What Private Capital and AI Could Mean for BigLaw Partners

A partner at a big firm called me this week and asked, more or less: what does all of this mean for me? I really didn't have an answer, and I expect I'll be getting the question a lot more.
Historically, BigLaw has worked something like this: partners own the firm, clients pay their bills, expenses get covered, and most of what's left gets paid out at the end of the firm's fiscal year.
That model has also worked because law firms haven't historically required enormous amounts of capital. AI may change that. Firms seem afraid of being left behind on AI and they are getting ready to spend their way out of their fears. Totally unclear whether that spend will pay off, as is true across the whole economy.
But for BigLaw specifically, investing in engineers, data, infrastructure, and other things I have no idea about is requiring a big upfront investment of capital. These investments may not go down particularly well with a group of equity partners who (a) aren't paid to think about these problems and (b) can leave for another firm if their current firm is making investments at the expense of near-term profitability.
Private capital offers a solution. Outside investors can fund those upfront technology investments through an MSO without taking the money directly out of the law firm partners' pockets.
But bringing in private capital creates a different set of questions. If an investor owns part of the business around your firm, who captures the upside when technology makes your practice more profitable? What happens to comp? Do you participate in the value being built outside the law firm itself, or only inside it? And what happens when the investor eventually wants out?
Most partners have never had to ask any of that. But a few years from now, I suspect someone weighing a lateral move will need to understand a firm's capital structure as well as its compensation system.
Which means those of us advising them will too.