TL;DR

The market for legal AI is separating into two tiers. Bought software handles drafting and research well enough that everyone has it; a group of large firms is now spending heavily on proprietary tooling for the complex, sensitive work they actually compete on. Around a fifth of big corporate firms worldwide are already building or customising their own.

The spending is real

Jon Ballis, who chairs Kirkland & Ellis, gave the clearest statement of the logic when his firm committed $500mn (£394m) to its own platform in May: widely available tools are “raising the floor for everyone”, but “we don’t get hired for the floor”. Goodwin Procter is running at roughly $25mn (£20m) a year and has already shipped a venture financing tool.

The British entry is structured differently. Freshfields agreed in April to help Anthropic build specialist legal tooling — paying an undisclosed sum, adopting Claude across the firm, and taking early sight of what Anthropic is developing. Tools built under it could eventually be sold on. The firm also runs a 50-strong technology lab in Berlin and partners with Google Cloud, while continuing to buy from Harvey and Legora.

Alan Mason, Freshfields’ global managing partner, presents that as deliberate optionality rather than indecision: no commitment to any single model, and the ability to work in whichever platform a client prefers. Sebastian Lach of Hogan Lovells Cadwalader, which has built around ten tools through its Eltemate arm, puts the case more bluntly — premium advice needs tooling that cannot simply be purchased, because the firm’s knowhow has to be built into it.

What the vendors say

Neither major supplier sounds alarmed. Harvey’s co-founder Gabe Pereyra notes that firms broadly accept some infrastructure will always be bought in, though he has seen more of them asking how they differentiate since Kirkland’s announcement. Legora’s Max Junestrand argues the bigger variance is in usage: the gap between a novice and an expert user of existing software dwarfs the gap between products.

Brian Tang, executive director of LITE Lab at the University of Hong Kong, expects an outsourcing market to form beneath all this, serving smaller firms that want bespoke tooling without becoming software developers or carrying the security burden themselves.

Looking forward

For UK firms outside the elite, the uncomfortable implication is that bought tools now define the baseline rather than an advantage. That sharpens a year in which lawyers have reached 94% adoption while growing more worried about errors, and in which insolvency practitioners are asking for guidance nobody has issued. Legal technology worldwide is forecast by Grand View Research to be worth $70bn (£55bn) by 2033, against roughly $31bn (£24bn) this year. Most of that will be spent by firms buying, not building.