"Since the first lawyer ran a chatbot query, investors and analysts have asked how startups building tools for lawyers can survive in a world where general-purpose AI is "good enough" for basic legal work. There are whispers that junior lawyers are using Claude to draft memos and law firms are buying ChatGPT licenses. Those fears flared again last week, when OpenAI blogged about a set of internal tools - contract and sales helpers among them - that it uses to run its own business."
"To be sure, OpenAI hasn't released these tools publicly. It also has a vested interest in the success of legal tech. OpenAI was the first investor in Harvey, which now provides tools to nearly half of the 100 highest-grossing law firms in the country. But the damage was done. Headlines about OpenAI's internal "DocuGPT" coincided with a double-digit drop in DocuSign's stock, sending fresh jitters across the software industry."
Legal tech funding surged, with startups raising capital for contract review, Word-based drafting, and demand-letter automation. Companies are designing products to be resistant to competition from general-purpose AI by focusing on narrow domains and specialized use cases. Investors worry that models such as Claude and ChatGPT may perform basic legal tasks well enough to displace focused tools. OpenAI's internal tooling and its prior investments in legal tech amplified concerns about potential direct competition. Market reactions included a drop in related software stocks, and funding is concentrating on firms that can build defensible moats against broad AI services.
Read at Business Insider
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