Freshfields Partners Secretly Plot AI Unit Spinoff Worth 'Billions' — Then Accidentally Email the Whole Firm

Senior partners at elite law firm Freshfields were caught planning a high-stakes spinoff of their in-house AI division, Freshfields Lab, after global managing partner Alan Mason accidentally forwarded a private email thread to the firm's entire internal distribution list — a group named '$Freshfields All.' Screenshots of the exchange spread before the email could be recalled, exposing strategic discussions that were clearly not meant for general consumption.

The emails show Mason telling US M&A co-head Ethan Klingsberg that he was putting serious work into converting 'our AI business' into a separate legal entity capable of attracting external investors or even going public via an IPO. Mason noted that two unnamed Wall Street banks had already reached out about the opportunity. He pointed to legal tech valuation multiples of 25 to 40 times revenues as the financial logic — a landscape where rivals Harvey and Legora are currently valued at $15.5 billion and $5.6 billion respectively. Klingsberg replied that such a standalone entity would be 'probably worth billions,' and both men agreed the firm stood to 'make a lot of money.'

Freshfields Lab develops AI-powered tools for internal lawyers and external clients, covering document analysis, litigation management, and due diligence workflows. The firm already struck a deal with Anthropic earlier this year to build specialist legal AI that could eventually be licensed to rival law firms. Klingsberg's vision goes further: selling the tools to corporate legal departments and competing firms, with one FTSE 100 company's large legal department cited as an ideal early customer. He also claimed Freshfields' own tools outperform Harvey and Legora.

Klingsberg cited an unnamed large US tech company's model — structuring an AI business unit to allow a future tax-free spinoff while generating cash and keeping employees incentivized — as a potential blueprint. The plan would require first placing AI operations into a standalone legal entity structured for outside investment, then winning marquee corporate clients to establish third-party credibility. On investor selection, Klingsberg was explicit: the firm would target 'sophisticated investors respected by the investor community,' a standard he said 'probably' ruled out Middle Eastern sovereign wealth funds.

Klingsberg confirmed the exchange to reporters but stressed discussions are at a very early stage and may not materialize. He flagged a central uncertainty: whether Freshfields Lab's tools would retain their value when trained on other firms' data rather than Freshfields' own proprietary legal work. The episode underscores the intense pressure big law firms face to monetize AI investments before valuations compress — Klingsberg himself warned that 'soon others will catch up and multiples will go down.'