Senior Freshfields partners discussed spinning out the firm’s legaltech arm and opening it to external investors, according to an email exchange leaked to the Financial Times.
In the exchange, Ethan Klingsberg, Freshfields’ co-head of US corporate and M&A, and Alan Mason, the firm’s global managing partner, also considered an IPO for a spun-out Freshfields Lab, which develops AI-based tools for its lawyers and clients for tasks such as document analysis and due diligence.
Mason wrote that legaltech companies are valued at 25 to 40 times their revenue, the FT reported, with Klingsberg suggesting that Freshfields Lab, structured as a standalone entity, would “probably 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 swiftly recalled, though some recipients had already taken screenshots.
A Freshfields spokesperson declined to comment on the email exchange, though Klingsberg told the FT the discussions were “very early stage”. Freshfields Lab’s products could be sold to rival law firms and in-house legal departments, Klingsberg said, though a “big question” would be whether such products would be valuable for third parties once they were using data from other firms rather than Freshfields, he added.
The exchange comes as law firms move to capitalise on AI disruption to the legal profession through use of products from tech providers such as Legora and the development of their own tools in-house.
Freshfields, which earlier this year announced a partnership with Anthropic to develop legal AI tools, would by no means be the first major law firm to spin out its legaltech arm. Top London firm Travers Smith carved out its legal AI unit Jylo into a separate business in 2024, while the year before, legacy Allen & Overy sold a majority stake in software business aosphere to private equity firm Inflexion, in a deal reportedly valuing it at more than £200m.
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