Anthropic’s new tool is sparking debate about whether AI will replace the existing software that has dominated the legal field for years.
The release of Anthropic’s Cowork legal plugin caused legal software stocks to plummet. Shares in legal software makers Thomson Reuters and RLEX each fell about 15% on Tuesday. Both stocks recovered slightly on Wednesday, but remain in the red this week.
This slump isn’t really about one Claude plugin. This begs a deeper question. Once AI models are good enough for lawyers, who needs traditional legal software?
On one side are Thomson Reuters and LexisNexis, two companies that have dominated legal tech for decades. They argue that lawyers will continue to buy software tools because their AI capabilities are based on a walled garden of vetted case law, statutes, and editorial content. They claim it reduces the risk of hallucinations and fewer career-ending mistakes.
On the other side are fast-growing startups like Harvey and Legora, as well as basic model companies. They’re betting that lawyers will accept more risk, or learn how to deal with it, in exchange for speed, flexibility, and tools that feel closer to true “virtual associates” than smart search boxes.
Harvey, who was valued at $8 billion last year, said he views Anthropic as both a partner and a challenger, building on Anthropic’s foundational model such as OpenAI and Google. In an internal memo seen by Business Insider, Harvey CEO Winston Weinberg told employees the announcement was “no cause for concern.”
“We continue to have great respect for Anthropic as a partner and potential long-term competitor,” he wrote. “The only thing this will change for us is that we need to be more urgent about what makes Harvey unique in the market.”
This week’s market reaction suggests investors are starting to price in unpleasant possibilities. That means a new wave of competitors is finally entering a corner of the legal market that hasn’t faced a real challenger for decades.
Analysts at William Blair & Co. wrote in a note to clients Wednesday that Anthropic’s entry into the legal market raises “structural concerns” about relevance and “the moat of information service names under this new AI paradigm.”
“1,000 ships”
If you work in the legal field, it’s been difficult to open LinkedIn over the past 24 hours without running into a wall of negative feedback about Anthropic’s new plugin.
One employee at a legal tech startup described it to Business Insider as “Claude’s announcement of launching 1,000 ships.”
Zachary Amron, deputy general counsel at technology company Valon, said it’s only a matter of time before Anthropic ships more legal-specific tools. Anthropic has not publicly said whether it plans to move further into the legal field.
“It’s very graphic.”
Not everyone in legal tech is panicking. At GC AI, a startup that develops software for in-house legal teams rather than law firms, the mood was more of a shrug.
In an internal memo seen by Business Insider, founder Cecilia Giniti told employees that Anthropic’s legal plugins are “very graphic and do not pose a threat to us.”
Ziniti’s broader point was that while the underlying model may be powerful, it is still just infrastructure. “Claude gives people a great engine,” she wrote. “Our cars already have it. But does that mean suddenly everyone is going to build their own car in their garage? Change their own oil? No.”
This analogy reflects a familiar pattern in the technology industry. Amazon Web Services provides services similar to those sold by software companies, including many Software-as-a-Service companies, that run on the AWS cloud. Nevertheless, specialized software vendors are often still more popular. Trust and experience are still valuable.
Ginity didn’t seem concerned about the impact Anthropic would have on his business. She was less charitable about the results for traditional vendors, saying the declines in Thomson Reuters and RLEX made sense to her.
“They are building horses,” she wrote. “Today’s technology is the automobile.”
Others saw Antropic’s launch as more of a demand generator than a threat.
Logan Brown, a former coolie lawyer who now runs Soxton, a company that provides legal services to startups, said interest in her business spiked immediately after Anthropic’s legal plugin was dropped. She explained that LinkedIn has been flooded with messages from investors betting on their company’s survival. That’s because LinkedIn serves founders, not lawyers, who don’t want to gamble on legal documents, Brown said.
Some lawyers are stress-testing Anthropic’s Claude chatbot in their daily work.
Mr. Amron, Valon’s in-house counsel, said the company is already using Mr. Claude to assist with contract reviews. He vibecoded the skill of comparing versions of contracts, charting changes, and flagging whether each revision helped or hurt the company.
On Tuesday night, Amron asked Claude to demo a new legal plugin. We explained how to generate a mock contract and review it.
When the lawyer skimmed the underlying code, he noticed that the system was trying to retrieve information from Wikipedia. He wasn’t impressed.
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