Thomson Reuters wants to be the AI platform for lawyers. Can it pass the ChatGPT test?

In the rapidly evolving landscape of legal technology, Thomson Reuters is striving to maintain its position as a leading provider of AI solutions for lawyers. The company, which boasts one of the largest repositories of legal data globally, is leveraging generative AI to develop innovative products like Westlaw Advantage and CoCounsel, aimed at automating various legal tasks. Despite initial investor enthusiasm earlier this year, Thomson Reuters is now encountering increased competition from new market entrants. Questions have emerged about whether CoCounsel can deliver superior legal insights compared to established AI models like ChatGPT. The company recently presented its quarterly results, but Wall Street's reaction was lukewarm, with shares dropping over 6%, marking a decline of more than 30% since mid-July. The Toronto-based firm noted a 9% organic revenue growth in its legal division, reaching $700 million, up from 8% in the first half of the year. AI features have reportedly fueled double-digit growth in its CoCounsel offerings. During an earnings call, CEO Steve Hasker highlighted the increasing role of virtual “agents” in alleviating legal workloads, asserting that the unique combination of its extensive law library and editorial expertise is difficult for competitors to replicate. As Thomson Reuters navigates this competitive landscape, it faces challenges from new players capitalizing on the generative AI boom. For instance, LexisNexis recently partnered with AI startup Harvey, integrating extensive legal data with advanced AI capabilities. Additionally, legal operations platform Clio has acquired vLex for $1 billion, signaling the aggressive push of competitors in this space. Hasker remains skeptical about the inflated valuations and growth claims of some AI startups, referring to them as “squishy.” He emphasized that the adoption of CoCounsel is outpacing that of rivals, positioning Thomson Reuters' competitive edge on its vast Westlaw data and human oversight, which are crucial in the high-stakes legal sector where accuracy is paramount. The company is now focusing on expanding its offerings beyond basic retrieval and summarization into more advanced generative services that enhance lawyers' workflows. However, the looming question for the legal tech industry is whether OpenAI will enter this market, potentially offering a dedicated app for law firms. Such a move could threaten existing customers who rely on OpenAI’s models. As legal professionals increasingly turn to tools like ChatGPT for assistance, the pressure mounts on Thomson Reuters to differentiate its specialized AI solutions. Hasker suggests that as customers become more discerning, the unique value of specialized legal AI may prevail against general-purpose models. Yet, he candidly acknowledged the uncertainty of the industry's future, stating, “Anyone who claims to have a clear vision of what will unfold in this environment is likely mistaken.”