ClearyX Eats Its Own
This isn’t just another law firm dipping its toes into legal tech; Cleary Gottlieb is essentially drinking its own milkshake with ClearyX. They make their bread and butter billing for legal tasks, yet they’ve spun off a subsidiary, ClearyX, to create tools that enable clients to handle those very same tasks on their own. And guess what? It’s faster and cheaper for the client. Normally, you’d expect firms to guard their revenue streams like a dragon guards its hoard, but Cleary Gottlieb is betting that the legal landscape is shifting seismically, and clinging to the old model is a losing game.
The firm doesn’t seem to think these are ordinary times, and they’re probably right. ClearyX started as a sort of internal ALSP, handling the grunt work clients grumble about paying top dollar for. But this month, they took it a step further, branding their AI software — CX+ — and slinging it directly to clients. You’ve got CX+Insights, supposed to help in-house teams untangle their contract portfolios, and CX+Transact, a supposed M&A diligence wizard. They’re touting massive savings — 40-60% time and cost reductions on over 150 deals. Sounds swell for the client, but for a firm still on the clock, that’s a whole lot of billable hours vanishing into the ether.
Is AI Really Stealing the Law Firm Pie?
The prevailing theory over at Cleary Gottlieb seems to be that AI is going to vacuum up massive chunks of billable legal work in the coming years, no matter what any firm does. So, instead of fighting a tidal wave, they’re trying to surf it, leveraging their Biglaw reputation to get in on the disruption. Carla Swansburg, the CEO of ClearyX, doesn’t shy away from the elephant in the room. When asked if this was cannibalizing the firm’s business, she didn’t hem and haw: “Yes, it is.” But then she pivots, suggesting it doesn’t matter if lawyers accept that this work is going to disappear anyway. It’s a bold strategy, akin to a blacksmith designing a more efficient hammer because they know a car factory is coming.
Remember when Claude dropped its legal plugin? The market did a brief, panicked flutter before everyone remembered that dedicated legal AI outfits understand the bizarre minutiae of legal practice far better than a general AI that might, you know, occasionally delete your entire database. But let’s be real: any legal process that seasoned lawyers can automate, a sufficiently trained language model eventually can too. The idea of specialized legal know-how being an impenetrable moat? That moat’s getting pretty shallow, and fast. But that doesn’t mean legal tech companies are defenseless.
Swansburg also points out that in-house teams lack the support infrastructure of law firms. They’re not typically buying a half-dozen disparate tools, wrestling with general AI platforms, and then figuring out four more specialized ones. And they certainly don’t have legions of engineers or knowledge workers on standby. While legal tech might be wrong about expertise being unlearnable by AI, they’re probably right that in-house legal departments aren’t equipped to handle the inevitable chaos when GPT hiccups or when a novel legal problem requires a bespoke, lawyers-eye solution. The real money, as always, isn’t just in the shiny new product; it’s in the painstaking support that keeps it running and fixes it when it breaks.
The numbers don’t lie. In-house teams are actively looking to slash outside counsel spending, even as demand for legal services climbs. It’s a simple equation: more work, less budget, which screams for technological solutions.
The Inevitable Shift: Why Cleary’s Move Might Be Smart
For all the chest-thumping from Biglaw about “embracing AI,” the tasks AI excels at are precisely the tasks clients have been trying to offload from outside counsel. Whatever the tech, clients will find a way to bring those expensive, automatable tasks in-house. Fighting this migration is a recipe for massive write-downs, irate clients, and fractured relationships. Cleary Gottlieb, by pushing ClearyX, isn’t just preparing for the inevitable migration of work; they’re finding a way to profit from it. They’re doubling down on the work that actually requires expensive outside counsel. Even if ClearyX’s client base isn’t directly tied to Cleary’s existing Biglaw clients, it offers a comforting bridge for clients who might eventually need high-level human legal intervention. It’s a calculated risk, and frankly, one of the few forward-thinking moves I’ve seen from a firm in years that isn’t just slapping an AI logo on a glorified search engine.
