The legal research software market has been consolidating in recent years, with two large companies, Thomson Reuters and LexisNexis, dominating the market. This consolidation has raised concerns about the future of the market, as it could lead to higher prices and less innovation.

However, there are some factors that could prevent the legal research software market from becoming too consolidated. One factor is the rise of artificial intelligence (AI), which has the potential to disrupt the market by making it more affordable and accessible to smaller players. AI-powered legal research tools can automate many of the tasks that are currently done by humans, such as summarizing case law and finding relevant documents. This could make it easier for new startups to enter the market and compete with the established players.

In 2019, only 8% of respondents in the ABA Legal Technology Survey were using AI resources. However, in just a few years, AI has become a significant topic of discussion within the legal industry. AI-powered legal research platforms can help legal professionals work more efficiently. For instance, LexisNexis released Lexis+, an AI-backed legal research solution in 2020. This tool demonstrated how AI can help locate relevant information faster and more cost-effectively. 

It should however be mentioned that AI-powered legal platforms are constantly being bought out by big companies. Jean O’Grady, an Am Law 100 director, noted that Thomson Reuters and LexisNexis are the key custodians of legal research software today; having bought up startups such as Casetext and Ravel Law, respectively.

AI in legal technology has historically been more “extractive,” meaning it’s been generally used to crawl and pull information from a large database. However, recent developments in “generative” AI are beginning to not only pull information but also create new, original content. It’s worth noting that this aspect of generative AI can cause issues if left unchecked, as the technology can create – and has been known to do so – fictitious court rulings virtually indistinguishable from actual cases.

Another factor that could prevent the legal research market from becoming too consolidated is the changing legal needs of lawyers and law firms. Lawyers are increasingly using cloud-based legal research tools that allow them to access information from anywhere. This trend could make it more difficult for the established players to maintain their dominance, as they may not be able to keep up with the pace of innovation.

Overall, it is too early to say whether the legal research software market will become permanently consolidated. However, the rise of AI and the changing legal needs of lawyers could prevent the market from becoming too concentrated in the hands of a few players.

In addition to the factors mentioned above, there are a few other reasons why consolidation in the legal research software market may not be a permanent trend:

• The increasing importance of data analytics. Legal research software is becoming increasingly sophisticated, with many tools now offering data analytics features. This allows lawyers to analyze large amounts of data to identify trends and patterns. This data can be used to improve legal research and decision-making.

• The growing demand for customized legal research solutions. Law firms and legal departments are increasingly looking for customized legal research solutions that meet their specific needs. This could create opportunities for new startups to offer niche legal research products and services.

• The increasing focus on legal innovation. The legal industry is undergoing a period of rapid innovation, with new technologies being developed all the time. This could lead to the development of new legal research tools that are more affordable and accessible than those offered by the established players.

Overall, the legal research software market is still in a state of flux. It is possible that the market will become more consolidated in the future, but it may also become more fragmented, with a wider range of players offering a variety of products and services.