AI startups court law students in fight for lawyer market

By Karen Sloan

April 7 (Reuters) - As artificial intelligence companies compete for U.S. legal industry customers, two leading legal AI startups are working to win over law students who will soon populate the country's law firms and corporate legal departments.

Sweden-based Legora said last month that it will supply free training and access to its AI legal research, drafting and review tools to nine law schools including Stanford, the University of Chicago and Northwestern. Harvey, based in San Francisco, launched a similar free subscription program last year that it since expanded to 17 U.S. law schools, including Penn, New York University, and UCLA.

Generative AI tools for attorneys have proliferated since Chat-GPT’s 2022 debut, creating a crowded marketplace for companies competing for lawyers’ dollars. According to some industry estimates, the legal AI market is on track to grow to $10 billion annually by 2030.

The technology has created an opportunity for new companies to compete alongside established research firms like LexisNexis and Westlaw that have long dominated the legal market. Westlaw's parent company Thomson Reuters also owns Reuters.

The startups—Harvey and Legora both launched less than four years ago—typically rely on large language models developed by companies such as OpenAI and Anthropic and layer on legal-specific systems to perform tasks such as research and drafting.

By contrast, legacy legal publishing companies maintain proprietary databases on cases and statutes that subscribers pay to access, alongside research and workflow tools that increasingly integrate AI. Those companies, which have longstanding relationships with U.S. law schools, are also giving schools and law students access to their AI tools.

Law school subscribers have had access to AI through LexisNexis' flagship platform, Lexis+ with Protégé, since 2023, the company said. LexisNexis also launched a “strategic alliance” with Harvey in June that gives Harvey users partial access to LexisNexis’ case-law database. Thomson Reuters in recent months expanded access to its AI enabled legal tools, including CoCounsel Legal, to its law school subscribers.

LexisNexis and Westlaw declined to disclose their law school pricing or what percentage of their revenue comes from law school users. Thomson Reuters said law schools receive a discounted rate, while LexisNexis said its operational costs outpace the revenue it generates from law schools.

Cultivating future lawyers

Legora and Harvey both said they hoped students who use their platforms for free in law school will eventually become part of their paying customer base.

“The more that they get to their firms and say, ‘Hey, you can actually do this in Harvey,’ that's great for us as a business,” said Harvey's chief operating officer Katie Burke.

Law school students and faculty have used the platform for drafting memos, prepping for final exams, and predicting what an opposing litigator might say in court, Burke said. Harvey, which hit an $11 billion valuation last week after raising $200 million in fresh capital, also uses feedback from law students to improve its products, she said.

Legora CEO Max Junestrand said the company is looking to partner with more law schools in the future. “If the students coming out of law schools are equipped with the skills to get the most out of AI, that will help everybody in the ecosystem—including us,” he said. Legora raised $550 million last month and is now valued at $5.55 billion.

Legora said it could not provide an estimate for the value of its law school subscriptions because its rates depend on a variety of factors. A Harvey spokesperson said its tool normally costs "a few hundred dollars per person per month on average."

University of Michigan law dean Neel Sukhatme, whose students have had free access to Harvey since August, said hands-on experience exposes students to both the benefits and pitfalls of AI—such as its potential to "hallucinate" false information. With practice, he said, "you intuitively know what they’re good at and what they’re not good at."

Expanding options

Other AI-enabled legal technology platforms are also partnering with law schools. Clio, a 18-year-old legal tech firm, said it is now being used, for free, at more than 200 law schools internationally. Clio wants law student users to stick with the platform after they graduate, said Philip Rosenthal, the company’s head of bar and academic partnerships, saying early familiarity benefits the students and their future firms and clients.

Smaller AI startups have inked similar deals. Contract drafting platform Spellbook is now used by students at 72 law schools, the company said. Charleston Law School is using transactions platform GenieAI at no cost, and CEO Rafie Faruq said the company is looking to partner with more law schools in the U.S. and U.K.

University of Miami law student Juan Sierra Ramirez, who founded a campus club for AI enthusiasts, said he and his classmates are more likely to stick with AI tools they use early in their studies, and they are eager for more options.

“Access matters, and students want it,” he said.

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