Last week, a generative AI acquisition in the legal technology space made news headlines. Thomson Reuters announced that it had entered into an agreement to acquire Casetext, a legal research software company, for the notable price of $650 million.

For the past decade, Casetext has provided a legal research platform grounded in AI technology. The company consistently developed innovative features that utilized AI technology to streamline legal research and brief creation, most recently releasing CoCounsel, a generative AI legal assistant tool powered by GPT-4, which is the same technology that powers ChatGPT Plus.

In mid-2022, Casetext was one of the first companies to begin working with Open AI, the company behind GPT-4. That partnership allowed Casetext to access GPT-4 months before its public release, and use it to develop CoCounsel, a cutting-edge legal assistant chatbot that included a number of built-in functionalities such as review and summarize documents, deposition preparation, database search, legal research memos, and contract analysis.

This Casetext acquisition is significant and is a sign of the tremendous impact that generative AI will have on the practice of law. According to Steve Hasker, president and CEO of Thomson Reuters, this acquisition will enable Thomson Reuters to quickly roll out generative AI capabilities to its customers and will change the workflows of legal professionals: “The acquisition of Casetext…will accelerate and expand our market potential for these offerings – revolutionizing the way professionals work, and the work they do.”

This acquisition comes on the tail of an announcement last month from another legal tech giant, LexisNexis, which rolled out the beta version of Lexis+ AI, the company’s generative AI platform that includes conversational search, document summarization, and intelligent legal drafting capabilities.

In response to Thomson Reuter’s acquisition announcement, LexisNexis VP of Corporate Development Bill Mills said, “We are leading the market in applying artificial intelligence to the legal industry…(and) have built the AI capabilities needed internally, which is allowing us to move at speed, without being slowed down by an acquisition process and subsequent integration. We are now rapidly introducing generative AI solutions across our product suite, helping customers to deliver better work product, faster than ever before, and to realize cost savings using secure tools they can trust.”

In other words, the gauntlet has been thrown and the legal generative AI race is on! However, the race to the finish line will undoubtedly be fraught with uncertainties and hurdles. The stakes are high, as are the benefits and risks.

One of the greatest challenges is the hallucination problem that occurs when generative AI tools provide categorically false information without batting a metaphorical eye. This issue has not yet been solved, and until an answer is discovered, the utility of generative AI in the legal context is limited to tasks that involve administrative and creative activities as opposed to more analytical and strategic functions.

Despite this temporary drawback, this technology has incredible potential and is improving at an exponential rate. In this rapidly evolving landscape, the true winners of the race will be the lawyers who keep up with the pace of change and take steps to learn about and successfully leverage AI’s benefits while taking advantage of the products released by legal tech companies that effectively mitigate its ethical and practical risks.

The Casetext acquisition, along with LexisNexis’ focused efforts to develop and quickly release its own generative AI platform, are strong indicators that this technology is here to stay and will re-shape law firms and the practice of law in the months and years to come, quite possibly more than any other technology that preceded it.

At this point, there’s no turning back. So buckle up, level up, and keep your eyes on the road ahead. While the path ahead may be uncertain, and you’ll encounter bumps along the way, it’s full speed ahead. All aboard the generative AI rocket ship: let’s see where it takes us!

Editor’s Note: This article is republished with permission of the author with first publication on Sui Generis – a New York Law Blog.