On Feb. 3, Thomson Reuters TRI, RELX REL, and Wolters Kluwer’s WKL stocks fell 16%, 14%, and 13%, respectively, after Anthropic released a legal plug-in for its Claude product.
Why it matters: This is the latest turn in the artificial intelligence disruption narrative that’s weighed on these stocks since summer 2025. Claude’s legal plug-in is the first direct push into legal technology by a major large language model provider, broadening the disruption story previously driven by AI-native startups like Harvey.
- Claude’s legal plug-in is targeting in-house legal teams to aid with tasks like contract reviews, legal briefings, and templated responses. This represents the new AI assistant market. The risk is lower growth as users are able to do more in-house rather than outsource to legal technology providers.
- Importantly, the plug-in has nothing to do with legal research, which is the core value proposition and wide-moat foundation of Thomson and RELX’s legal businesses.
The bottom line: We maintain our wide moats and fair value estimates for all three firms. At current levels, all three stocks look significantly undervalued.
- We’re surprised by the stock reactions. A drawdown of this magnitude implies the market was still pricing in meaningful AI-driven upside in legal, which doesn’t make sense. These stocks have already derated sharply over the past year as this story turned from upside to overhang.
- Our fair value estimates assume generative AI is positive for legal growth at these companies. We don’t see this as a clear enough threat to change our estimates yet. Thomson is most at risk, with 45% of EBIT from legal, while RELX and Wolters only generate 10%-13% of EBIT from legal.
Coming up: Thomson will report earnings on Feb. 5, which should help illuminate the potential risk of this new threat.
