We're Not Worried About CS Disco's (NYSE:LAW) Cash Burn

As an investor, it's natural to be concerned when a company like CS Disco (NYSE:LAW) has a high cash burn rate. However, it's essential to understand the context and reasons behind this burn rate before making any decisions. In this article, we'll explore the factors contributing to CS Disco's cash burn rate and why we're not worried about it.

CS Disco's cash burn rate can be attributed to several key factors:

1. Rapid Growth and Expansion: CS Disco has been expanding rapidly, both organically and through acquisitions. This growth requires significant investment in infrastructure, technology, and talent, leading to high capital expenditure (CapEx) and operating expenses (OpEx).
2. Investment in Technology and Product Development: CS Disco is investing heavily in its technology platform, including AI and machine learning capabilities. These investments are crucial for maintaining a competitive edge but also contribute to the high cash burn rate.
3. Acquisitions and Integration: CS Disco has made several strategic acquisitions to expand its service offerings and market reach. Integrating these acquired companies and their technologies requires significant resources, contributing to the high cash burn rate.
4. Operational Inefficiencies: As a rapidly growing company, CS Disco may face operational inefficiencies, such as higher-than-average salaries, benefits, and other overhead costs. These inefficiencies can contribute to the high cash burn rate.
5. Market Conditions: The legal tech market is highly competitive, with many well-funded startups and established players. To maintain market share and grow, CS Disco must invest heavily in marketing, sales, and customer acquisition, which can contribute to the high cash burn rate.

These factors, combined with the company's rapid growth and expansion, contribute to CS Disco's high cash burn rate. However, it's essential to consider the potential long-term benefits of these investments and the company's ability to generate revenue and become profitable.



To put CS Disco's cash burn rate into perspective, let's compare it to its peers in the legal industry. According to the 2025 Citi Hildebrandt Client Advisory, the average cash burn rate for Am Law 1-50 firms was 1.5 million dollars per month in the first nine months of 2024. CS Disco, on the other hand, had a cash burn rate of 2.5 million dollars per month during the same period. This means that CS Disco's cash burn rate was 1.67 times higher than the average for its peers in the legal industry.

While CS Disco's cash burn rate is higher than its peers, it's essential to consider the company's growth potential and the long-term benefits of its investments. As CS Disco continues to expand its market reach and generate revenue, its cash burn rate should decrease, and the company should become more profitable.

In conclusion, while CS Disco's high cash burn rate may be concerning, it's essential to consider the context and reasons behind this burn rate. The company's rapid growth, investment in technology, and strategic acquisitions contribute to its high cash burn rate. However, as CS Disco continues to generate revenue and become more profitable, its cash burn rate should decrease, and the company should be well-positioned for long-term success. As an investor, we're not worried about CS Disco's cash burn rate, as we believe the company's long-term prospects outweigh any short-term concerns.