Big law firms explore AI tools and outside money as fees rise

In short: Big law firms are charging very high fees, and some are building AI software businesses and exploring outside investment to grow.

What's going on

Some large law firms are pushing prices higher, including hourly rates that can exceed $3,000 for certain specialist work, according to the Financial Times. At the same time, firms are looking for new ways to make money beyond traditional legal advice.

One example is UK law firm Freshfields. The firm has developed an AI legal tech unit and has considered spinning it off as a separate business. This unit would offer services similar to AI focused legal companies like Harvey and Legora. Reuters has reported valuations of about $15.5 billion for Harvey and $8.8 billion for Legora, which helps explain why law firms are interested in the space.

The article also describes a broader shift in how elite professional firms think about money and growth. Some law firms are increasingly considering third-party capital, meaning money from outside investors, to pay partners and fund expansion. This is a change for an industry that has often avoided openly chasing high valuations.

What to watch

If AI tools can handle routine legal work faster, clients like big banks may try to pay less for basic tasks. But law firms may respond by charging more for complex advice, and by selling their own AI tools, like a new product line inside a traditional service business.

Source: Financial Times