Is the sky falling? Seems like it, as Anthropic’s entry into the legal tech market is the “AI Tsunami” that seems to be freaking people out!

As reported by Legal IT Insider two days ago when the announcement occurred, “Generative AI vendor Anthropic has unveiled a legal plugin that helps customise its large language model Claude for legal tasks such as document review, sending public legal software stocks into an ensuing spin”.

What announcement was that? As reported by Bob Ambrogi in LawSites: “Two weeks after introducing a new general-purpose “agentic” work mode called Claude Cowork, Anthropic has now rolled out a legal plugin aimed squarely at the legal workflows of in-house counsel, including contract review, NDA triage, compliance checks, briefings and templated responses.”

How much of an “ensuing spin” did that cause? The Legal IT Insider article illustrated the extent of the “spin”, showing “significant drops in the share prices of Pearson, Relx (owner of LexisNexis), Thomson Reuters, Wolters Kluwer and Sage”, with “[s]hares in the London Stock Exchange Group fells by 8.5% amid fears of the impact of AI on data companies”.

As examples, the drops for Thomson Reuters Corp (drop of 18.78% to 88.56), Relx PLC (drop of 14.78% to 30.28) and Wolters Kluwer NV (drop 12.67% to 70.04) reported in the article illustrate significant drops in legal tech stocks

Sure, but markets overreact, right? Those stocks must have recovered at least some of the gains two days later, right?

Well…not necessarily.

Of the three stocks mentioned above, two of them – Relx PLC at 29.78 and Wolters Kluwer NV at 68.56 – had actually sunk lower than the figures reported by Legal IT Insider when I checked yesterday after the close of the market. Only Thomson Reuters Corp had rebounded a bit – to 93.56. Still, that represents a loss of 23.78 (20.27%) over five days. Ouch.

Here is the 5-day chart for Thomson Reuters Corp (with stock low for the 5 days shown):

Here is the 5-day chart for Relx PLC (with stock low for the 5 days shown):

Here is the 5-day chart for Wolters Kluwer NV (with stock low for the 5 days shown):

See the “cliff-like” fall post announcement (especially for the first two)? Pretty dramatic.

What about eDiscovery providers? Did Anthropic’s entry into the legal tech market affect them?

There aren’t too many eDiscovery providers that are publicly traded, so it’s hard to tell generally. However, one that is a publicly traded company is DISCO. What’s their performance over the past 5 days?

As you can see, they are down 18.97% – comparable with the other legal tech publicly traded companies. Not only that, but their 5-day low was at the end of the trading day yesterday, so they may have more room to fall. Will DISCO serve as a barometer for the prospects of other eDiscovery companies? We’ll see.

Why the big deal?

As Bob notes: “Anthropic open-sourced 11 ‘starter’ plugins and published them on GitHub as templates that companies can customize. They cover various tasks such as marketing, finance, customer support and sales — and among them is one for legal…As TechCrunch summarized it, the idea is to automate specialized departmental work – including legal document review – using agentic workflows, and to let enterprises customize plugins without heavy technical lift.”

The Github page adds that the legal plugin can connect to applications such as Slack, Box, Egnyte, Jira and Microsoft 365.

As Bob observes: “It may sound like just another feature drop in a crowded AI market. But for legal tech, it is landing more like a tsunami than a drop. For the first time, a foundation-model company is packaging a legal workflow product directly into its platform, rather than merely supplying an API to legal-tech vendors.”

With Anthropic’s entry into the legal tech market being presented as a “tsunami”, I decided to throw Bob’s article and the Legal IT Insider article into NotebookLM (side note: can you imagine how the market would have reacted if Google announced a legal tech plugin? 🤯) and generate an infographic. Here’s the result:

Is the sky actually falling or are people overreacting? And are there any booths left at Legalweek for Anthropic? (Asking for a friend)… 😉

It’s difficult to say after two days what the long-term impact of Anthropic’s entry into the legal tech market will be. But the short-term impact illustrates the “wild west” world we all live in today. It’s not a world for those who are “chicken”.

So, what do you think? Do you think Anthropic’s entry into the legal tech market will create market upheaval long-term? Please share any comments you might have or if you’d like to know more about a particular topic.

Image created using Microsoft Designer, using the term “chicken little (not the Disney licensed version) running around telling people the sky is falling”.

Disclaimer: The views represented herein are exclusively the views of the authors and speakers themselves, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.