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💻 Why a software company just bought a UK law firm
Idin Sabahipour
May 21, 2026
Contents
If you take just one thing from this email...
Carta, a US-based software company, has bought a UK law firm and relaunched it as Carta Law.
This would not be possible in most countries because, typically, only lawyers can own a law firm. The UK is different because of the Legal Services Act 2007, which created the "alternative business structure" (ABS). This says a law firm that can be owned and managed by non-lawyers.
That one piece of legislation is why the UK is likely to see AI-first law firms arrive faster than almost anywhere else.
EDITOR’S RAMBLE 🗣
Imagine this. You've got a Rolex that you think is a fake. You find a buyer and swap your "fake" Rolex for three of their real ones, because the model you're holding is rarer than what they’ve got.
You think you've pulled off an amazing scam. But then it turns out your watch was real all along, worth around £90,000. So the buyer's lost nothing. You've actually given them a fair deal.
Have you committed fraud?
This is exactly what happened to Deepak Singh, in this story I read this week.
He is a 24-year-old Italian man who flew to Singapore last November to sell what he thought was a counterfeit Rolex GMT Saru (it was actually genuine).
But the Singapore courts sentenced him to seven months in jail.
In the UK, if the same thing happened, the outcome would be the same.
The English law case of R v Shivpuri settled it. A man was jailed for smuggling what he thought was heroin (it was actually just powdered tobacco). The drugs weren't real, but his intentions made him guilty.
That’s because, in criminal law, it's your intention that's on trial, not always the outcome. Under the Criminal Attempts Act 1981, you can be convicted of attempting a crime even if completing it was impossible.
Do you think that’s a fair outcome? Reply to let me know.
FEATURED REPORT 📰
💻 Why a software company just bought a UK law firm
What’s going on here?
A US software company called Carta has acquired Avantia – a UK law firm that serves asset managers. Following the acquisition, Carta’s relaunched the firm as Carta Law, an AI-driven law firm.
Is a software company allowed to own a law firm?
In many countries, non-lawyers can't own or manage a law firm. In the UK they can, because of the Legal Services Act 2007.
Jurisdiction | Can a non-lawyer own a controlling stake in a law firm? |
|---|---|
🇬🇧 United Kingdom | ✅ Yes |
🇦🇺 Australia | ✅ Yes |
🇺🇸 United States – Arizona | ✅ Yes |
🇺🇸 United States – Utah | ⚠️ Only for firms that are in a special pilot scheme run by the state's top court |
🇺🇸 United States – Washington D.C. | ⚠️ Only if the non-lawyer owner actually works in the firm |
🇺🇸 Rest of US | ❌ No |
🇫🇷 France | ❌ No – outside investors can hold up to 49%, but lawyers must keep majority control |
🇮🇹 Italy | ❌ No – outside investors can hold up to one-third, but lawyers must keep majority control |
🇪🇸 Spain | ❌ No – outside investors can hold up to 25%, but lawyers must keep majority control |
🇨🇦 Canada | ❌ No – some provinces let non-lawyers deliver legal services, but firms must still be lawyer-owned |
🇩🇪 Germany | ❌ No – only lawyers and certain other professionals (e.g. accountants) can own a firm; pure investors are banned |
This Act created a category called the “alternative business structure” (or ABS) – a law firm that can be owned and managed by non-lawyers, provided it's licensed to carry out one or more reserved legal activities.
🤔 What are reserved legal activities?
These are activities that only authorised people (lawyers and some other regulated professionals) are allowed to carry out by law. Most legal work – drafting commercial contracts, reviewing transactions, running due diligence checks – isn't reserved at all. That means anyone can do it.
s.12 of the Legal Services Act 2007 names a closed list of six activities that only authorised people can do:
Rights of audience: The right to stand up in court and address the judge.
Conduct of litigation: Issuing and running court proceedings.
Reserved instrument activities: Preparing certain formal legal documents involved in transfers of land.
Probate activities: Handling the legal side of a deceased person's assets.
Notarial activities: Authenticating documents for use abroad.
Administration of oaths: Witnessing sworn statements.
Anything outside this list can be done by anyone – qualified lawyer or not.
Avantia was already a licensed ABS before Carta acquired it. The Solicitors Regulation Authority (SRA) had approved Avantia to carry out specific reserved activities, and the lawyers inside Avantia were personally qualified to do that work.
When Carta acquired Avantia, the SRA approved the change of ownership, and Carta continued to operate under Avantia's existing licence (only now rebranded as Carta Law).
Why did Carta want to own a law firm?
Carta sells software that runs the operational and accounting side of investment funds – like private equity and hedge funds.
These funds do a lot of routine legal work: onboarding new investors, signing NDAs when looking at potential investments, running anti-money-laundering checks, drafting the documents that govern how a fund operates.
That work is repetitive, high-volume, and expensive – top-tier law firms charge a lot of money for it. Every one of those tasks also leaves a paper trail – a signed NDA, an anti-money-laundering check, and a register of investors. Carta already runs the software these funds use to manage this paper trail in a digital way. So buying a law firm gives Carta two key advantages.
🔗 They can do the legal work and manage the paper trail on one platform. Carta's customers currently pay one vendor (a law firm) for the legal work and another (Carta) for the software that manages the fund’s paper trail. Information has to be passed between them, which takes time. That makes the whole process faster, and lets Carta charge less than a top-tier firm would for the same routine work.
🏰 Carta can lock customers in by running their entire end-to-end work. Once a fund's legal work and paper trail live on Carta, the customer's day-to-day operations run through Carta end-to-end. Leaving is expensive because it means rebuilding that whole setup with a new provider – finding a separate law firm, finding separate software, and re-establishing the connections between them.
For this to work, Carta needs a particular kind of law firm.
What will Carta Law actually do?
Carta didn't acquire just any UK law firm. Avantia was already built around an AI-native model. It had some features that made it stand out.
👥 A tiny team of supervising lawyers. Even before the acquisition, the legal work at Avantia was mostly carried out by AI. The lawyers' role is to review what the AI produces before it goes to the client. There are 13 UK solicitors and 10 US attorneys – the entire lawyer headcount of the firm is 23 people.
💷 A fixed fee for each service, not an hourly rate. Traditional law firms charge by the hour – the more time a matter takes, the more the client pays. Carta Law charges a fixed fee for each service it delivers. There's no hourly billable rate.
📑 Carta Law will only do the work it’s good at. It will handle repetitive legal work in private capital – checking that a new investor is who they say they are, signing the NDAs that get exchanged before any deal discussion, drafting the documents that admit a new investor into a fund. The complex, judgement-heavy work – like major disputes, complex deal structures, regulatory issues – stays with a customer's existing law firm – Carta Law won’t do that kind of work.
A firm that runs this way wasn't possible two years ago. Until recently, AI was good enough to help lawyers work faster but not good enough to do the legal work itself. That has changed with agentic AI.
🤔 What is agentic AI?
Most people's experience of AI is ChatGPT, where a user asks a question and gets an answer. Agentic AI does more than that. Instead of generating text in a single response, it runs multi-step tasks on its own.
You may have seen this with ChatGPT's Agent Mode or Anthropic's Claude Computer Use – both browse websites, fill in forms, and complete tasks across multiple apps without being prompted at each step.
In a firm like Carta Law, the agentic AI could pull documents from a fund's records, draft an NDA from a template, and send the output to a lawyer for review – each separate task would be carried out in sequence.
The lawyer doesn't have to tell the AI what to do at each step – they just check the final output.
Carta Law isn't the only firm structured this way. Earlier this year, legal AI company Orbital launched Farringdon, an AI-native firm for UK residential property transactions. They’re doing for real estate what Carta is doing for investment funds.
What’s the big picture impact?
In the world of commercial law, three wider shifts could follow from a deal like this one.
👑 Firms like Carta Law are challenging the revenue model of traditional commercial law firm. Traditional firms make money by splitting work between partners and junior associates. Partners handle the complex, high-stakes work at the highest rates. Juniors handle the routine, repeatable work – the kind that Carta Law now does – at lower rates on small salaries.
The gap between what a junior costs the firm and what the firm bills the client for their time is how traditional firms make most of their profit. When AI does the routine work, juniors have less billable hours, so firms need fewer juniors per partner, and the traditional model stops working.
💷 Hourly rates become harder to justify. When clients see an AI alternative at a fraction of the cost, charging hundreds an hour for a trainee doing the same work is harder to defend – especially when the trainee is using that AI to do it!
🌍 The UK is set up for faster AI adoption in law than most other markets. The ABS regime here lets non-lawyers run law firms. That makes it easier for new kinds of law firms to set up in the UK – like AI-first firms backed by software companies, in the case of Carta Law.
It also gives traditional UK law firms more ways to respond. They can take investment from outside the legal industry to build their own AI tools. For example, a private equity firm or a tech company could put money into the law firm in exchange for a share of the business.
This is harder to do in countries where only lawyers can own a law firm.
The result is that the UK might change faster than elsewhere – bringing more disruption to traditional law firms. But it also means more options for clients to benefit from cheaper, faster legal services.
Which law firms were involved?
Freshfields advised Carta and Cooley advised Avantia in this deal.
How can you use this in your applications?
Here are some ways you can use the insights from this story in your law firm applications.
Insight | Why it’s important | How to use it in your applications |
|---|---|---|
Companies acquire other companies to give customers a more complete experience – and that can make leaving expensive | Carta already sold software to private funds. By buying Avantia, Carta can now handle the legal work and the paper trail it leaves behind on one platform. Once a fund runs both through Carta, switching means rebuilding both halves with new providers. The completeness is what creates the customer lock-in. Here’s a non-legal example. If a hotel comparison website buys a flight comparison website, customers can plan an entire trip on one platform. Once they're used to that, going back to two separate sites feels like a downgrade. | Use this in case studies that ask whether one company should acquire another. Move past "do the products fit" and ask: do the two companies, combined, give customers a more complete experience than either could alone? That could help you justify your answer by explaining how it gives the customer a more end-to-end experience, which can lock them in more. |
The UK lets non-lawyers own law firms | The Legal Services Act 2007 created the ABS regime, which is how Carta – a software company – can own Carta Law. The same regime is how DWF became the UK's largest publicly listed law firm in 2019 (owned by its shareholders – which could include you or me), and how private equity firm Inflexion took it private in 2023. | In commercial awareness interviews, use this to discuss the balance between disruption and resilience. The ABS regime means more competition in UK legal services – which benefits clients but puts pressure on traditional firms. But the regime has existed since 2007, and traditional firms are still posting record revenues. So ABSs didn’t destroy traditional law firms – in the UK legal market there has been room for both (so far). |
Agentic AI changes whether legal work needs a junior lawyer | For the past few years, AI helped lawyers work faster but stopped short of doing the work itself. Agentic systems – AI that runs multi-step tasks on its own – have changed that. This is what makes Carta Law's 23-lawyer headcount possible – the AI runs the workflow, the lawyer reviews the output. | When asked about the future of the profession, frame agentic AI as both a threat (it takes away the routine work that juniors are paid to do, which is how Big Law makes most of its money) and an opportunity (firms that build on top of it can get things done more efficiently). |
IN OTHER NEWS 🗞
🥊 Matchroom Sport (the boxing and darts business) has sold a 15% stake to US private equity firm Bruin Capital in a deal valuing it at over £1 billion. Matchroom owns the Professional Darts Corporation and promotes boxers like Anthony Joshua and Katie Taylor. The investment is meant to fund a push into the US sports market, particularly to grow darts there. Simpson Thacher advised Bruin Capital, and CMS advised Matchroom and the Hearn family.
🇬🇧 Foreign companies are buying up UK firms listed on the London Stock Exchange fast. 22 London-listed companies have accepted or received takeover bids this year worth a combined £43 billion, including insurer Beazley and wealth manager Schroders. This week, Tate & Lyle received a £2.7 billion offer from US rival Ingredion, and private equity firm EQT raised its bid for FTSE 100 testing group Intertek to £10.6 billion. The bids are coming because London shares are considered cheap compared to their US counterparts.
🏭 Ashurst is advising the UK government on a new bill that would let it nationalise British Steel. The Steel Industry (Nationalisation) Bill – announced in last week's King's Speech – would give ministers the power to take steel companies into public ownership if a public interest test covering national security, the economy and critical infrastructure is met. It builds on emergency legislation passed last year to keep British Steel's Scunthorpe plant running after its Chinese owners moved to close the blast furnaces.
OPEN TABS 🌐
🖱️ Cursor camp: Your laptop cursor is probably tired – so take it to summer camp
🌍 Smog: This live map shows real-time pollution levels for cities around the world (see how clean or dirty the air is where you live)
🥤 Canny pack: Coke has released a designer handbag built to carry a single can of Diet Coke 👇️
STUFF THAT MIGHT HELP YOU 👌
💻️ Free application advice: Check out my YouTube channel for actionable tips and an insight into the lifestyle of a commercial lawyer in London.
📁 Law firm application bank: A growing library of real, verified successful applications for training contracts and vacation schemes. Helpful if you want to learn from others who answered the same questions you’re stuck on.
📝 Write winning law firm applications: A practical course to help you write clearer applications, faster. Avoid common mistakes, learn how to structure answers properly, and get lifetime access to future updates. Try it for 14 days, risk free.
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