Anthropic Claude’s Legal Plugin Poses AI Threat to Big Law’s Billable Hours

Anthropic is taking a page out of Elle Woods’ law book, turning to junior attorneys and asking, “What, like it’s hard?” 

The artificial intelligence company that created chatbot Claude has introduced a legal plugin for its Claude Cowork platform, the more user-friendly version of its popular AI coding platform, Code. The new plugin automates contract review, non-disclosure agreement triage, compliance workflows, legal briefings and templated responses, according to the company. (“All outputs should be reviewed by licensed attorneys,” it adds). 

Automation Anxiety  

In other words, it does what associate lawyers have done for decades, posing a threat to the billable-hour model underpinning Big Law. That further undermines hiring of new law school graduates, which has deteriorated since the turn of the century amid software-driven document analysis and predictive coding.

Corporate clients were already pushing for the end of billable hours, and at last year’s American Bar Association ethics conference, attendees predicted that AI advances could lead to the demise of the payment model. 

The platforms powering that trend include tech startups growing at a rapid clip. Harvey AI, a tool designed specifically for the legal industry, said in December that it had raised $160 million in a funding round led by Andreessen Horowitz, valuing it at $8 billion. Another AI startup looking to automate lawyers’ workloads, Legora, said in October it closed a $150 million funding round led by Bessemer Venture Partners at a $1.8 billion valuation. In May, Harvey — which was already integrated with OpenAI — announced it would add models from Anthropic (alongside Google) to its platform. Legora also relies primarily on an underlying model from Anthropic. 

Now that Anthropic itself, which tailors its model to the needs of specific industries such as finance and marketing, is joining the space, investors seem concerned:

• Shares of legal data service provider Thomson Reuters fell roughly 16% on Tuesday. Anthropic’s entry into the legal industry is “a sign of intensifying competition, and thus a potential negative,” Morgan Stanley analysts wrote. European legal publishing and LexisNexis parent company RELX, which provides AI tools for the legal sector, plunged 14%. 
• In the US, FactSet Research Systems, S&P Global and Accenture suffered, too, as worries spread. The Nasdaq Composite and S&P 500 ended the day down 1.4%  and 0.8%, respectively. “All the software players are clients of the hyperscalers,” Mike O’Rourke, chief market strategist at JonesTrading, told the Financial Times. “If the guys who are supposed to buy the computing power are being disrupted, that’s bad for the hyperscalers, too.” If the legal industry can be disrupted by Anthropic’s tool, he said, so can consulting and financial services. 

Pentagon Clash: Anthropic didn’t exactly get a warm welcome from the legal industry, but it’s at least better than the one the company is getting from the Defense Department. Last week, The Wall Street Journal reported that a $200 million Pentagon contract that Anthropic snagged last summer could be at risk because of the firm’s limits on how its technology can be used.