Venture Capital Tempts Law Firms, But Ethical Concerns Surface

Law firms increasingly are turning toward high-risk, high-reward venture capital investing as a way to spur technology innovations to streamline functions like contract review and legal research.

Yet the investments are raising conflicts-related concerns among legal ethics experts and competing firms that have rejected the approach.

As clients demand better technology solutions from their law firms, some of the largest and most prestigious firms in the U.S. and U.K., including Dentons, Latham & Watkins, and Orrick, have turned to different forms of venture investing. That business model allows law firms—typically risk-averse operations compared with the players in Silicon Valley’s VC ...