Anyone can make sweets, but not everyone can make a Hershey bar.

The debate over legaltech startups offering nothing more than a “thin wrapper” around an LLM begs a deeper analysis of the value of a wrapper, particularly as open-source alternatives take root.

Let’s start with a Hershey bar. You pay for the chocolate, right? Maybe.

What is the value of the Hershey bar wrapper?

The wrapper is the packaging. You don’t eat it. It’s just a thin layer around the real product. But it also embodies what makes the Hershey bar commercially viable.

The wrapper represents the brand. You know the experience and quality will be consistent whether you buy it at a grocery store or at an airport while waiting for a delayed flight.

The wrapper represents hygiene. It communicates nutritional value and provides allergen information. It encompasses manufacturing standards, quality control, ingredient sourcing, working with reputable retailers, and compliance with thousands of regulations from the FDA and other bodies.

The Hershey bar wrapper also stands for accountability. If there is a problem or complaint, representatives behind the wrapper stand ready to address a minor issue or even initiate a recall if necessary.

It has tangible value too. You can hold the bottom of the wrapper and remove the top to eat the chocolate. It makes chocolate mobile. If the chocolate melts on a hot day, the wrapper may prevent a mess, and you can still enjoy it later when it cools. We take the wrapper for granted.

What about AI wrappers?

An “AI wrapper” is a common criticism of a startup that builds a product around an LLM. A Google exec recently suggested that businesses that are LLM wrappers have their “check engine light” on. If the central functionality and value are the language model itself, then there is some truth to the criticism. And the new legal industry open-source adds more competition.

There is a difference between functionality and a product. There is also a difference between a product and a strong commercial business, especially when attorneys must rely upon it.

When a legal AI startup launches, its wrapper can be flimsy or even unreliable at first. But if they are focused, the wrapper tells you what problem they are trying to solve as they strengthen the wrapper. Are they focused on a specific problem or category? Let’s use the Hershey’s wrapper as a guide.

Building a commercial-grade wrapper

In my view, Lexis and Westlaw have represented the benchmark for commercial wrappers in the legal industry. Remember the chatter when Thomson Reuters executives tried to pull the plug on 24/7 telephonic legal research support staffed by lawyers? Their commercial motions include training virtually all aspiring lawyers on their services in law school. If you ask an attorney if they prefer one research service or the other, they will almost universally tell you. This is part of their wrapper.

There are certainly other legal vendors with strong wrappers. Lawyers have long valued authority, trust, training, support, familiarity, and accountability. It is even more important now. Those values are gaps for foundational model providers trying to serve legal directly.

A commercial-grade wrapper represents answers to tough security and privacy issues. In legal AI, SOC 2, GDPR, and no-training commitments are table stakes. It means integration with other systems and a knowledgeable staff that can help advise on legal-specific workflows. A commercial wrapper represents solutions to market problems that individual customers would otherwise have to figure out on their own. The commercial-grade-wrapper handles distractions, speaks its customers’ language, and makes it easy to do business.

For those who want to make their own AI candy in-house, it’s prudent to think through the commercial-grade wrapper and identify any gaps in your plan. For example, do you have the expertise to handle data hygiene for an open-source solution on your own?

Another value that a wrapper provides is political air cover if something goes wrong.

Investors can’t be completely wrong

The large venture capital valuations of Harvey and Legora elicit emotional reactions. Let’s set those aside for a second and ask if there is value in the role they play. Are there gaps in what OpenAI or Anthropic can do for legal today without at least a partner? Is there value in the last mile? What about expertise in building legal workflows and understanding the unique challenges firms face, such as conflict checking and ethical walls?

Investors are betting on productization, workflow ownership, customer relationships, and adoption that drives repeat purchases. They want the opportunity to be part of the new operating system for legal work.

That is the part of the wrapper debate that gets lost. The LLM delivers value, but the model isn’t the entire value. Trust is important to buyers, and trust requires more than technical superiority. Trust is built through repetition, support, familiarity, community, and institutional confidence. Law school programs, user communities, training support, and customer success programs matter. Brand credibility and people relationships are often underestimated.

Another way to think of the commercial wrapper is that it surrounds the user, not the LLM. And if “AI chocolate” becomes cheap because of vibe coding and open-source, the wrapper may become more important, not less.

There is a gap to fill and a role to serve, even if we think venture capital valuations are irrational.

Horizontal versus deep vertical

One philosophy of business strategy is whether to provide standard, horizontal solutions that are simple and scalable but lack depth. The alternative is to provide depth and specialize in a narrow area. The legal industry is a vertical. In fact, the legal industry is a vertical of verticals, with deep specialization in various areas of law and client focus.

Vertical expertise provides value. For example, Wolters Kluwer serves its customers in healthcare, tax, accounting, financial services, and legal with a message about deep vertical expertise.

Verticals need specialized support. There is value in making systems usable, trusted, and supportable for law departments and law firms with unique needs.

Commercial-grade wrappers are thicker and more important within industry verticals.

Conclusion

When someone says a legal AI company is “just a wrapper,” I’d ask a follow-up question.  What is in the wrapper?

If it’s just a user interface and a few injected prompts, that may not be much.  But if the wrapper represents focus and is becoming commercial-grade, offering trust, security, workflow, and service & support, that’s a different story.

Anyone can make homemade AI-candy, and there will be situations that call for that. But there is value in licensing the AI equivalent of a Hershey bar that is trusted to purchase, carry, consume, share, and come back to again.

What’s in a wrapper? In legal AI, there is more than most realize.

AI was used in the creation of this article.

Ken Crutchfield, founder and CEO of Spring Forward Consulting, has over 40 years of experience in legal, tax and other industries. Throughout his career, he has focused on growth, innovation and business transformation. His consulting practice advises investors, legal tech startups, firms, and others.As a strategic thinker who understands markets and creating products to meet customer needs, he has worked in start-ups and large enterprises. He has served in General Management capacities in six businesses.

Ken has a pulse on the trends affecting the market. Whether it was the Internet way back in the 1980s or Generative AI, he understands technology and its impact on business.

Crutchfield started his career as an intern with LexisNexis and has worked at Thomson Reuters, Bloomberg, Dun & Bradstreet, and Wolters Kluwer. Ken has an MBA and holds a B.S. in Electrical Engineering from The Ohio State University.