Anthropic's new AI shakes up legal software industry

A fresh development from Anthropic is stirring discussions on whether AI could supplant long-established software in the legal industry.

The introduction of Anthropic's Cowork legal plugin led to a significant drop in the stocks of legal software firms.

Thomson Reuters and RLEX, known for their legal software offerings, saw their stock prices fall approximately 15% on Tuesday.

Though their value rebounded slightly on Wednesday, they have yet to return to favourable levels.

This decline stems from more than just one Claude plugin. It raises a fundamental question: Should AI models prove sufficient for lawyers, will there still be a need for conventional legal software?

One faction consists of the veteran companies in legal tech: Thomson Reuters and LexisNexis.

They insist legal professionals will continue to rely on their products since their AI capabilities are founded on secure collections of authenticated case law, statutes, and editorial resources, resulting in reduced hallucination issues and fewer disastrous errors.

Meanwhile, emerging startups like Harvey and Legora, along with foundational model firms, are betting that legal practitioners will embrace—or learn to mitigate—increased risk for the advantages of speed, adaptability, and tools resembling a "virtual assistant" more than a sophisticated search engine.