According to Business Insider, Thomson Reuters reported quarterly results showing its legal unit grew organic revenue 9% to $700 million, with AI features driving double-digit growth across its CoCounsel products. Despite these positive numbers, the company’s shares fell more than 6% on Tuesday, continuing a brutal slide that’s seen the stock drop over 30% since mid-July. CEO Steve Hasker argued the company’s combination of Westlaw’s massive legal database and human editorial oversight creates a moat that’s “difficult, if not impossible, to replicate.” Meanwhile, competitors are circling – LexisNexis partnered with AI startup Harvey in June, and legal operations platform Clio acquired legal data specialist vLex for $1 billion in late August.
Sponsored content — provided for informational and promotional purposes.
The ChatGPT problem
Here’s the thing that’s keeping Thomson Reuters executives up at night: lawyers are already using ChatGPT. Either officially or unofficially, they’re turning to the free chatbot for legal research and drafting. And when you’re competing against “free,” you’d better be offering something dramatically better. The company’s betting that its curated legal data and human-in-the-loop validation will be that differentiator. But honestly? That’s a tough sell when general AI models keep getting better and cheaper.
The competition heats up
Thomson Reuters isn’t just fighting OpenAI. The legal tech space is getting crowded fast. LexisNexis teamed up with Harvey, bringing together another massive legal data trove with AI expertise. Clio’s billion-dollar vLex acquisition shows how valuable specialized legal data has become. And get this – OpenAI is actually an early investor in Harvey, which creates this weird situation where Thomson Reuters is both a customer and competitor of OpenAI. Talk about awkward.
The OpenAI wild card
The biggest fear hanging over the entire legal tech industry? What if OpenAI decides to build its own legal product? They’ve already shown demos of contract review tools using their own models. Now, they’d risk cannibalizing customers who pay to build on their platform – including Thomson Reuters itself, since CoCounsel uses OpenAI’s GPT models. But if the legal market is big enough, might they take that chance? Probably. And that uncertainty is exactly why investors are getting nervous about Thomson Reuters’ AI story.
Depth versus breadth
Hasker’s argument comes down to specialization. He believes that deep, accurate legal data combined with human validation will beat general-purpose AI for high-stakes legal work. And he’s got a point – when you’re dealing with litigation where errors can cost millions, you want certainty, not creativity. Westlaw processes over 300 million documents annually, with 85% of primary documents getting human editorial upgrades. That’s a massive undertaking that ChatGPT can’t match. But here’s the real question: will lawyers pay premium prices for that certainty when good-enough AI tools are available for pennies?
The brutal honesty
I have to give Hasker credit for one moment of refreshing honesty. When asked about the future of legal AI, he admitted: “Anyone who will tell you they know exactly what’s going to happen in this environment is probably slightly deluded.” That’s probably the most accurate statement in this whole debate. The legal AI landscape is changing so fast that even the players with the deepest pockets and best data can’t predict where this is headed. And that uncertainty is exactly why Thomson Reuters’ stock keeps getting hammered, despite what look like solid quarterly numbers on the surface.
