"A new tool from Anthropic is stoking debate over whether AI will replace existing software that has dominated the legal sector for years. The release of Anthropic's Cowork legal plugin sparked a steep sell-off in legal software stocks. Shares of Thomson Reuters and RLEX, makers of legal software, dropped about 15% each on Tuesday. Both stocks recovered slightly on Wednesday, though they remain fervently in the red for the week."
"The slump isn't really about one Claude plugin. It pokes at a deeper question: If AI models become good enough for lawyers, will anyone need traditional legal software? On one side are the two companies that have ruled legal tech for decades: Thomson Reuters and LexisNexis. They argue that lawyers will keep buying their software tools because their AI features are grounded in a walled garden of vetted case law, statutes, and editorial content."
"On the other side are the fast-rising startups, such as Harvey and Legora, and foundation model companies. They're betting lawyers will accept - or learn to manage - more risk in exchange for speed, flexibility, and tools that feel closer to a true "virtual associate" than a smarter search box. This week's market reaction suggests investors are starting to price in an uncomfortable possibility: a new wave of competitors is finally pushing into a corner of the legal market."
Anthropic released a Cowork legal plugin that prompted steep sell-offs in legal-software stocks, with Thomson Reuters and RLEX dropping roughly 15–20% in recent days. The move raises the question of whether AI models can replace traditional legal software. Incumbent providers such as Thomson Reuters and LexisNexis stress their offerings rely on vetted case law, statutes, and editorial content to reduce hallucination risks. Startups like Harvey and Legora and foundation-model companies emphasize speed, flexibility, and virtual-associate-style tools, accepting more risk. Analysts say investors are starting to price a structural challenge to long-standing information-service moats.
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