Is Anthropic’s new tool the death knell for AI legaltech? Not quite.

Rosie Bradbury

Sat, February 21, 2026 at 5:51 AM GMT+9 3 min read

(Jenna O’Malley/PitchBook News)

Anthropic‘s new Cowork tools, including one for legal work, sent software stocks plunging this month, but the large language model giant doesn’t seem to faze legal AI companies like Harvey and Legora, and their investors.

Harvey is in talks with Sequoia and General Catalyst to raise new funding at a $11 billion valuation, Forbes reported. Meanwhile, rival Legora is targeting a (mere) $6 billion valuation in a new financing, per Bloomberg.

Both companies operate as horizontal platforms, marketing their legal AI tools widely to traditional law firms, in-house counsel and non-legal professional services. As for Claude Legal, one of Anthropic’s new Cowork plug-ins, it offers capabilities for document review and case briefings.

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Anthropic’s wading into the legal field echoes what happened with AI coding assistants. If a large language model provider can offer the same applications without having to pay market rates for third-party API calls, it has an inherent advantage. But it would still have to cross the moats their specialized rivals have built.

“Most of [the legal AI startups] are building on Claude and ChatGPT, and it is expensive right now,” said Tamara Steffens, managing partner at Thomson Reuters Ventures. “But [cost] is coming down, and that’s where the talented engineers come in, who can take advantage of the least expensive model.”

AI application developers are also lowering their costs by diverting certain queries to cheaper models, among other methods. So, in the long term, Anthropic’s cost advantage may not be much of an advantage at all.

Moreover, is competing with these legal AI startups even what Anthropic wants? The LLM giant would effectively need to become an app maker—a completely different business specialization.

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Harvey and Legora both have teams of forward-deployed engineers developing custom products for law firm clients, a level of service that developers of more generalized language models would have to build up. They also both have established brands across the Am Law 100 firms and the elite UK firms known as the “Magic Circle.”

In fact, their true competitors are likely the legaltech startups developing highly targeted AI products for niche verticals. A horizontal solution like Harvey may be widely marketable, but a specialized startup can collect and leverage much more thorough legal data specific to a particular area of the law.

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“We think the deep domain expert solutions will win here, versus the horizontal platforms that end up being commoditized,” said Venrock partner Ethan Batraski. Venrock has made two legal AI bets: a service specifically for litigators called Syllo and EliotNest, a fraud-detection software startup.

The hype is certainly there, but so is the potential upside—legal services are a $1 trillion market.

“That’s the difference between you and me,” Harvey’s namesake character from the TV show “Suits” once said. “You wanna lose small; I wanna win big.”

This article originally appeared on PitchBook News

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