Freshfields weighs spin-out of legal AI unit worth ‘billions’, FT reports

Freshfields partners have discussed spinning out the firm’s in-house legal tech unit and bringing in outside investors, in a move that could create a business worth “billions”, according to the Financial Times.

Freshfields Lab is the firm’s internal legal tech arm, which develops tools for lawyers and clients. Senior partners considered options including external investment and a potential IPO, according to an internal email exchange seen by the FT.

The exchange was between global managing partner Alan Mason and Ethan Klingsberg, co-head of US corporate and M&A, who said the unit could be "worth billions".

The publication said Mason accidentally forwarded the thread to a large internal distribution list called “$Freshfields All” over the weekend. The email was recalled, but screenshots had already been taken.

‘Billions’ at stake

Freshfields Lab is co-headed by European partners Gerrit Beckhaus and Lukas Treichl and brings together lawyers and technology specialists to build bespoke legal tools.

The discussions come as law firms and investors continue to debate where external capital can best be deployed within legal, with spin-outs of tech-led businesses increasingly emerging as a model.

Freshfields would not be the first major firm to go down that route. Legacy Allen & Overy sold a majority stake in legal software business aosphere to private equity firm Inflexion in 2023 in a deal reportedly valuing it at more than £200 million.

Silicon Valley firm Wilson Sonsini sold legal tech subsidiary SixFifty last year at a reported valuation of up to $85 million, while City firm Travers Smith spun out its legal AI unit Jylo into a separate software business in 2024.

Freshfields has been ramping up its AI push over the past year. In August, it became a launch partner for Google’s suite of legal AI products, while earlier this year it announced a partnership with Anthropic to develop legal AI tools.