By Paul R. La Monica

Investors may be overreacting to Anthropic's launch of an artificial-intelligence tool for legal services, according to the CEO of LegalZoom.com, whose stock plunged nearly 20% in response to the news.

Several other legal-services stocks plummeted as well. Investors worried that a plug-in for Anthropic's Claude model would devastate their businesses.

LegalZoom CEO Jeff Stibel told Barron's in an interview Friday that he is "excited to see what Anthropic has done." There is no denying that AI will make legal work easier and faster, but there still needs to be a human element to make sure things are done right, he said.

"Our job is to make AI safe and get people to the finish line," Stibel said, adding that the market may be ignoring the fact that LegalZoom is already partnering with other AI firms, such as OpenAI and Perplexity. So rather than seeing AI as an enemy, Stibel thinks that software and other services companies like LegalZoom that embrace AI should survive and thrive.

"Software isn't dead. The playbook has changed," he said. "Most companies won't move fast enough. We are. We've been making this transformation for a couple of years."

David Wong, chief product officer at Thomson Reuters, made a similar point. Thomson Reuters was another stock that was hit hard earlier this week due to concerns about Claude's effect on its law-related businesses.

"The entrance of more AI players into professional-grade AI validates the market opportunity. AI will fundamentally transform how professionals work. But building AI that meets the demands of professional environments requires more than sophisticated models. It requires critical components that we've spent decades developing and that others simply don't have," Wong wrote in an email to Barron's.

Stibel noted that LegalZoom also plans to use AI to become more efficient and boost profit margins. LegalZoom is expected to generate net margins of just 16%, based on analyst estimates for 2026. That would be up slightly from levels in recent years, but it is relatively low for a digitally native services-software firm.

The low margins may be a reason why Wall Street remains lukewarm about LegalZoom's prospects. Five of the 10 analysts covering the stock have LegalZoom rated at Hold. One has it at Sell, while the remaining four suggest buying.

LegalZoom stock was up about 2% to near $8 in mid afternoon Friday. That compares with the price of $28 in its 2021 initial public offering.

Write to Paul R. La Monica at paul.lamonica@barrons.com

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February 06, 2026 15:46 ET (20:46 GMT)

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