AI is now being applied to everything from healthcare to customer support, but no use case is yet as popular or profitable as writing code.
Jack Newton, co-founder and CEO of Clio, a Canadian law firm management software company, believes legal tech is poised to be the next big winner of the LLM era. It’s a self-serving argument — 18-year-old Clio is a legal tech company — but the numbers are hard to ignore.
Clio saw a sharp acceleration in revenue growth after integrating AI into its services in 2023. The company announced annual recurring revenue (ARR) of more than $200 million in mid-2024 and doubled that number to $500 million in ARR by the end of last year.
“LLMs are great for coding because all the existing code in the world is a huge repository to train on,” Newton says. “The similarities with the law are very clear.”
Law firms maintain large corpora of contracts and agreements, providing a rich foundation of text-based data for AI models to learn from.
“Technology companies and lawyers alike are recognizing the tremendous benefits of an LLM in law practice,” Newton said.
Clio isn’t the only legal tech company seeing significant revenue growth from AI.
Harvey, a four-year-old LLM AI provider for law firms, is on track to reach $190 million in ARR by the end of 2025, co-founder and CEO Winston Weinberg shared on LinkedIn. Harvey’s main rival, Legora, announced last month that it had reached $100 million in ARR just 18 months after launching its platform.
nevertheless The definition of ARR by the legal tech community has recently come under scrutiny, and the opportunity to apply AI to law clearly makes sense. Because LLM can automate some of the most time-consuming tasks in the field, such as document reviews and drafts.
Legal tech companies aren’t the only ones recognizing how valuable AI can be for lawyers. Earlier this week, Anthropic announced a new suite of law-specific features and expanded Claude for Legal. The plugin debuted earlier this year and caused a sell-off in legal tech stocks.
Both Harvey and Legora rely on Claude, among other things, as a core model, which makes the relationship uncomfortable. Key suppliers are now also competitors.
For Newton, these are all signs of the enormous potential of the legal AI market. He has reason to be optimistic. Canada-based Clio was valued at $5 billion when it raised $500 million in Series G funding last November. The company provides law firms with time tracking, billing, and payment tools. Last year, the company acquired data intelligence platform vLex for $1 billion, giving lawyers access to Clio’s AI in their investigations.
If you buy through links in our articles, we may earn a small commission. This does not affect editorial independence.
