Fried Frank Bets on AI to Streamline Private Equity Funds Group

Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at how a Wall Street law firm is using artificial intelligence to speed up its private equity funds practice. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.

Fried Frank is rolling out a new, internally-built artificial intelligence platform it says will streamline its practice advising private equity funds and may provide a strategic advantage through client collaboration and cost savings.

The tool, dubbed FundAssist, uses OpenAI’s latest models to pore through Fried Frank lawyers’ previous work, pinpoint client-preferred language, and return the most relevant precedents. The tool will allow clients to query their own documents. The goal is to generate the first draft of long-form fund formation documents with the click of a button.

Clients and the firm succeed if the clients can get answers from the tool while turning to Fried Frank’s lawyers for “trusted adviser service,” said Becky Zelenka, co-head of the private funds group, who spearheaded the development of the technology. The firm hasn’t decided on how to price the tool yet; it is focused on getting clients to work with it to determine its value.

Big Law’s AI road map is still far from identifying a clear destination. Much of the discussion around AI centers on what tools law firms should purchase, or whether frontier models like those developed by Anthropic or OpenAI will upend the market.

But Fried Frank’s launch is an example of an advantage law firms have over tech providers: decades of historical work product. Some firms are beginning to point AI models at that work, delivering more efficient services in the process.

Providing precedents directly to clients could move law firms toward consulting-style business lines, advising on high-level strategy while clients self-serve through the law firms’ models. Law firms as consultancies “is a value proposition that law firms need to be moving toward,” said Ryan McClead, chief executive at legal tech consultancy Sente Advisors.

Fried Frank’s tool, announced Thursday, has access to lawyers’ past work and helps them answer substantive questions more quickly, rather than click through dozens of documents looking for data from past deals, Zelenka said.

The emergence of that type of model has led to widespread concerns about the impact on associates’ jobs and how they will be trained.

The tool isn’t expected to cut down the number of associates working in Fried Frank’s private equity funds group, Zelenka said. It will allow associates to ramp up more quickly, she said.

“It enables you to do more deals,” Zelenka said. “We do expect a junior would become what we think of now as a mid-level faster.”

The firm began developing the tool about two years ago, said Conan Hines, director of practice innovation at Fried Frank. Zelenka, a Massachusetts Institute of Technology graduate and self-described former “techie,” believed the practice was well-positioned to build the tool based on a decade-long history of cataloguing its deals and tracking terms.

The product, which runs in Fried Frank’s private cloud, appears as a ChatGPT interface featuring the brand of the client whose documents a Fried Frank lawyer is working on. Each client’s data is ring-fenced so the tool doesn’t cross-pollinate, Hines said.

Much of the grunt work to build the product involved cataloging the firm’s past work down to a granular level.

The catalogued work includes back-and-forth negotiations in addition to completed documents, which Hines and Zelenka said will help the tool provide lawyers more context. Rather than a knowledge database returning a specific document, FundAssist can pull up specific provisions in the document.

“Everybody has the technology; what’s different about this is, it’s our experience,” Hines said.

The tool cut its teeth automating responses to investor requests for special provisions in the funds they are investing in, which result in agreements known as “side letters.” A typical investor, or limited partner, can request up to 100 bespoke terms in a fund, Zelenka said, making it a laborious process.

Kirkland & Ellis has also custom-built a platform that streamlines the side letter process, but said that it did not employ AI when the firm launched it in 2023. The firm did not respond to questions about whether that tool has since been updated.

The FundAssist drafting effort requires multiple AI agents, which work autonomously on a series of commands. In legal drafting, one agent might update the parties in a contract while another fixes subject-verb agreements and a third checks jurisdictional implications, Hines said.

“Ultimately we want to say: here’s the new criteria for the fund, look at the past precedent, and create the new document with the click of a button,” Hines said.

The firm may later decide to provide the drafting tool directly to clients. The cost of building the tool has mostly been peoples’ time to date. The cost of the compute to run the tool is “nominal,” the firm said.

Technology is advancing so quickly that decisions around what to build versus buy have changed even in the past six months, Hines said. Other firms could “probably” build something like FundAssist, he said.

“But by then we will have already moved on to the more challenging and edgy use cases,” he said.

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That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.