While artificial intelligence is currently being integrated across diverse sectors, from healthcare to customer support, no application has yet achieved the widespread popularity or financial success seen in code generation.
Jack Newton, co-founder and CEO of Clio, a Canadian company specializing in law firm management software, firmly believes that legal technology is poised to become the next major beneficiary of the large language model (LLM) era. While this perspective naturally aligns with Clio's 18-year history as a legal tech firm, the compelling financial data supporting this claim is difficult to overlook.
Clio experienced a significant acceleration in revenue growth following the integration of AI into its offerings in 2023. The company’s annual recurring revenue (ARR) surpassed $200 million by mid-2024, doubled that figure by late last year, and has just announced a new milestone, reaching $500 million in ARR.
“LLMs are so excellent for coding because all the existing code in the world is a huge repository to train on,” Newton stated, drawing a clear parallel. “The analogy to legal is really clear.”
Indeed, law firms possess extensive archives of contracts and agreements, which represent a rich and vast source of text-based data ideal for training advanced AI models.
“Tech companies and lawyers alike are recognizing what a huge amount of upside there is for legal with LLMs,” Newton added.
Clio is not alone in witnessing a substantial revenue surge driven by AI within the legal tech sector.
Harvey, a four-year-old company that provides LLM AI solutions for law firms, reportedly achieved an ARR of $190 million by the end of 2025, as shared by co-founder and CEO Winston Weinberg on LinkedIn. Meanwhile, Harvey’s primary competitor, Legora, announced last month that it reached $100 million in ARR a mere 18 months after its platform's launch.
Despite recent discussions within the legal tech community regarding the precise definition of ARR, the strategic application of AI to legal work remains evidently logical. LLMs offer the capability to automate some of the field's most labor-intensive tasks, such as document review and drafting.
It's not just legal tech companies that are recognizing AI's immense value for lawyers. Earlier this week, Anthropic unveiled a suite of new legal-specific features, expanding its Claude for Legal offering. This law-focused plug-in, which debuted earlier this year, had previously caused legal tech stocks to fluctuate.
Both Harvey and Legora rely on Claude as a foundational model, among others, creating an unusual dynamic where a key supplier has now also emerged as a direct competitor.
For Newton, these developments collectively signal the immense potential within the legal AI market. His optimism is well-founded, given that Canadian-based Clio was valued at $5 billion when it secured $500 million in Series G funding last November. The company offers law firms essential tools for time-tracking, invoicing, and payments. Its $1 billion acquisition of the data intelligence platform vLex last year further enhances its capabilities, now enabling lawyers to leverage Clio’s AI for comprehensive research.
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