Anthropic’s new AI tools for the legal sector triggered a sharp sell-off in major legal data firms, sparking what observers call the ‘Claude Crash’ that weighed on Thomson Reuters, RELX (LexisNexis owner), and Wolters Kluwer.

Investors swung between panic and pragmatism, reassessing traditional software models as AI enhancements become more attractive.

In India, the Nifty IT index fell around 6% as Infosys, Wipro, Tata Consultancy Services, and Persistent Systems slid on fears that AI automation could dampen outsourcing demand.

Democratizing legal GenAI tools is welcomed by some, but strategy and delivery will be crucial in the weeks ahead.

Incumbents should lean on content and client relationships while adopting AI, law firms must balance efficiency with avoiding commoditization, and AI providers should emphasize accuracy, security, and trusted deployment to reshape legal services.

Experts note incumbents still hold advantages in proprietary datasets and domain expertise, which may slow immediate disruption.

Larger firms tend to favor established brands and customized solutions, while smaller firms may experiment with new AI approaches, with Freshfields highlighted as adopting a customized path.

Industry analyst Shelly Palmer invites engagement and promotes an upcoming AI update service that covers practical trends, regulatory shifts, and leadership-use cases.

Anthropic differentiates by building and tailoring its own models for specific industries, challenging both traditional legal info providers and other AI startups that rely on third-party models.

Its advantage lies in scale-built models that could shift competition among software firms and AI startups.

AI-driven enterprise software is expected to embed more deeply into core operations, pushing traditional software companies to adapt while navigating ethics and regulation.

Foundation-model firms may become platform vendors in legal tech, influencing how enterprises deploy automated workflows and move beyond model provision alone.