Last week, Anthropic released a new AI tool for automating legal work, precipitating a mass stock market selloff over fears that the tech could upend huge software customers in industries ranging from law to finance, Reuters reports — an urgent example of the power that AI currently has over financial markets and even the economy writ large.
The S&P 500 software and services index fell by nearly nine percent over five trading sessions, and is down over 20 percent from its October peak following the release of the AI tool. The Nasdaq 100 Index is similarly despondent, down by around 2.6 percent.
Thomson Reuters, Reuters’ parent company which operates a large legal division, saw its stock plunge by over 20 percent over five days. Both the SaaS heavyweight Salesforce and the global cloud-based cybersecurity firm Crowdstrike fell by around percent, but eased on Wednesday.
The stock rout is a sign of the tense fears over AI automation’s potential to disrupt entire industries and especially those focused on knowledge work — despite the tech’s still considerable shortcomings.
“We are not yet at the point where AI agents will destroy software companies, especially given concerns around security, data ownership and use,” Ben Barringer, head of technology research at Quilter Cheviot, told Reuters,
The buzz centers on a new plugin for Anthropic’s Claude Cowork AI agent, which was released last month. Simply titled “Legal,” Anthropic says it can speed up and even automate contract review, non-disclosure agreement triage, and compliance workflows — “all configurable to your organization’s playbook and risk tolerances.” Of course, none of what it produces should be construed as legal advice: “All outputs should be reviewed by licensed attorneys,” Anthropic cautions.
Nonetheless, this was taken as bad news for legal divisions everywhere, the shockwaves of which were felt in the larger market. Morgan Stanley analysts summarized the anxieties in a note to Thomson Reuters: “Anthropic launched new capabilities for its Cowork to the legal space, heightening competition,” they wrote. “We view this as a sign of intensifying competition, and thus a potential negative.”
There’s still considerable doubt over the efficacy of AI agents in the workplace. A MIT study found that companies which integrated AI into its workflows saw no meaningful increase in revenue, while analysts have observed that the tools haven’t led to a bump in productivity, either. Its introduction into the legal sphere has been particularly fraught, with numerous lawyers landing in hot water with a judge after their AI tools incorrectly cited sources and fabricated caselaw. Perhaps AI agents will find some general purpose use among white collar workers, but there’s a long way to go before they can have a sniff at highly specialized fields.
“It feels like an illogical leap to extrapolate Claude Cowork Plugins, or any similar personal productivity tools, to an expectation that every company will hereby write and maintain a bespoke product to replace every layer of mission-critical enterprise software they have ever deployed,” JP Morgan analyst Mark Murphy told Reuters.
Even so, it’s undeniable that AI has the market feeling pretty jumpy.
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