Key facts
- City law firms are increasingly considering adopting corporate-style models to secure outside capital.
- The need to invest in Artificial Intelligence is a key driver for this potential shift.
- Burford Capital, a legal finance firm, predicts this trend and is positioning itself as a strategic minority equity partner.
- Firms are seeking long-term, aligned minority investments rather than full private equity buyouts.
- A reluctance exists among top firms to be the first to make such a deal, but a "dam will burst" once it happens.
Top City law firms are increasingly considering adopting corporate-style models to secure outside capital, driven by the significant investment required for Artificial Intelligence, according to Burford Capital. Travis Lenkner, COO of the legal finance firm, stated that firms are exploring ways to take on external funding to remain competitive, a move away from their traditional limited liability partnership (LLP) structures.
Lenkner explained that the need for AI investment is forcing firms to consider new capital structures. He noted that while firms have sought external cash before, it was typically through bank debt, and many have been wary of public markets, with several law firms that listed in the late 2010s having since delisted or gone under. Burford Capital is positioning itself as a strategic minority equity partner for major firms, including those in the magic and silver circles, having recently made a minority investment in London-based Kindleworth.
Patrick Savage, VP at Burford Capital, emphasized that the firm seeks credible plans for AI spending to avoid open-ended investment. He added that managing partners recognize the changing landscape, and conversations are focused on implementation rather than whether the change will occur. However, there is a noted hesitation among firms to be the first to make such a deal, though Lenkner anticipates a significant shift once the first major firm commits.
According to LawtechUK, a record £188.8m was invested in legal technology in 2025. Firms like Kirkland & Ellis are setting aside substantial amounts, such as $500m, to build custom AI platforms. The traditional LLP model, where funds must come from profit pools, can slow decision-making for partners nearing retirement who may not benefit from long-term investments.