Despite fears that advanced tools from Anthropic and OpenAI would soon make legal apps like Harvey and Legora irrelevant, recent revenue milestones at those startups suggest they are doing just fine. But a fresh assault on their business is brewing: Some law firms now want to develop their own AI apps with frontier model companies like Anthropic or OpenAI rather than just purchase apps from smaller legal startups.
Kirkland & Ellis, the biggest law firm by gross revenue last year, said this week that it plans to spend $500 million to develop its own AI apps for a wide range of tasks while continuing “to spend on licences to use third parties’ AI tools,” the Financial Times reported Wednesday.
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Despite fears that advanced tools from Anthropic and OpenAI would soon make legal apps like Harvey and Legora irrelevant, recent revenue milestones at those startups suggest they are doing just fine. But a fresh assault on their business is brewing: Some law firms now want to develop their own AI apps with frontier model companies like Anthropic or OpenAI rather than just purchase apps from smaller legal startups.
Kirkland & Ellis, the biggest law firm by gross revenue last year, said this week that it plans to spend $500 million to develop its own AI apps for a wide range of tasks while continuing “to spend on licences to use third parties’ AI tools,” the Financial Times reported Wednesday.
London-based law firm Freshfields previously said it would help Anthropic, a client, develop a legal AI tool for its 4,000 attorneys in exchange for early access to the company’s models. Freshfields last year made a similar deal with Google to make legal AI products.
Such AI activity might seem out of left field for big law firms, which were once considered AI luddites. But many are already using AI from Harvey, Legora and others for due diligence, contract review and document drafting to expedite tedious tasks. And some of the most competitive law firms now appear less willing to use the same apps as their competitors.
That threat hasn’t seemed to slow Harvey and Legora, the two legal AI frontrunners. Harvey is generating roughly $300 million in annual recurring revenue, CEO Winston Weinberg said in a Reddit-moderated interview Wednesday, up almost 60% from January. Legora surpassed $100 million in ARR in April, 18 months after launching its product publicly. (Recurring revenue usually refers to the value of existing software subscriptions or contracts over the next 12 months.)
If the biggest law firms follow Kirkland’s lead and start developing their own AI apps, however, Harvey and Legora could lose some business. To be sure, a lot of smaller law firms and corporate legal departments won’t follow Kirkland’s lead because they don’t have hundreds of millions of dollars to spare.
Big Number
Anthropic’s latest funding round, which raised $65 billion at a $900 billion valuation before the investment, means that it’s hauled nearly three-quarters the cash of OpenAI—an impressive feat given the company is about five years younger.
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