Private equity advisers are racing to leverage AI and automate the services they provide to fund managers and their investors. Law firms, such as Kirkland & Ellis, have been among the most active adopters.
The dominant name in private fund formation and sponsor-backed M&A, the firm rolled out its own AI platform in June, built with Palantir and designed to reshape the repetitive, boilerplate elements of fund formation work, such as drafting limited partnership agreements, closing investor commitments and conducting compliance.
Earlier this year, Kirkland reportedly earmarked $500 million to develop a proprietary AI tool over three to four years, no small sum even for a law firm that generated $10.6 billion in annual revenue last year.
Erica Berthou
Erica Berthou, a partner at Kirkland and a member of the firm’s executive committee, recently spoke with PitchBook about how AI could reshape the practice of law—including how it will change the economics of legal work—and how the adoption of AI may affect practitioners, especially the young talent.
The interview was edited for clarity and brevity.
PitchBook: Everyone in private equity talks about AI. What does adoption actually look like inside PE firms right now?
Erica Berthou: We spend a lot of time talking to in-house legal teams at our clients about how they can operate more effectively using AI. Private equity firms tend to have more off-the-shelf legal tools. They use them to summarize documents for quick review and to extract key terms — essentially, to ask a question and get an initial analysis. That does not replace inside or outside legal counsel or human judgment, but it certainly can speed up the initial analysis.
Kirkland launched its Fund Formation Engine with Palantir. What exactly did you build?
What we’re building with Palantir is basically a bespoke fund formation engine that embeds all of our legal knowledge in the funds industry.
That includes our model document library, where we can prepare fund agreements using AI. We can respond to investor requests, drawing on potential accommodating solutions to address their concerns. And we can automatically track all the obligations and undertakings our clients make to their investors, ensuring they comply with everything they say they’ll comply with.
The big differentiator versus off-the-shelf legal tools is that this is our legal knowledge. Off-the-shelf legal tools are trained on common knowledge and publicly available data.
Are LPs drawing any lines around how GPs use it?