City law firms considering corporate-style models amid capital crunch
Artificial intelligence investment may force top City firms to abandon the traditional limited liability partnership (LLP) mindset and behave like capital‑hungry corporates, a top legal finance firm has predicted.
Speaking to City PM, Burford Capital’s chief operating officer, Travis Lenkner, and vice president, Patrick Savage, said City law firms that would never traditionally sell a controlling stake are increasingly exploring ways to take on outside capital to fund their investment plans.
“One of the leading reasons we are seeing [the trigger for outside capital] is driven by AI and the sense that this is a moment where investment in technology is a must for law firms that want to remain competitive,” Lenkner said.
AI spend has skyrocketed as law firms fork out millions of pounds in order to stay competitive.
According to LawtechUK, a record £188.8m was invested in legal technology in 2025 alone. External providers such as Harvey AI or Legora AI aren’t cheap. And with competition heating up, some firms have decided to take more advanced routes, such as Kirkland & Ellis setting aside $500m to build its own custom AI platform.
However, one of the major challenges with the LLP model when investing for the future is that funds must come from the profit pool. For older partners nearing retirement, who may not benefit from these investments, this often leads to slower decision-making and less agility compared to traditional businesses.
There has been considerable discussion in the sector about external sources of capital, including private equity. However, unlike the accountancy sector, these investments have not flourished among top-tier firms and have been more prevalent in smaller companies.
Lenkner said elite City law firms are not looking at private equity but instead are seeking “a strategic minority investment by a capital provider that’s aligned with the goals for the business over the long term.”
Burford Capital, which suffered a significant setback in a US court earlier this year, causing its shares to drop by more than 50 per cent, reports that law firms are already approaching them about capital structures.
The listed legal financial firm is positioning itself as a strategic minority equity partner to major firms, including those in the so-called magic and silver circle. Last September it made a minority investment in London-based Kindleworth, a business it says is “reshaping the legal landscape”.
Everyone wants to be second
Savage said Burford seeks a detailed, credible plan rather than vague AI spend. Burford wants to understand exactly what the money is for to “avoid them coming back saying ‘we need another £100m'”, given AI can be an endless pit of investment, he added.
“It’s rare today for us to talk to the managing partner… that doesn’t realise the degree to which [things are] changing… these are conversations about how this will happen, and not… whether this will happen,” Lenkner added.
However, there’s a reluctance to be the first big firm to do a deal of this kind, he said.
“I also have no doubt that someone will be first… once we’re past that point… the dam will burst… you see a little bit of hesitation about being first, but everybody… is very interested in being second,” Lenkner added.
Law firms have not been shy about seeking external cash before, but the market has traditionally relied on bank debt to fund investments.
The legal sector has also been traditionally wary of the public markets. A wave of law firms opted to list on the London Stock Exchange in the late 2010s but several have since gone under or delisted.
Between 2015 and 2020, six law firms entered the market: DWF, Ince Group, Keystone, RBG Holdings, Gateley, and Knights. Now that number stands at three. This week, Gateley, the City’s first listed law firm, revealed it is set to lose its chief executive as well as axe dozens of jobs as it grapples with a swelling cost base and fears of a slowdown in client spending.
As the AI race intensifies, City law firms face a pivotal choice: embrace transformative investment or potentially risk losing their competitive edge. Whether any of the industry’s top names are willing to make the move is yet to be seen.
Eyes on the Law is a weekly column online and in the newspaper focused on the legal sector.