Anthropic announced this week that it will offer a standalone legal GenAI tool that could do such things as document review, flag risk, and even compliance work. The announcement sent legal tech vendors — and, more importantly, their investment — into frenzy.
This immediately triggered a significant drop in stock prices of some big legal tech providers like Thomson Reuters, RELX, and Wolters Kluwer. Anthropic is one of the largest GenAI providers to the public. Its main product is Claude. The announcement means Anthropic is now in the application business.
Why It Matters
The fear driving the stock drop and has legal tech vendors shaking is that the big GenAI players like Anthropic will now compete directly with the vendors and at a lower price. The volcano effect that Melissa Rogozinski and I have discussed in a series of articles (see below) may be about to erupt.
And the fallout could be severe not only for legal tech providers but also for the legal community as a whole. The big GenAI players will not only gobble up the services now provided and offered by legal tech providers but could very well set their sights on the services lawyers provide.
Like Pompeii residents when the volcano erupted, many seem surprised by the announcement. Many seem to pooh-pooh it. But it shouldn’t have been all that unexpected and it’s no time to be pollyannish about the long-term impact.
I have written not once but twice that such a move was not only possible but likely.
A Predictable Move
I first predicted such a move by the large GenAI providers back in October. My opinion was based on a podcast interview with Winston Weinberg and Gabe Pereyra, the Harvey founders. At the time, they recognized that their biggest future competitor would not be other legal tech providers but OpenAI itself. Their fear was that OpenAI might enter the legal tech space and compete with providers like Harvey. Given their meteoric success with Harvey, I gave their views a lot of credence. The only thing they missed was that it would be Anthropic, not OpenAI, that would make the first move.
I reiterated this view in a more recent article in which I opined that the GenAI market was ripe for commoditization and that the first step in that process would be for the big players to offer services now offered by legal tech vendors. This, in turn, would lead to fierce competition on price that might squeeze out a lot of legal tech providers. I even posed a hypothetical in which OpenAI was now the GenAI provider of choice for most law firms and legal departments by early 2027. Like Weinberg and Pereyra, it looks the only thing I may have missed is the identity of the first to move.
In both articles, I stressed that the big players might not be content to sit back and let legal tech vendors create the wares based in part on the large GenAI platforms and would make a move.
By and large, this has not happened before in part because the legal market was not big enough to justify the investment in learning the field.
But GenAI changes that dynamic since it’s much easier to gain the skills and understanding needed to provide services directly to lawyers. So the big providers might do so simply because they can. As I said in October, “It’s ironic too that the very AI tool responsible in large part for the increased investment and explosion of products in legal tech may itself enable and encourage the bigger players to try to cut out current legal tech providers.”
And this may be only the beginning.
What Happens Next?
It would seem likely that now that Anthropic has dipped its toe in the legal market, it’s probably not going to just rest on its laurels. I think we will see continued development of legal products. And the other big players will likely follow suit in order to compete. That will drive the commoditization process I referred to in my article.
That could spell trouble for many of the legal tech providers who can’t compete on price. It could also make their present and would-be investors very nervous. The net effect will be the Pompeii effect we have talked about in our series of articles: severe fallout in the legal tech industry. These rumblings beneath the foundation are visible now more than ever and I wouldn’t bet against the big players right now.
But that’s not all. Once the big players see they can offer similar products to that now provided by the legal tech vendors, they could very well push their products to those who need legal services directly. GenAI is already becoming ingrained in corporate legal departments. If Anthropic can provide the same services as the legal tech vendors at a much lower price, in-house legal will flock to the service. And those services will do more and more to replace the need for in-house lawyers and in turn outside lawyers as well.
It was this kind of threat that was described in a recent article in The Hill by John Mac Ghionn. While the article was not centered on legal, it did paint a dystopian future where entire workforces, even those based on judgment, pattern recognition, and reasoning, are displaced by GenAI. It’s hard to see how legal would be any different. Sure, there will still be a need for human lawyers, just nowhere near as many.
And yes, the arrival of low-cost legal services provided by GenAI tools could be a boon to access to justice by making those services more accessible. But make no mistake, when a bot can do 90% of the work in drafting a contract, we won’t need as many lawyers in the loop.
So, buckle up. It’s no time to be pollyannish. We could be in for a wild ride. We told you so.
The Pompeii Series:
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Infrastructure Crisis? (Part I)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Cost Crisis? (Part II)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Trust Crisis? (Part III)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Financial Crisis? (Part IV)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Definition Crisis? (Part V)
Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes TechLaw Crossroads, a blog devoted to the examination of the tension between technology, the law, and the practice of law.
The post Anthropic’s Legal Plug In: Hate to Say We Told You So, But We Told You So appeared first on Above the Law.
Anthropic announced this week that it will offer a standalone legal GenAI tool that could do such things as document review, flag risk, and even compliance work. The announcement sent legal tech vendors — and, more importantly, their investment — into frenzy.
This immediately triggered a significant drop in stock prices of some big legal tech providers like Thomson Reuters, RELX, and Wolters Kluwer. Anthropic is one of the largest GenAI providers to the public. Its main product is Claude. The announcement means Anthropic is now in the application business.
Why It Matters
The fear driving the stock drop and has legal tech vendors shaking is that the big GenAI players like Anthropic will now compete directly with the vendors and at a lower price. The volcano effect that Melissa Rogozinski and I have discussed in a series of articles (see below) may be about to erupt.
And the fallout could be severe not only for legal tech providers but also for the legal community as a whole. The big GenAI players will not only gobble up the services now provided and offered by legal tech providers but could very well set their sights on the services lawyers provide.
Like Pompeii residents when the volcano erupted, many seem surprised by the announcement. Many seem to pooh-pooh it. But it shouldn’t have been all that unexpected and it’s no time to be pollyannish about the long-term impact.
I have written not once but twice that such a move was not only possible but likely.
A Predictable Move
I first predicted such a move by the large GenAI providers back in October. My opinion was based on a podcast interview with Winston Weinberg and Gabe Pereyra, the Harvey founders. At the time, they recognized that their biggest future competitor would not be other legal tech providers but OpenAI itself. Their fear was that OpenAI might enter the legal tech space and compete with providers like Harvey. Given their meteoric success with Harvey, I gave their views a lot of credence. The only thing they missed was that it would be Anthropic, not OpenAI, that would make the first move.
I reiterated this view in a more recent article in which I opined that the GenAI market was ripe for commoditization and that the first step in that process would be for the big players to offer services now offered by legal tech vendors. This, in turn, would lead to fierce competition on price that might squeeze out a lot of legal tech providers. I even posed a hypothetical in which OpenAI was now the GenAI provider of choice for most law firms and legal departments by early 2027. Like Weinberg and Pereyra, it looks the only thing I may have missed is the identity of the first to move.
In both articles, I stressed that the big players might not be content to sit back and let legal tech vendors create the wares based in part on the large GenAI platforms and would make a move.
By and large, this has not happened before in part because the legal market was not big enough to justify the investment in learning the field.
But GenAI changes that dynamic since it’s much easier to gain the skills and understanding needed to provide services directly to lawyers. So the big providers might do so simply because they can. As I said in October, “It’s ironic too that the very AI tool responsible in large part for the increased investment and explosion of products in legal tech may itself enable and encourage the bigger players to try to cut out current legal tech providers.”
And this may be only the beginning.
What Happens Next?
It would seem likely that now that Anthropic has dipped its toe in the legal market, it’s probably not going to just rest on its laurels. I think we will see continued development of legal products. And the other big players will likely follow suit in order to compete. That will drive the commoditization process I referred to in my article.
That could spell trouble for many of the legal tech providers who can’t compete on price. It could also make their present and would-be investors very nervous. The net effect will be the Pompeii effect we have talked about in our series of articles: severe fallout in the legal tech industry. These rumblings beneath the foundation are visible now more than ever and I wouldn’t bet against the big players right now.
But that’s not all. Once the big players see they can offer similar products to that now provided by the legal tech vendors, they could very well push their products to those who need legal services directly. GenAI is already becoming ingrained in corporate legal departments. If Anthropic can provide the same services as the legal tech vendors at a much lower price, in-house legal will flock to the service. And those services will do more and more to replace the need for in-house lawyers and in turn outside lawyers as well.
It was this kind of threat that was described in a recent article in The Hill by John Mac Ghionn. While the article was not centered on legal, it did paint a dystopian future where entire workforces, even those based on judgment, pattern recognition, and reasoning, are displaced by GenAI. It’s hard to see how legal would be any different. Sure, there will still be a need for human lawyers, just nowhere near as many.
And yes, the arrival of low-cost legal services provided by GenAI tools could be a boon to access to justice by making those services more accessible. But make no mistake, when a bot can do 90% of the work in drafting a contract, we won’t need as many lawyers in the loop.
So, buckle up. It’s no time to be pollyannish. We could be in for a wild ride. We told you so.
The Pompeii Series:
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Infrastructure Crisis? (Part I)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Cost Crisis? (Part II)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Trust Crisis? (Part III)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Financial Crisis? (Part IV)
Like Lawyers In Pompeii: Is Legal Ignoring The Coming AI Definition Crisis? (Part V)
Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes TechLaw Crossroads, a blog devoted to the examination of the tension between technology, the law, and the practice of law.
The post Anthropic’s Legal Plug In: Hate to Say We Told You So, But We Told You So appeared first on Above the Law.
