CLM is a Zombie, ALSPs are In Trouble and Outside Counsel Budgets Cut in Half: Episode 54, Wordsmith.ai CEO Ross McNairn
The understated founder of one of the hottest legal AI startups on the market makes bold predictions
You read that right. Half.
As in 50%.
Some distant time in the future? Nope.
End of 2027. Boom.
Hey there, I’m Zach Abramowitz and I’m Legally Disrupted, and I too got caught off guard by this prediction. You can see that shock on my face very clearly in this 30-second clip from Episode 54 of 🎙️Zach Abramowitz is Legally Disrupted with Wordsmith.ai CEO Ross McNairn.
Ross said two very important things.
The prediction itself: by end of 2027, a majority of departments will reduce outside spend budgets by 50%
His observation that some of his customers have already cut their spend by 40%
My reflex was to disagree with his conclusion. And, sure enough, when I put this out to the audience on X, many of them disagreed sharply.
Here is what is driving my thinking. Generally speaking, I think AI tends to create more, not less. My experience with AI is that it is simply a better way to work and was, frankly, long overdue. Because of AI, I get more done, I create better work product and I enjoy the process more. When people have better ways to work, it leads to greater economic output.
Furthermore, industry surveys like the 2026 ACC CLO Survey do not indicate that most departments are cutting outside spend to law firms (ALSPs like Axiom are another question).
But here’s the thing: Ross isn’t reading this off a McKinsey slide or a vibes-based LinkedIn post. He’s just talking to his customer base which includes more than 500 corporate legal departments. Perhaps, Ross and the Wordsmith team are simply living in the future. Meaning this isn’t a prediction so much as an observation.
There’s already some evidence that Ross is living in the future. Along with the team at Sandstone (I’m an investor) and Chamelio (just friends), Wordsmith.ai has pioneered an entire new category of software, which has been a huge hit with legal departments. I didn’t hear that from Ross or team Wordsmith. I heard it through the grapevine from multiple trusted contacts, especially in the UK and the EU, the place where the company first went to market. They kept telling me that GCs (not head of legal ops, innovation lawyers or something like that) were raving about Wordsmith. Those kinds of reviews were part of what got me so excited about Sandstone.
In his 2007 essay “The Only Thing That Matters, Marc Andreessen writes the following:
"In a great market—a market with lots of real potential customers—the market pulls product out of the startup."
Chamelio, Sandstone and Wordsmith all came to the market — which I would argue has now become a “great market” — around the same time. They arrived at the same product design because they were all listening to the market. This is what it looks like when the market pulled the product out of them. What’s new about this product category?
Designed specifically for legal departments
Covers all review and requests from the business, not just contract review
Intelligent routing of requests to the right in-house attorney along with all the context they will need to give an answer
Connective tissue: it’s connected with and embedded in all your current tech stack
It’s like a sidekick or a show producer for the entire department.
So why is anyone still buying clunky legacy technology like CLM? Well according to Ross, more legal departments are graveyarding decommissioning their CLM.
But CLM has one advantage: a recognizable name and an established product category. Gartner and Forrester (not to mention the decades old consultants and implementation partners) will continue to promote CLM because their job is to make things plain-ass dumb and simple for buyers. They’re not incentivized to tell you about new categories, especially when the legacy tech companies are willing to pay to play.
What this category lacks right now is the catchy name that catches on. If you’ve got any ideas for what this product category should be called or have experience using one of these solutions, please share in the comments.
You can watch the full conversation here right inside this newsletter.
Oh, and one more thing: make sure to stay disrupted, legally disrupted.
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It is a great opportunity for somebody to name the category. The problem with CLM as a name is that “management” is broad and vague, so that is wide open space. Whoever names the new category can position themselves against CLM and they will automatically get the benefits of being “not a CLM” and people will assume they solve all of shortcomings of traditional CLMs. I am not a legal tech founder but I know what I would name the new category! Maybe I’ll vibe code something so I can get in the arena!