
Anthropic’s gamechanger in legal technology. In early February, Anthropic announced a new legal plug-in for its large language model (LLM) Claude. With this new plug-in, Claude’s CoWork AI agent can now perform complex, multi-step tasks including legal document review, non-disclosure agreement (NDA) triage, compliance tracking, and summarisation. This development sparked a significant sell-off in legal software as well as publisher and professional services stocks as it accelerated worries about AI disruption within the software space; AI agents are now increasingly positioned as “shared cognitive infrastructure” that can execute concrete operational tasks rather than chatbots that provide passive assistance. Shares of major industry players, including Thomson Reuters (TRI US), RELX (REL LN), and Wolters Kluwer (WKL NA) fell by over 10%.

Not an apocalypse. While Agentic AI disruption is a reality confronting the software industry (a trend we highlighted in “Global Technology: Segments Facing Disruption in the Age of AI”, published on 19 Aug 2025”), we believe the severity of the latest sell-off is overdone and reflects an overextension of logic. Markets are pricing a wholesale disruption of traditional SaaS models, but such a scenario is extreme at best. There is an unjustified extrapolation of selective pressure within parts of the enterprise software space (in this case legal technology) into a broad structural impairment of the technology software sector. In reality, AI disruption will likely happen in a much more selective and nuanced manner. We explain below how we think AI disruption will take place in both software and hardware, and our preferences within each of those spaces.
Software: Dispersion, not extinction. Within the software space, we continue to believe that pure-play SaaS with narrow product scope and niche use cases, limited moats, and weak integration will face competitive headwinds. AI-native solutions will compress pricing in commoditised workflow layers and reduce incremental seat expansion in certain verticals. Customer relationship management and creative software suites for example are being progressively disrupted. However, this represents selective earnings risk, not a systemic collapse of the software industry. Mission-critical, integrated enterprise platform systems remain deeply embedded. Integration complexity, governance requirements, compliance standards, security architecture, and brand equity collectively ensure that switching costs are still very high. AI is increasingly deployed as an embedded enhancement layer rather than a wholesale replacement.
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