Shares are still down 16% from last December's all-time peak, though. The part where enthusiasm meets a price chart At a $3.07 billion market cap, Intapp trades around 5.3 times sales and 20.4 times forward earnings estimates. That's not outrageous for 27% subscription growth with real cash flow attached. But the average analyst price target of $39.43 sits below the current quote. Management sees a $50 billion addressable market for agentic professional services software. If that's reachable, Intapp has a lot of growing left to do. Celeste only became generally available after the 2026 fiscal year ended. Its market traction and monetization are what to watch: There are no shortcuts to 25 years of knowing exactly how a law firm thinks. Should you buy stock in Intapp right now? Before you buy stock in Intapp, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intapp wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960 !* Now, it’s worth noting Stock Advisor’s total average return is 981 % — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 15, 2026. Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intapp and Microsoft. The Motley Fool has a disclosure policy .

Intapp bootstrapped for two decades without venture capital, and its first salesperson was a law firm CIO who quit his job to sell the product.

The Celeste AI platform reached general availability on July 15, after the fiscal year ended, so its revenue contribution will show up in the next fiscal year's results.

The stock trades at roughly 5.3 times sales and 20.4 times forward earnings, though the average analyst price target now sits below the share price.

Some companies are built from a business plan. Intapp (NASDAQ: INTA) was founded in response to a complaint.

Back in the early 2000s, a small Silicon Valley outfit with a data integration product went to file a patent. The attorney handling the paperwork read the application and said that his law firm was a disaster in exactly this area. "Can I license this thing?" he asked.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Intapp said yes. The chief information officer at that law firm liked the product enough to quit his job, join Intapp as its first salesperson, and introduce the company to every law firm he knew. Referrals did the rest.