Freshfields Weighs Spinning Off Its Legal AI Unit

Freshfields, one of the world's largest law firms, is reportedly considering turning its in-house legal technology unit into a separate company that could attract outside investment. The Financial Times first reported the idea on 14 October 2026, following a leaked internal email exchange. Discussions are still at an early stage, but the possibility raises a wider question for major law firms developing their own AI tools: should they use this technology only to serve clients, or could it become a business of its own?

What Was Reported

According to Legal Cheek, senior partners at Freshfields have discussed turning Freshfields Lab, the firm's in-house AI and legal technology division, into a separate company. Global managing partner Alan Mason reportedly outlined the proposal in an email to Ethan Klingsberg, co-head of US corporate and M&A. Mason later forwarded the email thread to the firm-wide "$Freshfields All" mailing list over a weekend.

The email was quickly recalled, but some recipients had already taken screenshots. Legal Cheek also reports that Mason had approached two Wall Street banks about the proposal. This detail comes from the publication's reporting and has not been confirmed in a public statement by Freshfields.

Non-Billable, citing the Financial Times, reports that the options under discussion included bringing in outside investors and a possible initial public offering (IPO). Freshfields Lab, co-headed by Gerrit Beckhaus and Lukas Treichl, develops specialised tools for lawyers and clients. According to both publications, Klingsberg suggested in the email exchange that a standalone company could be "worth billions."

Klingsberg also urged caution. According to PYMNTS, he said the discussions were still at an early stage and might not lead to any changes. He also questioned how valuable the AI tools would be to other businesses without access to Freshfields' data. This raises an important issue: much of what makes a law firm's technology useful may come from its own legal precedents, documents and internal workflows. A separate company would not automatically own that information or have permission to share it with competing firms.

Why the Valuation Discussion Is Happening Now

The discussion comes as independent legal AI companies attract high valuations. PYMNTS and Legal Cheek both report valuations of $15.5 billion for Harvey and $5.6 billion for Legora. Legal Cheek also notes that both companies have more than 1,000 customers and operate as independent technology businesses.

These valuations help explain why Freshfields Lab is being discussed as a business potentially "worth billions." But there is an important difference. Freshfields Lab was built to support the firm's own work, while companies like Harvey and Legora have spent years developing products for a wider market and selling them to multiple customers.

Other law firms have made money from their technology, but on a much smaller scale. According to Non-Billable, Allen & Overy sold a majority stake in its aosphere software business to Inflexion in 2023, reportedly valuing it at over £200 million. Wilson Sonsini sold SixFifty in 2025 at a reported valuation of up to $85 million, while Travers Smith spun out its legal AI unit, Jylo, in 2024. A multibillion-dollar valuation for Freshfields Lab would be far higher, so "worth billions" should be treated as a partner's opinion, not a confirmed valuation. Some comments on Legal Cheek also express scepticism, although reader opinions are not evidence.

The Wider Legal AI Picture

Freshfields has also been working with AI providers. According to Legal Cheek, the firm announced a multi-year partnership with Anthropic in April 2026 to introduce Claude across all 33 offices. Non-Billable reports that Freshfields became a launch partner for Google's legal AI products in August. Other law firms are taking different approaches. Legal Cheek reports that Kirkland & Ellis set aside $500 million in May to develop its own AI tools, including a platform that can switch between AI models. A&O Shearman plans to introduce agentic AI developed with Harvey. The publication also notes that former A&O global managing partner Wim Dejonghe co-founded an AI-powered firm focused on commercial contract review, challenging the traditional billable-hour model.

PYMNTS also highlights how major AI companies are expanding into legal technology. According to the report, OpenAI launched an AI foundation for law firms and legal tech companies in September 2026, with 26 ecosystem plugins linking ChatGPT to specialised legal tools. Anthropic added legal tools to Claude in May 2026, including more than 20 MCP connectors and 12 plugins. These developments show that AI providers are moving further into legal work just as law firms consider turning their own technology into commercial products.

The Cost Question Behind the Strategy

Another concern is how much firms will pay to use AI. A Law.com report by Dan Roe, published on 13 October 2026 and partly behind a paywall, says growing AI adoption is putting pressure on vendors' computing costs as law firms prepare for usage-based pricing. The available portion suggests most law firm AI leaders are not expecting major price increases. Instead, they are looking at ways to manage how lawyers use these tools. Firms also see slower AI adoption as a greater risk than rising costs. Ilona Logvinova, chief AI officer at Herbert Smith Freehills Kramer, said she "wouldn't say it's concerning," although there are "a number of unknowns."

This could also affect Freshfields, although the connection is not direct. If vendors move towards charging based on usage, firms that own their AI tools could retain more of the value they create, while those relying on outside providers face changing costs. This is an interpretation of the two reports, not a conclusion stated by either source.

What to Watch

Several questions remain unanswered. Freshfields has not confirmed any plans in the reports reviewed, and the story is based on leaked emails and Financial Times reporting. It is still unclear whether partners would support outside investment, how client confidentiality and data rights would be protected, or whether a separate company could sell its technology to competing law firms. For now, the discussions show how AI is changing the legal industry. For major law firms, it is no longer just about working more efficiently but also about whether their technology could become a business of its own.