Anthropic’s recent release of a software product tailored to in-house legal teams is a warning to legal tech vendors: If your product is little more than a wrapper for dominant AI models, you might be in trouble.
Since legal AI vendors typically market products built around foundation models—like Anthropic’s Claude—the question becomes how far Anthropic and other AI giants like OpenAI and
Anthropic PBC’s new legal-specific plugin for its popular Cowork tool can be used to review contracts, flag risks, and automate workflows for contract negotiation, compliance, and litigation.
The more players like Anthropic push their own legal tech, the theory goes, the more likely it will hurt business for smaller vendors offering similar products.
“You’re wondering whether these tools, like these OpenAI tools, become the only tool you need to use in a legal department to do a lot of different things,” said Mark Allen, director of legal operations and strategy for legal and compliance at Zillow Group Inc.
Such fears quickly spread to the stock market Tuesday, sparking the decline of not just legal tech stocks, but the broader software market.
The View From Legal Teams
Many large companies already have enterprise subscriptions of Claude, OpenAI’s GPT or Google’s Gemini, so legal teams can potentially save on cost by building around those tools, Allen said. It’s similar to how a company’s subscriptions for Google or Microsoft products don’t come out of the legal department’s tech budget, he said.
Existing legal software tools are more specialized, but they can also be restrictive in what they offer, Allen said. In some cases, they don’t offer much value beyond some legal prompts for large language models, he said.
“You pay a lot of money for glorified prompts, is kind of the internal lingo that we tend to talk about,” Allen said.
Sheena Ferrari, who formerly led legal operations at
“It still becomes a build-versus-buy situation in my mind, even if they have their own plugin and stuff because you’re doing it all yourself,” she said.
Ferrari said she’d have to hire someone to fully implement the plugin, which amounts to a hidden cost of using the tools.
Anthropic said its legal plugin can be integrated with Word, Slack, Box and other software, but Ferrari said legal-specific tech vendors have more and better integrations, which makes the software easier to use.
“Building those out took people millions of dollars in R&D,” she said.
Platforms Versus Tools
Some of the capabilities Anthropic rolled out this week are ahead of the capabilities that large legal departments currently have, said Jenn McCarron, former head of legal operations at Netflix. NDA triage, for example, allows legal departments to look across incoming non-disclosure agreements to flag potentially objectionable clauses. Other tech vendors offer that capability, but not many Fortune 500 companies are actually using it, said McCarron, who co-founded Contracts.ai.
Other capabilities offered by Anthropic, like playbook comparison and analysis tools, aren’t even offered by every contract tech vendor, McCarron said.
Still, McCarron said legal specific-AI vendors can differentiate themselves by offering broader solutions that connect more platforms and store intelligence from more data. Cowork helps boost the productivity of individual employees, but it doesn’t offer the same scale as enterprise software solutions, she said.
“It’s not a platform, and what a platform does is give you instant insights and action,” she said.
Leaders at Harvey, the legal tech startup investors value at $8 billion, have previously said they’re competing against improvements in AI model releases.
“Anthropic’s announcement does nothing to change our strategy or bullishness on this space, and Anthropic remains one of the models our customers benefit from using in Harvey,” Harvey CEO Winston Weinberg said in a statement.
Anthropic’s new additions don’t make it a direct competitor to Agiloft, said the contract tech maker’s chief product officer, Andy Wishart. But he expects the AI giant to build more in the legal space.
“Most product teams, and I’m thinking about the product team behind this set of features at Anthropic, will be thinking that this is V1,” Wishart said, referring to the first version. “And I anticipate that we will see more over time, and we may also see more over time from other providers like OpenAI or Microsoft.”
In his blog, Artificial Lawyer, legal tech strategist Richard Tromans said the Anthropic plugin may dismount basic contract review tech companies, that, for the most part, are not publicly-traded anyway.
“Anthropic’s move into legal tech is massive, in that we have been waiting for years for Big Tech to make such a move and now it’s happened,” Tromans wrote in his post. “But, its impact will not be that of a sledgehammer.”
Bloomberg Law sells legal research tools and software, including some that use GenAI, that perform tasks like contract management.
—With assistance from Alicia Tang and Yazhou Sun of Bloomberg News
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