Senior private capital investors are increasingly warning that artificial intelligence could significantly disrupt law, accounting and other professional services businesses, raising concerns for buyout firms with substantial exposure to the sector, according to a report by the Financial Times.
While much of the focus in recent years has centred on AI’s impact on software companies, industry executives say the technology’s reach is broader, posing risks to asset-light, fee-based advisory businesses that rely heavily on billable hours.
Speaking at a private equity industry conference, investors highlighted areas such as legal services, claims processing, audit support and administrative outsourcing as particularly vulnerable to automation-driven efficiency gains that could reshape traditional revenue models.
Some senior executives cautioned that firms charging by time-based billing structures may face the greatest pressure, as AI tools reduce the labour intensity of core tasks. Others suggested that even adjacent functions such as proxy voting administration and compliance-related services could see disruption.
The concerns come as investors reassess earlier assumptions about stability in professional services, a sector widely targeted by private equity due to its recurring revenue characteristics and relatively low capital intensity. However, rising uncertainty around long-term pricing power and earnings durability is prompting greater selectivity in new dealmaking.
There is also evidence of shifting sentiment across the industry, with some investors reducing appetite for non-regulated white-collar services while favouring businesses with stronger asset backing or regulatory protections that may limit automation risk.
At the same time, views within the industry remain mixed. Some executives argue that firms able to integrate AI effectively could improve margins and productivity, particularly in regulated areas such as audit, where human oversight remains a core requirement.
The debate reflects a broader re-evaluation across private equity portfolios, as firms assess which business models are most resilient in an environment where AI is increasingly embedded across professional workflows and service delivery.
