The Brief:
Freshfields’ plan to spin off its AI unit was leaked after the global managing partner accidentally forwarded the emails to a firmwide distribution list.
The thread included a swipe at Middle Eastern sovereign wealth money, sparking an apology from the firm.
Freshfields is in damage control after a confidential email chain about spinning off its AI unit landed in the inbox of the entire firm.
The spinoff
Global managing partner Alan Mason had been trading emails with Ethan Klingsberg, co-head of the firm’s US corporate and M&A practice, about turning Freshfields Lab, its in-house AI unit, into a separate entity. The standalone business could bring in outside investors, or even IPO.
Klingsberg figured it would be “probably worth billions”. He also declared: “We’re better than Harvey and Legora!”
Then Mason accidentally forwarded the whole thread over the weekend to a distribution list called “$Freshfields All”.
The email was quickly recalled. Not quickly enough. Some recipients had already grabbed screenshots, which ended up with the Financial Times.
The comment
In the emails, Klingsberg said the venture should pitch “sophisticated investors that are respected by the rest of the investor community for their leadership”, adding that this “probably” ruled out “Middle Eastern sovereign wealth money”.
A tricky line for a firm with offices in Abu Dhabi, Dubai, Bahrain and Riyadh, and a client list that has included the Abu Dhabi Investment Authority and the Qatar Investment Authority.
The firm went into damage control:
“We apologise unreservedly for a comment made about Middle Eastern sovereign wealth investors . . . the comment does not reflect the position or beliefs of the firm or those participating in that email exchange, and we sincerely regret the offence caused.”
“We hold our clients across the Middle East in the highest regard and deeply value the longstanding relationships and trust we have built in the region. We have enormous respect for the discerning leadership and global impact of our clients and remain firmly committed to the region.”
The AI race
Most of BigLaw has backed Harvey or Legora. A smaller group is building.
Freshfields is in that group. It’s co-developing legal AI tools with Anthropic, with the option to license them to rivals. Spinning out Freshfields Lab with outside investors is now a possible next step.
Kirkland & Ellis is building too, but it’s not selling. The firm is spending US$500m on a proprietary platform that it will own outright, funded out of revenues.
Same bet on in-house AI. Very different endgames.