"The catalyst for this carnage - which the Jefferies Group is calling the " SaaSpocalypse " - had nothing to do with the ongoing hallucination and slopification problems unleashed by artificial intelligence. We've had those for months now and they've only succeeded in inflating the tech bubble further. Instead, the precipitous decline arrived because Anthropic released a plugin. And threatened to take over legal tech in the process."
"The company behind Claude has been riding high recently off its Claude Code buzz. The company reportedly used their fancy coding agent to write up Claude Cowork, offering more user-friendly access to its agentic properties. Yesterday, they dropped a legal plugin for Cowork, promising to automate a number of legal workflows from contracts to briefings. It's open source and therefore configurable to meet whatever shop idiosyncrasies a firm wants to include."
"Therein lies the problem for every legal AI company that's been building on top of Anthropic all this time. For years, the legal tech playbook has been straightforward: take a foundation model from Anthropic or OpenAI, wrap it in legal-specific prompts and guardrails, add some integrations, slap a subscription fee on it, and call yourself a legal AI company. The assumption was that the model providers would stay in their lane, happy to collect API fees while legal tech startups captured enterprise value."
Major legal-tech-related stocks fell sharply after Anthropic released an open-source legal plugin for Claude Cowork. The plugin promises to automate workflows such as contracts and briefings and can be configured to match firm-specific practices. The release places legal workflow products directly within a foundation-model platform rather than merely offering an API to vendors. That shift undermines the prevailing legal-tech business model of building on top of foundation models with legal prompts, guardrails, integrations, and subscription pricing while relying on model providers to remain in an API-only role.
Read at Above the Law
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