Artificial intelligence is touching every industry, but the legal world is quickly becoming the biggest winner. Jack Newton, the boss of the Canadian legal software giant Clio, believes law firms are the next big target for large language models. While Clio has been around for 18 years, its recent growth suggests he is right. The company just announced that its annual recurring revenue hit $500 million, a huge jump from the $200 million it reported just two years ago.
Newton says the reason is simple. AI is already great at writing code because it has billions of lines of existing software to learn from. Law is very similar. Law firms sit on massive piles of contracts, court filings, and legal agreements. This mountain of text is the perfect training ground for AI. Both tech experts and lawyers now see that AI can handle the boring, time-heavy parts of the job like drafting documents and reviewing long files.
The Fight for the Front Office
Clio is not the only one making bank in this space. Harvey, an AI startup built specifically for law firms, hit $190 million in revenue at the end of 2025. Its rival, Legora, reached $100 million in revenue just 18 months after it started. Even though some critics are looking closer at how these companies count their money, the trend is clear. AI makes legal work faster, and firms are happy to pay for that speed.
The competition is getting even more interesting because the big AI builders are joining the fray. Anthropic recently released a new set of tools specifically for lawyers called Claude for Legal. This puts startups in a tough spot. Companies like Harvey and Legora use Anthropic’s tech to run their own apps. Now, their main supplier is also their direct competitor.
Betting Big on the Future
Clio is ready for the fight. The company is currently valued at $5 billion after a massive $500 million funding round last November. They started out by helping lawyers track their time and send bills, but they are moving into much deeper waters. Last year, they spent $1 billion to buy a data platform called vLex. This move lets lawyers use Clio’s AI to do actual legal research instead of just managing their office.
This shift shows that AI is moving from a fun toy to a required tool for legal professionals. Newton believes we are just seeing the start of how much money and time this tech will save. As law firms continue to feed their private data into these models, the AI will only get better at predicting trial outcomes and spotting risks in contracts. For the legal tech industry, $500 million is just the beginning.