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.