Law firm records and AI training: what UK firms can license

Law firms hold some of the most valuable records any business keeps: years of advice, drafting and negotiation, written by experts. AI developers want this material, and some buyers ask for contracts and case files by name. But most of a law firm's records are, in substance, its clients' affairs.

This guide explains what a firm regulated by the Solicitors Regulation Authority (SRA) in England and Wales can and cannot license, and why. It covers firms registered under SIC codes 69102 (solicitors) and 69109 (other legal activities) (Companies House). Barristers, and firms in Scotland and Northern Ireland, have their own regulators and rules.

What law firms hold

• Matter files. Advice, correspondence, drafts, contracts, court documents and evidence.
• Systems. The Law Society lists "legal practice and matter management platforms" for "case tracking, billing and client communications", automated client onboarding with digital identity checks, and "e-billing systems" (Law Society).
• Accounts records. Client ledgers and other accounting records. Under rule 13.1 of the SRA Accounts Rules, "You must store all accounting records securely and retain these for at least six years" (SRA).
• Anti-money laundering files. Independent legal professionals are in scope of the Money Laundering Regulations 2017 (reg 8). Regulation 12 covers them "when participating in financial or real property transactions" (reg 12), so conveyancing and corporate files hold customer due diligence records.
• Know-how. Precedents, templates, practice notes and internal training.
• Business records. HR, finance, marketing and IT.

Why most client material cannot be licensed

Confidentiality. Paragraph 6.3 of both SRA Codes says: "You keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents" (Code for Solicitors, Code for Firms).

Privilege. "It is important to note that the privilege belongs to the client and not their representative", and "Only the client has the right to waive this privilege" (HMRC). Legal advice privilege covers "confidential communications between a lawyer and their client for the purpose of obtaining or giving legal advice", and litigation privilege covers "documents produced for the dominant purpose of contemplated or actual litigation" (same source). Section 10 of the Police and Criminal Evidence Act 1984 defines "items subject to legal privilege" for the purposes of that Act. "Once legal professional privilege has been waived it cannot normally be reclaimed" (HMRC).

Material that is not privileged is still confidential. Invoices, engagement letters and records of fact are not privileged (HMRC), but they are still the client's affairs under paragraph 6.3.

The SRA's warning on AI. In August 2026, the SRA issued a warning notice on the misuse of AI. It says firms should make sure client data "is not used to train AI models except where explicitly authorised and appropriate to do so", and warns that "legal professional privilege may be permanently waived and unable to be recovered" (SRA). The Law Society adds that "Careful consideration needs to be taken when client data is to be shared with a third-party AI vendor" (Law Society).

So matter files are off-limits unless a client gives explicit, informed authorisation. Even then, a file usually holds information about other parties too.

What must stay out

• Matter content. Advice, drafts, correspondence, evidence and anything privileged.
• Client affairs. Names, matter references, invoices, engagement letters and the facts of each matter.
• Accounts and AML records. Client ledgers and customer due diligence files. AML records may only be processed to prevent money laundering, terrorist financing or proliferation financing, with narrow exceptions (MLR 2017, reg 41).
• Special category and criminal offence data. Files in family, employment, personal injury and crime often hold health data, data about sex life, ethnic origin and criminal offences, which the UK GDPR protects most strictly (Article 9, Article 10).
• Third-party know-how. Precedents and practice notes from subscription services belong to their publishers.

What a law firm may be able to license

• Your own know-how. Precedents, templates, checklists and training your lawyers wrote, with every client detail removed. A precedent drafted from a client matter can still hold that client's information, so check each one.
• How the firm runs. Internal processes, policies and operating records that do not touch client matters.

These are narrower than matter files, but they are the firm's own. A firm with a large, well-kept precedent bank may have something buyers want.

What buyers want

• Mode sets its lowest published minimum, "6+ for legal", for law firms, although it says teams based mainly in the US fit best (Mode).
• Mercor names legal as a sector, and asks for "Contracts, case files, discovery docs" (Mercor). These are exactly the materials that paragraph 6.3 and privilege protect.
• Pewter's fit check includes law firms, but it shows no law firm deal (Pewter).

The demand is real, but for a UK firm the supply is narrow. Be wary of any buyer or broker that asks for matter files without asking how you will get each client's authorisation.

If the firm is closing

The SRA's figures show that 514 firms closed in the 12 months to the end of June 2026 (SRA). Closing does not free client files. The SRA's guidance says "As a matter of law, some of the papers on the file may belong to you, but many will belong to the client". It also says the duty of confidentiality "continues after a client's matter has concluded", and that "Original documents, such as wills, should not be destroyed" (SRA).

A closing firm can still license its own know-how and operating records, on the same terms as a firm that is trading.

Before you talk to buyers

1. Treat every matter file as off-limits. Start from that position.
2. Separate know-how and firm operations. These are the records you may be able to license.
3. Clean each precedent. Remove client names, matter references and facts.
4. Remove third-party content. Subscription precedents and practice notes belong to their publishers.
5. Keep accounts and AML records out. No exceptions.
6. Involve your COLP. Read the SRA's warning notice on AI, and record your decision.

Tydex can tell you quickly whether your firm has records worth licensing, and which buyers might want them. Get a free valuation.