The legal technology industry is experiencing unprecedented upheaval as artificial intelligence transforms how lawyers work, threatening the decades-long duopoly of LexisNexis and Thomson Reuters. The two giants, which have dominated legal research since the 1970s, are now facing fierce competition from AI-powered startups promising next-generation alternatives.
LexisNexis, founded in 1973, reported $1.2 billion in revenue for its legal segment in the first half of this year, with a 9% year-over-year increase driven by firms adopting “intelligent” new tools. Sean Fitzpatrick, CEO of LexisNexis’ North American group, confirmed that “law firms are spending more money on technology than they ever have.”
The catalyst for this disruption came in 2022 when OpenAI released GPT-3.5, a large language model capable of understanding and producing text. David Wong, Chief Product Officer at Thomson Reuters, immediately recognized the existential threat: “If Thomson Reuters doesn’t do something with this tech to either enhance or replace our products, others will, and we’ll be obsolete.”
Thomson Reuters responded aggressively, acquiring Casetext, an early mover in automating legal workflows, and doubling its applied research group to 260 people. The company’s legal segment has shown healthy growth, with organic revenue increasing 8% for two consecutive quarters.
Meanwhile, AI startup Harvey has emerged as a potential challenger to the “Wexis” duopoly. Backed by venture capital giants, Harvey raised $300 million in Series D funding in February, with LexisNexis parent company Relx participating through its Rev Ventures arm. Four months later, Relx increased its stake in another $300 million funding round, signaling a strategic “keep your friends close, frenemies closer” approach.
Harvey is building an operating system for law that integrates directly into existing platforms like iManage, LexisNexis, and ChatGPT. The startup is now piloting a feature allowing customers to search Lexis content directly within the Harvey interface. Winston Weinberg, Harvey’s co-founder, believes the market is expanding as law firms become more like tech companies.
Additionally, Vlex, a distant third competitor, has agreed to a $1 billion sale that would bundle its tools into a legal operations platform. Steve Hasker, Thomson Reuters CEO, acknowledged “a new era of competition” from “a bunch of startups” and newly energized incumbents, though he maintains Thomson Reuters has advantages through proprietary data and integrated solutions.
The fundamental question remains: will AI-powered startups shift spending away from incumbents, or will total legal tech budgets simply expand to accommodate both traditional and new solutions?
Key Quotes
Law firms are spending more money on technology than they ever have.
Sean Fitzpatrick, CEO of LexisNexis’ North American group, highlighted the unprecedented surge in legal technology spending, driven largely by AI adoption and the promise of intelligent automation tools.
If Thomson Reuters doesn’t do something with this tech to either enhance or replace our products, others will, and we’ll be obsolete.
David Wong, Chief Product Officer at Thomson Reuters, described the existential threat posed by large language models like GPT-3.5, which could potentially replicate the core functions of traditional legal research platforms.
What we’re seeing is a new era of competition.
Steve Hasker, Thomson Reuters CEO, acknowledged the changing competitive landscape during an earnings call, citing both AI-powered startups and newly energized incumbents as threats to the traditional duopoly.
To be successful, you’re not going to be able to differentiate on technology alone.
Sean Fitzpatrick of LexisNexis downplayed the threat from AI startups, suggesting that comprehensive databases, established citation norms, and institutional relationships provide durable competitive advantages beyond pure technology.
Our Take
The legal tech battle illustrates a critical inflection point in enterprise AI: when does innovation overcome institutional inertia? LexisNexis and Thomson Reuters have built moats through decades of data accumulation and integration into legal workflows—advantages that seemed insurmountable until large language models emerged.
What’s fascinating is the dual strategy from incumbents: aggressively building AI capabilities internally while investing in potential disruptors like Harvey. This suggests they recognize the technology shift is real but remain uncertain whether their legacy advantages will hold.
The “expanding pie” thesis from Harvey’s Winston Weinberg is particularly compelling. Rather than zero-sum competition, AI may fundamentally increase legal technology spending as firms build sophisticated tech stacks. This mirrors patterns in other industries where AI augments rather than replaces existing tools.
Ultimately, this battle will test whether proprietary data and institutional lock-in can withstand the democratizing force of foundation models trained on vast public datasets. The outcome will have implications far beyond legal tech.
Why This Matters
This story represents a pivotal moment in enterprise AI adoption, demonstrating how generative AI is disrupting even the most entrenched industry incumbents. The legal sector, traditionally conservative and resistant to change, is now experiencing rapid technological transformation that could reshape how legal work is performed.
The strategic response from LexisNexis and Thomson Reuters—investing heavily in AI capabilities while simultaneously backing potential disruptors like Harvey—illustrates a new playbook for legacy companies facing AI disruption. Rather than simply competing, they’re hedging their bets through strategic investments.
For the broader AI industry, this signals that enterprise AI applications are moving beyond experimentation into mission-critical workflows. Law firms’ willingness to significantly increase technology spending shows that AI tools are delivering tangible value, not just hype. The fact that citation-dependent legal work—where accuracy is paramount—is embracing AI suggests the technology has matured considerably.
This also highlights the “coopetition” dynamic emerging in AI, where traditional competitors become partners and investors in startups that could theoretically replace them. This trend will likely accelerate across other industries as incumbents navigate the AI transition.
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Source: https://www.businessinsider.com/lexisnexis-thomson-reuters-legal-tech-new-era-ai-competition-2025-8