The New Era For Legal Tech Begins

Microsoft’s entry into legal tech marks the beginning of a new era for the sector. It also marks a likely shift of user behaviour, with LLM-generated estimates suggesting between 18% and 25% of large firm lawyers leaving specialist tools for the new Legal Agent, or Claude for Word, once they are widely available.

For the inhouse and small-to-medium size firm segments the impact is even more likely to be felt strongly. See charts below. The blue one is via ChatGPT and the ochre one is Claude. They were asked to consider what % of lawyers would move away from specialised legal tech tools for doc review, if Legal Agent and Claude for Word were widely available.

What Does This Mean?

One thing that struck AL is that the results are not that different to the estimated impact of Claude – with the Word add-in and all possible tooling – that this site considered before.

Why is that? The reason is that the trigger and the pathway to move away from legal tech is often the same. If you are not committed to legal AI tools already, and the work you do is not always ‘bet the $1 billion company’ scale or risk level, then tools that easily live within the way you work already – and cost a lot less than some legal tech offerings – is really not a big step.

Most lawyers will have the Microsoft suite, including Copilot. If and when Legal Agent becomes universal – even if there are some small additional costs – the decision to use it, if it works well in the real world, will be easy to make.

So, small firms, medium size firms, those within inhouse teams that are mostly focused on day to day contract needs, and those ALSPs that have not yet fully brought in one of the legal AI platforms to work with, are those who will shift over. And some will be doing so already with regard to Claude.

Conversely – and AL has explored this in depth several times in relation to Claude – Big Law and large inhouse teams, especially those handling very high risk matters – will be both 1) already committed to a range of legal AI tools that provide doc review, whether as their main feature or as an additional feature, and 2) where cost of legal tech tools is not a big issue, especially when those tools come with a much broader offering that covers specialised workflows and curated legal data.

Hence the clear patterns we see above and have seen before in AL analyses.

Impact

Any legal tech tool that is focused primarily on doc review gets impacted here. While they will hold onto many of their Big Law customers, possibly by building a moat with new features, perhaps around data curation, their TAM will take a big hit.

Companies that have been hoping to expand revenue by selling into the smaller firm market, or inhouse world, will soon run up against the hard to argue point that Legal Agent and/or Claude for Word ‘is simpler and cheaper’ – at least for their needs.

This may affect the valuations of all legal tech companies. The specialist contract companies clearly get hit the most. But, even large platforms that venture into contract review will have some of their TAM cut away. CLM also gets hit hard.

As ever, and as AL has said before, the way ahead is therefore to innovate, to build new features that stand out and allow you to keep winning hearts and minds. Sitting still means having Microsoft and Anthropic eat away at your TAM. And they will likely only get better at doing it.

Conclusion

One last thing: this also impacts the legal market directly. If it becomes globally easier for all firms, and all clients, to speed through document review – a key pillar of the market’s activity – then how does this change the legal world as a whole?

For AL, it’s another nail in the billable hour coffin for routine law firm work, as selling your value by time alone will mean you are poorer. And for clients the realisation that you can use AI to really zoom through such work will become universal, which will help them, and change expectations.

Plus, how long before Google, or Meta, or someone else in the Big Tech world decides that after seeing all the exciting news about legal AI and the revenue they can make there – no doubt helped by spotting movie star adverts everywhere – that they should ‘do legal tech’ as well? All bets are off now.

Welcome to the new era of legal tech.

Richard Tromans, Founder, Artificial Lawyer, May 1st, 2026

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A Legal Tech Conference For All of Europe – Legal Innovators Europe – Paris – June 24 and 25.

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Legal Innovators California, the landmark West Coast legal tech event, will take place on June 10 and 11, in the heart of the Bay Area, the home to many of the world’s leading AI businesses – and plenty of legal tech pioneers as well! More information and tickets here.