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2026.10.01 | TB | Software | Wolters Kluwer Legal: AI Monetisation

原标题：Wolters Kluwer – Legal & Regulatory Division – AI Monetisation & Law Firm Lock-in

#software

Third Bridge · 2026-10-01

Analyst-led • 22 Sep 2026

Companies: TRI CA, WKL NL, MSFT US, REL GB

Sitaram Karanam (SK) Director, Product Management at Babel Street Inc

Saad Maqsood (SM) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

SM [00:00:02]: Welcome to Third Bridge's Interview entitled Wolters Kluwer – Legal & Regulatory Division – AI Monetisation & Law Firm Lock-in. I'm Saad, and today we have with us Sitaram Karanam, former Director of Product Management for the Legal & Regulatory division at Wolters Kluwer.

Just before we get started, could you please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

SK [00:00:43]: I agree.

SM [00:00:45]: Could you start us off with an introduction to your background, please?

SK [00:00:51]: Yes. I have over 20 years of experience at the intersection of legal, regulatory, compliance and legislative change management capabilities across a variety of institutions, most recently that include Wolters Kluwer for over nine years and Thomson Reuters for over 3.5 years. Prior to that, I was with IBM, particularly their regulatory compliance division called OpenPages. Before that, I did some work in HIPAA compliance world, if you will. I've always been in this space. Right now, I've left Wolters Kluwer for over a year now, a year ago, and I'm working for a company called Babel Street that is in a completely different area, which is identity risk intelligence, just for context.

Questions

00:02:21] How defensible is Wolters Kluwer's position in L&R [legal and regulatory] vs the incumbents that are already in the market and the newer SaaS players?

SK [00:02:40]: Let us start with the right now situation and perhaps some possibilities of how defensible or indefensible that situation is. As of now, as of today, I would say the position is fairly defensible in content and the installed base, but less defensible at the workflow or interface layer than it historically was. Let me characterise or explain that in a bit more detail. There are three major things that WK has, authoritative proprietary content, long-standing and defensible institutional relationships and products that are deeply embedded in professional workflows, particularly in the legal and regulatory side. That creates a high switching cost and very strong recurring revenue characteristics. Quite honestly, if you just take the market at large, Thomson Reuters has the same paradigm. In fact, they're even more deeply embedded into the workflow with their practical content and steps that every lawyer follows without fail. Historically, the database of the research platform, while a majority of it is made up of primary source content that is easily available, there is a lot of secondary content and treatise content and third-party content that they add in here, which gives Wolters Kluwer its own texture and differentiation in that research content, which makes it survive in a law firm for a long period of time.

Now Wolters Kluwer has not necessarily been sitting quiet on the workflow front and the Harveys and the Legoras that have created these custom workspaces that now law firms apparently cannot live without. They have invested or acquired a company called Libra, and they are trying to feed the WK legal content rolled out across 10 countries, so that workflow hybrid combination also exists for customers. Now that is taking a strong position against Harvey and Legora. Where is the moat holding vs where it is thinning? We don't have to look far within Wolters Kluwer to understand what that might look like. Wolters Kluwer has another division called as a Health division. Publicly, we can see that they are extremely under pressure. Now Health division for a very quick context is produces a lot of proprietary content for nurse practitioners. In other words, Wolters Kluwer hires lots and lots of doctors who write these practical steps for nurse practitioners to do a lot of the patient intake, diagnosis and in some cases, prescription as well. Now an AI company called OpenEvidence is completely putting a tremendous amount of pressure on this proprietary content despite the fact that it was so deeply embedded in a nurse workflow or it was so deeply embedded in a doctor's workflow.

What is to say that is not going to happen with some of these companies with regard to their content, you can see Legora and Harvey are going out and acquiring more content providers. They're probably trying to create their own versions of the content, which is hyper-specified to what a law firm truly cares about. That is a deep experience in a certain practice area. That internal knowledge of winning a history of cases is what a law firm's differentiation is. How much are you going to be able to stop these other vendors from creating proprietary and targeted content tailored for the internal knowledge base of a law firm. That is where I feel it's going to thin a little bit when these vendors start getting into those areas. It pushes Wolters Kluwer in uncomfortable areas where they have to truly understand how they can differentiate themselves. Maybe in areas that is really strong right now, for example, what is going to hold the moat for a little longer, proprietary or editorially enhanced content and trusted answers. A lot of it is still done by human-machine hybrid. Deep local jurisdictional experience. You're so strong in Poland. It's nearly impossible for someone to catch up with proprietary content. The relations I already talked about and procurement credibility I talked about, but that's hardly a strong moat.

Installed workflow products with meaningful switching costs and then legal spend data and other proprietary data sets, so things that show that here is how the whole market is spending and everything like that, so being a little bit of a thought leader there. Thinning areas for the moat are standalone AI features or generic drafting and summarisation or user interface differentiation. Those are all AI-native companies can build much faster. In fact, an AI-native law firm can build on their own. My point of view is the moat is moving downward in the stack. The interface itself becomes less defensible and trusted content data integrations will become more important, so they need to find differentiation there. If I were there, that's where I would be concentrating a lot of my time on. Then you can see even in the numbers in the stocks, there is imbalance, publicly available information. Information solutions, for L&R particularly, 75% is coming from there and 25% in software. The business is still quite vulnerable if they focus only on the content.

00:08:52] If Wolters Kluwer doesn't react fast enough, do you think the fate of its L&R division will be similar to that of the health division? Is that an apples-to-apples comparison?

SK [00:09:10]: It's a corollary comparison. Right now, the whole legal space is going through an upswing. Literally, law firms are enjoying blockbuster profits. Somehow contrary to anyone's expectations, they have become the biggest adopters of all things AI, in its full glory. Harvey and Legora have really led that wave in a way. They're spending more, and law firms historically have been rather overspending. They overspend on research platforms. They overspend on things because they're historically conservative and they want to be belt and suspenders with everything. Relative to their revenue, spending like a few extra million dollars was never an issue. On top of it, the wallet share has been grabbed by the AI vendors, too, so they're spending a lot of money. At some point, when things turn around and they are making hard choices, let's say the market moves into that level of AI adoption where people are going to turn around and say, I don't want to pay you so much for these kind of services because a lot of AI-native law firms are charging 1/10 the price. When are they going to start losing some of their proprietary advantage? When they start losing money and are forced to create their own advantages and cut costs, that's when we'll see a big bloodbath. That's when they will make hard choices. They are not there yet, and that might happen.

00:10:47] Wolters Kluwer's H1 2026 report noted that the L&R Information Solutions business contributed 75% to L&R revenue. What do you think the company should prioritise to ensure its defensibility?

SK [00:11:12]: Knowing everything that I know, I would highly recommend Wolters Kluwer, and this is not in their DNA at all. They would never do something like that. I would highly recommend that they actually start more and more experimentation-related work that finds niche use cases that they can deep dive in and deliver effectively. For example, we're not looking at software. Let's just look at the content assets, for example. As a company or as a legal and regulatory has a tremendous amount of presence in the security space, securities, meaning broker-dealers, investment advisers and anyone who's advising on those. It's kind of very connected to hedge funds and mergers and acquisitions. If that is an area where you're extremely strong in, then find a niche use case with more simulation variables that create a differentiation for you. Take your content and start building one specific use case for securities law, or find a super niche use case that is focused on plaintiffs, if you have a lot of case law, which is what you have in a lot of Europe and other regions, then double down and create like one plaintiff-related use case that you can build within the law firm, within their infrastructure. I would really push the company to do more work there and spin up a services arm to be able to do that. Why am I saying I will do that? Honestly, it's not an idea that I just came up with right now.

This is quite literally the wave of what I have seen Harvey and Legora go through. When I was in Wolters Kluwer, Harvey and Legora reached out to us and said, "We want to partner with you, give us access at least to your primary source content so we can train," and it was rejected ruthlessly. When I brought this example up saying that you're giving away our moat or whatever, but now see their journey. They became an LLM wrapper. They did an extraordinarily good go-to-market, and they built a custom solution for every single customer and dissuaded all their concerns that, no, no, this is going to leak information from within the law firm to something external. They went straight into the underbelly of their knowledge-based system. They built a system there, said that, look, no telemetry whatsoever, that's fine. It's your system. They spent a lot in driving people to these law firms continuously and improve on the model. Now they are getting into the point where they are earning some of the trust back and they're building bigger and bigger trust infrastructures within these law firms. This model is very similar to what OpenAI at one point, if you remember, OpenAI said we are starting a big consulting division for USD 10m annual revenue. We will come and build the infrastructure and modernise everything internally. They're doing that. I see every single legal AI unicorn has evolved in that direction.

They started as an LLM wrapper, then they built out like a strong go-to-market motion to go within the law firm and build something there. Once they gain the trust, now they are the custodians or the guardians of that infrastructure, and they're taking the same model to every other law firm and saying that, look, for USD 5m or USD 6m or USD 7m per year, I will modernise your entire AI stack. That's the wave I have been seeing, and I would push really hard in doing that, "Okay, I can't win every single law firm like Harvey and then become a USD 14bn company, but let me take like the top 30 securities law firms in the country who are trusting my content and who are powering 75% of my revenue. Let me sit down with them and find a use case and build it within the law firm for that." If I'm not doing that, I'm just a sitting duck at this point.

SM [00:15:16]: You mentioned that doing something like this is not in Wolters Kluwer's DNA. Is that something that you still stand by? Do you think it's unlikely that the company will go down this route?

SK [00:15:38]: They are very unlikely to do that because they've always been of a very staunch belief that by being a SaaS revenue-focused company where things come neatly out of the oven, in the Dutch oven, I have my neat margins and this and that even they obsess so much about buying a company that has strong P&L and buy those conservatively and attach them and grow. which is one of their blessings, because it's not like a big… There's no one major single point of failure per se. If there is a failure point, it's not catastrophic at any point in time, maybe EUR 100m, EUR 200m out of a EUR 6bn company, fine. You know what, they'll make some changes to get rid of that and go back and get this thing. That's really helped them over the years to grow steadily from a low price point to a very high price point. Now the world is changing. Again, Wolters Kluwer is the kind of company that will have to die with a thousand cuts, so that's still their advantage. They're definitely feeling the pressure right now because of the SaaS. I was just looking at the stock price right now, I was talking to you. Now they're still down at EUR 67. At one point, they were EUR 180, so this thing.

00:17:18] Do you think Wolters Kluwer's November 2025 acquisition of Libra Technology was a step in the right direction, at least strategically? Did it make sense for Wolters Kluwer to integrate its proprietary legal content into Libra's technology?

SK [00:17:41]: Yes. I think Libra was definitely a good step in the right direction. This is the Wolters Kluwer way, try to grow as much as you possibly can while protecting your revenue share and get incremental shares with your own homegrown version. They will execute fairly well with that aspect. I left by the time Libra was coming in, so when I read the news, I was like, yes, that makes sense. That's a good idea that they're doing this. They're going to be comparing it with Harvey, Legora and all the extremely strong capabilities that are there in the US, so the US market will be hard for them to conquer. LR or Legal & Regulatory is also a very European-centric business. Even if they grab their market share in Europe and double down on their relationships, they should be fine there.

00:18:43] How would you describe Wolters Kluwer's L&R revenue and strengths across the US vs Europe?

SK [00:18:56]: It's heavily weighted. I think publicly available, you have 75/25 for software vs the content. Again, I would not even say US. US has one big software component, the ELM business. Yes, so within that 25%, the ELM business has the majority of that software component. You can see, they're not even USD 1bn, I think about USD 900m according to the public documents. You can calculate. US has two groups actually. One is ELM for matter management and for legal bill management and that kind of thing, and the other software components, the legal and regulatory US is predominantly research with a very, very small focus on software. Other parts of the world are mostly research, some derivative softwares that are associated with it, but not a whole lot.

00:20:08] Wolters Kluwer's full-year 2025 results noted that L&R was split as 66% Europe, 31% North America, and 3% APAC and the rest of the world. Would you say that 31% in the US is primarily from L&R Information Solutions or L&R Software?

SK [00:20:36]: It's both. In the US, you have two divisions. You have Legal & Regulatory US, which is predominantly the legal research capability. They may call it software, but at the end of the day, the corollary product for that is Westlaw. Westlaw and Thomson Reuters. Here, it is called VitalLaw. I sat on top of that VitalLaw product. That was my main focus when I was there. Within the US, completely unrelated to my P&L was ELM or corporate legal, both of those work together. They make up the remainder of that 15% approximation that you're talking about. They make up almost 15% of the entire revenue is there. Almost 20% of that 25% software revenue is also there at the ELM, this thing. That's the other thing that they don't have. They haven't really made any inroads whatsoever in the corporate world. This is the other thing that I would have done. If I was involved in my portfolio, most of the revenue concentration was with the law firm market within the US, the Am Law 100, 200, they all use it. As I said, they need insurance. They need to make sure that our books, quote-unquote, were there on their – quote-unquote – shelf.

I would have been like, "Okay, if law is evolving in this direction, now is there an angle where corporate legal departments don't need to spend so much with outside counsel? Can they be self-sufficient in some niche workflows that we can roll out, which is very, very simple areas some kind of a corporate securities law or some kind of a tax-related law."

Corporate legal departments keep going out to tax law firms and pay millions of dollars to get advice. Can you run your own workflow, because that's another major practice area that was in my portfolio. I would have done a lot more there to try and get some penetration with corporate legal departments. Pick a niche area like a cryptocurrency tax management or some kind of a 1099 form management and build out a micro solution there, that allows corporate legal departments to save a lot of money, so many use cases that can be built out there, with how things are changing.

00:23:24] Wolters Kluwer's L&R Software division has Kleos, Legisway and Brightflag, which was acquired in 2025. It also has the ELM [enterprise legal management] solutions. Which of those products do you see as having the highest growth potential for the company in the US, Europe or globally?

SK [00:24:02]: Legisway is growing, but it's still fairly small. Kleos is closer to the operating system for a law firm, where you can do matters, billing, time workflow and a few things like that. Legisway and ELM are in service of the corporate legal department, so what they are trying to say predominantly in the market is, "Hey, you have access to these tools," which harmonise your legal operations. More importantly, you can manage your outside counsel more effectively, the contracts you have with them, the spend, the matters and any analytics that I can build on top of it. Along with that, I'm coming at you with all this matter management and spend trends in terms of how other companies are spending in terms of their legal bills. You have that industry-specific insight on where you can optimise your outside legal spend. In my view, where would I lean long term? The business is naturally going there. I would lean, as I said, strongly towards corporate legal and ELM has the largest strategic expansion opportunity. Legisway used to be in my world, but I would push it and move it towards ELM if it was left up to me. Kleos can still be a very good SaaS business in fragmented European markets, that would be more of a go-to-market problem.

I would say let's double down only in Poland and Czech Republic and then try to get Kleos the chosen system there by heavily driving your sales motion there by having lots of conversations, lots of roundtables and grab your wallet share that way, with Kleos. Those are the things that I would do.

SM [00:25:58]: To your point around Legisway, you said that you would be moving more towards ELM. Is that effectively integrating Legisway into Passport and TyMetrix, or is it just the make? What would be the approach here?

SK [00:26:13]: If they have an overall portfolio and in that portfolio stack, Legisway can help you with some level of a contract life cycle automation process and tie it very tightly with some differentiation in terms of matter management or even better legal spend management. I would connect it that way and then maybe over-index a little bit on helping procurement. Build some external connection point like that and then make it like a unique piece, almost like an OEM that sits in a larger outside counsel management, matter management, spend management capability. If people want to use it, they'll use it. If not, they'll just use the thousands of fantastic AI contract life cycle management solutions that exist today anyways, which also come with drafting and all the advanced capabilities. That's why that product is struggling. It's not really going anywhere right now.

00:27:25] Is it primarily VitalLaw that's driving growth in Wolters Kluwer's L&R Information Solutions?

SK [00:27:42]: Yes, pretty much, but it's not blockbuster growth or anything like that. The origin story for Legal & Regulatory, if you take all the past analyst submissions, it's always been a losing proposition for a number of years. Even though another previous CEO tried to convert them from print to digital, the wave itself created a tremendous amount of, I mean, again, slow adopters, whatever, whatever, they did not move the print properly into digital in a timely fashion, because of the sales motion, mismanagement, whatever. They were losing money for the longest period of time. Now that it is finally digitised and the digital version exists somewhere out there, it's growing at a modest percentage, but the growth is also extremely small, relative to other parts of Wolters Kluwer. Even with the AI and its wave and my first launch in AI also, I barely cracked an additional 1% to the existing 3%.

00:28:53] How are law firms bringing in AI-natives alongside VitalLaw? Were players such as Harvey and Legora already capturing some wallet share from the company, or was it being used in tandem?

SK [00:29:37]: I think for the most part, with the exception of… What do you call, the adoption curve has moved exponentially. When this whole thing started, initially, there was a lot of scepticism. They were not really interested. Then they started getting into the basic drafting summarisation, some doc analysis, some acceleration from a research perspective. Still, it's not at the point where it's truly making a massive difference. It's never been about that, a lawyer in their very core, they're not trying to create good prose. They're not trying to create good documents. A lot of it is a contact sport, especially you take like a national bet-the-company-lawyer or someone who's doing litigation in a deep way, it's about authority. It's about confidentiality. It's about provenance. It's about reliability. These firms have rapidly moved from a general intelligence layer to a professionally driven intelligence layer where all of the crystallised intelligence is coming out as an injunction or a submission or a court brief or something that they can go and implement. That's how they have changed the dynamics so rapidly. In some ways, we still exist or are relevant. When I say we, I mean Westlaw or VitalLaw or any of these others, because they still are the primary interface with the lawyer. They still are habituated to go and open up Practical Law or VitalLaw or Westlaw and start from there. That is always their starting point.

What they do afterwards is completely focused on deliberation, doing their depositions and whatnot. It's not entirely that Harvey will recreate the Wolters Kluwer content library or Thomson Reuters content library. It is if it gets to a point where these lawyers' behaviour is changing to the point where the Harvey becomes a starting point of their day. WK is fading off into the background as a potential upstream content or data provider and nothing more. That's when I think the dynamics will truly, truly, truly change.

00:32:13] How would you compare Wolters Kluwer's approach to those of Thomson Reuters, Westlaw and Relx's LexisNexis? Do you think those three players are in a similar position as companies such as Harvey and Legora, or do you think some of them are doing better or worse than the others in terms of reacting and adapting to AI?

SK [00:32:44]: They're all trying to do a few things in terms of adapting. Honestly, I think Thomson Reuters lost the plot the most compared to anyone else, because even before Harvey and Legora were on the map, they went and bought CoCounsel for USD 630m. They invested so much in their AI infrastructure. They tried to build a custom. They used all the money that they had to do a few things, but I don't think any of those panned out as a super successful thing that they can feel proud about. That's the unfortunate reality of that. Compared to all of these other guys, I find LexisNexis is the one that is the most practical in terms of its approach. They started with building their own proprietary language model, and they learned a tremendous amount from their customers in that process. Where LexisNexis becomes very formidable, in my opinion, is they do have their own AI capabilities that they have pushed, but they've also become the de facto solution for government sectors, education sectors, legal sector in terms of certain content that is used as the backbone. They've established phenomenal relationships with these AI vendors, and they're offering their capability directly, and they are really engaging with Claude and even ChatGPT directly with their legal plug-ins, and they are trying to be part of it.

Their Big four strategy is phenomenal. A lot of the big four implementations of AI that are being done by the Deloittes of the world, the PwC, the Ernst & Young, so on and so forth, the KPMG. They leverage LexisNexis, and then they also started diversifying deeper and deeper into other areas of AML, KYC and adversarial content and things that are so specific and niche, but done at an enterprise scale. That's where I feel like LexisNexis, even though they are losing the AI battle and not becoming the next Harvey or Legora, they have won in these areas, which keeps them extremely sticky and relevant in many, many, many institutions. Anyway, that's my overall take on that. Wolters Kluwer specifically, again, the US market, they're not that big. Even these guys have botched some of the legal research capabilities a little bit in the market. because they have what is that? The vLex that got acquired by Clio right now. They've created vLex by simply not doing translation and transfiltration properly of their content. VLex said like, "Hey, nobody is serving the Latin American market or even the APAC market," so they doubled down on getting a lot of content from these different countries, and they were barely a USD 10m company, and they sold vLex to Clio for USD 1.4bn. These guys may let it happen.

SM [00:36:14]: At least today or historically, has that content side or the proprietary content been the biggest moat for Wolters Kluwer?

SK [00:36:38]: Yes. That and the deep relations.

00:36:44] If Wolters Kluwer doesn't address the issues that we noted, how long might it take for the company's proprietary content moat to wither away or weaken? Is it happening today, or would it take 1-2 years? How quickly should Wolters Kluwer react?

SK [00:37:19]: This is where I default to it. Right now, it's not happening. It's not happening in a way, and they might get very lucky and people don't care about content and Harvey and Legoras are making so much money with just this AI native implementation and the whole market is making money, and the law firms continue to make more and more money because now there is more at stake with all the AI craziness. It's not even a problem. Law firms are growing like 20% YoY and growth that they have never had in years together, Wolters Kluwer can happily ride the wave. They're not going to be blown out just because of that. The tipping point might happen when some crash happens. The AI crash happens or some new vendor provides the same research content in a much more advantageous way for Harvey and Legora, therefore, putting pressure back on these guys and there are more and more fights for wallet share. Those can cause those issues as well. I use the same health example, right? OpenEvidence was not even there on the map two years ago. I look at them. They're making Wolters Kluwer sweat like anything. Health was one of those untouchable crown jewels of Wolters Kluwer that grew at a healthy 9% YoY for years together. It just seemed like, you know what, this is untouchable. They're suffering right now.

You don't know in which direction or where it might come. If I were to put my Kalshi bet on this one, I would say they probably have one year or two before they're going to feel a lot of pressure. They're already feeling some pressure. Don't get me wrong. They are. They are feeling pressure. There are some cancellations. They are trying to desperately understand how to protect the future. Publicly available information, and I'm not there anyways, you know that publicly available information does not show me a material dip in the revenue yet.

00:39:40] Based on Wolters Kluwer's H1 2026 results, L&R Information Solutions grew 5% organically, which is the same as the segment's 2025 growth. I appreciate that the print side is obviously declining. Do you think that 5% organic growth is already underwhelming, or is that a fair level for L&R Information Solutions?

SK [00:40:20]: That drive for 5% has been like you can put it on the Wolters Kluwer historical playbook. It's based on historical characteristics rather than some portfolio growth or some crazy positive growth. 5-6% growth overall is what the company wants to keep reporting at a minimum every single year to get the good juicy dividends that the shareholders get. Wolters Kluwer is a dividend stock, so yes, that's fine. They've managed to do that, and they are keeping it. Pricing is an important contributor because they can go back and claim that, look, there's a lot of AI costs, so I need to increase the price and which is definitely fuelling some of that 5%. That does not disclose the underlying issues overall. Anyway, there's this thing. I would be more concerned about a near-term risk for the revenue in terms of disintermediation of the user relationship. What I mean by that is it goes back to the same thing I mentioned earlier. The lawyer workflow is always investigate, research, analyse, conclude. Where does the investigation happen? Always related to the case file that is inside their knowledge base, and then they go back and look at 4-5 tabs, they open up, Thomson Reuters, Wolters Kluwer, LexisNexis, they go search for the law or the case law or the treatise and they finish the investigation.

Then they start their research and then they go analyse everything. They take printouts or they make notes of it offline, whatever, and then they conclude. If that user is no longer interested in opening up 15 tabs to do the research and simply ask a question to Harvey, or Claude or Legora and say, go search W.K., Thomson Reuters, all these different search engines, give me all the legal research that is out there and take this client context and paint a picture and create entity-resolved research graph for me. Why? Can you imagine what a different experience that is? Then from there, they go do what they do best, which is the contact sport of law, which is going and deliberating and presenting their arguments, counterarguments, introducing an injunction, whatever, cancelling a trial, settlement, so on and so forth, that the lawyer is going to still do all of that anyway. Where does that leave Wolters Kluwer? If Harvey is the gatekeeper of those dollars, what are you going to do? That is the biggest risk in my opinion.

00:43:35] In terms of Wolters Kluwer defending its proprietary content on the L&R Information Solutions side, you mentioned that the company should prioritise finding some niche use cases within its installed base and really embed itself. Do you think any further acquisitions would help? Should Wolters Kluwer stop acquiring and address that organically?

SK [00:44:17]: I think what they're doing right now is they have increased the amount of investment in terms of how they're going to market. Wolters Kluwer is one of those extraordinarily late adopters in terms of consolidating operations across the company. Every business was left alone to do its own thing and manage their P&L. As long as you are giving the corporate tribute of having at least a 5-10% growth, you are given a pat on the back and you're sent off to do your own thing for the next quarter or whatever the case might be. That is changing now because there are cracks everywhere and perhaps they're still able to somehow get to that 5% with some level of deeper orchestration across these different business units. You can see even in the H1 results, they have established a global revenue organisation where they're consolidating all the go-to-market capabilities, operations, AI-native go-to-market capabilities into one global division that reports to the CEO, which is absolutely new. They've never done this before. I think that's one way for them to preserve their revenue by having more in-depth contacts with these law firms, finding niche use cases and introduce new capabilities that is going to help them. They have great distribution, though. We have a very strong installed base, a strong brand, enterprise relationships and the ability to cross-sell. All of these are advantages, which a founder-led sales group may not be able to immediately implement.

You can see like Harvey and Legora also are raising, each of their rounds are USD 400m-500m because they've realised that to beat these incumbents and get deeper and deeper into the law firm, they need to spend on their go-to-market and relationships. That's where their money is going. Yes, they're responding with some changes, but it's still very much a race.

00:46:42] Do you think Wolters Kluwer can take a more collaborative approach – such as opening up the company's platform for integrations with players such as Harvey and Legora – that could give it more time to address the content side? Would integrating with Harvey and Legora require Wolters Kluwer to give up its proprietary data in the first place?

SK [00:47:07]: They are integrating, but only through MCP servers, right, which still allows them to not get so disintermediated, but that will change. I think even the MCP server is only controlling the secondary content, and shoots the user over to the other tab and use that not inside the Harvey platform, but inside this thing, inside the VitalLaw platform, if you will. Primary source content, they're passing on directly to Harvey and Legora. This allows Harvey and Legora to say that they have an integration with Wolters Kluwer and Thomson Reuters and posture themselves as the consolidation of everything for the law firm. It allows Wolters Kluwer to also not be the complicated company that does not work with the ecosystem. Yes, it's a fine balance. They're doing some stuff there already, but I don't think it materially created a lot of revenue for them. Mainly because in the US, at least, it's a saturated business, so you've already penetrated the large law firms. The only other green spaces would be small and medium. They're basically trying to survive and protect the revenue without losing their position.

Now the story might be a little bit different in Europe, and you can see Europe is being a little bit more bold about rolling out Libra compared to the US. They are doubling down and saying that, "Hey, we are the biggest game in town when it comes to research, so use our software." They may be able to do a little bit better in Europe with that strategy.

00:48:58] Is there a case for Wolters Kluwer to leverage more of its European expertise and transfer its approach there to the US, or are they just two completely different markets, with the US being more competitive? Do you think the company can genuinely improve its US positioning to how it's positioned in Europe?

SK [00:49:33]: No, I think they're definitely much more strongly positioned to improve the Europe position, not the US position. US needs a lot of investment, which I don't think is necessarily a focal point. It's a tough balance. They like the revenue, obviously, but if there's a lot of soul searching happening, it's in the US.

00:50:18] I appreciate Harvey and Legora are the core examples that we've been using. Would you highlight any other players that are making waves, or do you think those two are by far ahead of the pack of the AI-native start-ups that have come about in the last few years?

SK [00:50:40]: I think they are ahead of the pack, Harvey and Legora. It's funny, even those guys, the way they got so embedded into it is they went to the Am Law 200, and they spoke with literally every single partner by paying them USD 1,000 an hour for their fee and bought them lunch and went as a team of three or four and then took all the notes that they possibly can and went and built for that use case. Even the staunch sceptics are now converted. They really like Harvey and Legora. Even though Claude has its own legal plug-in and everything like that, it's not really shaking these guys in any shape or fashion. The only thing that can put Harvey, the competitor for Harvey and Legora is at some point when these law firms learn so much about what is involved or what this implementation entails that they just build their own internal infrastructure. Cooley or somebody has pledged about USD 500m over the next 10 years to build out their internal AI infrastructure on their own because that's their secret sauce. When they start using that and they start moving more towards small language models or open and weight models and not relying on frontier models, and their security concerns are fully addressed, then why would they spend on Harvey and Legora? You know what I mean?

They're still adding some value, but I go back to this really stupid analogy. It's funny and stupid in my mind anyway. I'd like to simplify things a little bit. If today, somebody comes and tells me that I am a Microsoft-native law firm, I'm going to laugh them out of the building. What are you talking about? Everyone uses Microsoft. Now if somebody comes and says, today, I'm an AI-native law firm, I'll be like, cool, you're on the wave of adopting it. Five years later, if someone says, I'm an AI-native law firm, I'll be like, what are you talking about? Everyone is using AI, so what's so special in that comment? I think a lot of this is in the time and space that we are in right now. When these law firms decide to become more self-sufficient and adopt their own AI and all of that. This can have an impact of some shape or fashion for these LLM wrapper companies and they default to a technology that comes directly from either Anthropic or ChatGPT or maybe even Microsoft, which is good enough for them to run their own native stack, and they don't need to pay for a vendor anymore for something like that.

00:53:35] Is there anything else that you'd like to discuss around Wolters Kluwer? Do you have any concluding remarks?

SK [00:54:04]: I love talking about this stuff, and I think I covered in a fair amount of detail. I hope I answered all your questions and things that you would need to do. The only thing that I would say is whatever we have discussed and we are seeing can evolve. One month later, it might be evolving further and further and further. I would highly encourage going back somewhere, make a note of the absolute first principles of a law firm. What does a law firm care about? They go through that IRAC framework. They need to go to the first principles of protecting their most important asset. Their most important asset is their case law, the history of winning 20 cases in tax litigation or the history of winning 40 cases in something related to workplace harassment. In that process, they don't only win a case by the letter of the law. They win the relationships. They win the process of litigating, they win the process of deposition. They win the process of going and presenting their arguments. They win the process of closing arguments. There is so much proprietary knowledge they get as part of it. That all sits inside the law firm. That's what they keep tapping into to get the next business and the next business and the next business. That's what creates the flywheel.

The law firm is always going to think about protecting that. All these other vendors are helping them move and multiply or become a force multiplier for their business growth. They're not essentially married to one vendor or anything like that. They'll switch out and go somewhere else as the market moves.

SM [00:55:59]: I think that would be a good note to end on. Let me close by saying thank you so, so much for your time today. Honestly, that was a great discussion and incredibly helpful. A pleasure speaking with you. Hope you enjoyed it, too.

SK [00:56:15]: Yes. Likewise. I appreciate it. Take care. Bye-bye.

SM [00:56:17]: Not a problem. Take care. Bye-bye.

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