Intapp's AI Honesty Problem: Law Firms Need Permission, Not Just Answers

Intapp was founded in response to a complaint, not a business plan. In the early 2000s, a Silicon Valley data integration startup applied for a patent. The attorney handling the paperwork recognized that his own law firm was a disaster in exactly the domain the patent addressed and asked if he could license the product. When Intapp agreed, that lawyer—who was the CIO at his firm—quit his job, joined Intapp as its first salesperson, and introduced the company to every law firm he knew. Referrals sustained the company for two decades without venture capital; its first outside money arrived with the 2021 IPO.

Intapp's customers are what CEO John Hall calls "large partnership firms": law firms, accounting firms, investment banks, private equity shops, and consultancies. Hall estimates this category generates around $4 trillion in annual revenue in the United States. Building software for these firms is tricky because it is not enough to build a functional product; the software must understand which of a firm's thousands of employees may see which document and be able to prove it in an audit. Generic AI vendors lack the lived-in data set required to copy Intapp's approach, which is why most software companies simply do not chase this market.

In February, Intapp launched Celeste, an agentic AI platform (a system that can take actions, not merely answer questions). It reached general availability on July 15. Hall distinguished Celeste from other legal AI tools—such as Harvey, an Intapp partner, and Legora—as well as from horizontal assistants like ChatGPT Enterprise. "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. Someone asks about a deal they are ethically walled off from, and a regular AI assistant helpfully tells them about it anyway. 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 no answer from Celeste. Every interaction leaves an audit trail, because regulators may have questions about it.

Intapp's fiscal year closed on June 30 with strong results. 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. The company is profitable on an adjusted basis: adjusted net income was $103.6 million, and 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. As of August 14, shares are up roughly 20% since the earnings report and 93% over the past three months, though they remain down 16% from December's all-time peak.

At a $3.07 billion market cap, Intapp trades around 5.3 times sales and 20.4 times forward earnings estimates. 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. Since Celeste only became generally available after the 2026 fiscal year ended, its market traction and monetization are what investors will watch—a challenge with no shortcuts to 25 years of knowing exactly how a law firm thinks.