While AI is increasingly used in various sectors like healthcare and customer support, its most prominent and profitable application has been code writing.
Jack Newton, CEO of Clio, a Canadian law firm management software company, believes legal tech will thrive in the age of large language models (LLMs). Although Clio is a legal tech company, the evidence supports his claim.
Clio experienced a surge in revenue growth after incorporating AI into its offerings in 2023. By mid-2024, the company hit $200 million in annual recurring revenue (ARR), doubling by the end of the same year, and recently announced it reached $500 million in ARR.
“LLMs excel at coding because of the vast amount of existing code available for training,” Newton explained. “The similarity to legal data is evident.”
Law firms possess extensive collections of contracts and agreements, providing a rich data source for AI models.
“Both tech companies and lawyers see the enormous potential in legal LLMs,” Newton added.
Clio isn’t the only legal tech company benefiting from AI-driven revenue growth. Harvey, a company offering LLM AI for law firms, achieved $190 million ARR by 2025, as shared by co-founder and CEO Winston Weinberg on LinkedIn. Harvey’s competitor, Legora, announced it reached $100 million in ARR just 18 months after launching its platform.
Despite recent scrutiny over ARR definitions within the legal tech community, the potential for applying AI in law is clear, given LLMs can automate time-consuming tasks like document review and drafting.
Legal tech companies aren’t the only ones recognizing AI’s potential for law. Earlier this week, Anthropic introduced new legal-focused features, expanding Claude for Legal — a plugin whose release earlier this year disrupted legal tech stocks.
Both Harvey and Legora use Claude among their core models, creating a challenging situation as a key supplier becomes a competitor.
For Newton, these developments signal the immense potential of the legal AI market. Clio, based in Canada, was valued at $5 billion during a $500 million Series G funding round last November. The company offers time-tracking, invoicing, and payment tools for law firms. Its $1 billion acquisition of data intelligence platform vLex last year enables lawyers to use Clio’s AI for research as well.
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