The personal injury (PI) legal sector is undergoing rapid transformation, driven by increasing private equity (PE) investment, expanding alternative business structures (ABS), and growing demands for technology, AI, and staffing investments. All while traditional marketing and competition seems to be growing as well. While PE firms have already made significant moves into the PI space from lending, ABS and financial partnership the future looks like this is going to significantly increase as they continue to see opportunity in a fragmented market, but the overall consolidation in the space isn’t being driven by PE alone.
Larger plaintiff firms are also aggressively expanding through mergers and acquisitions, and states like Arizona and Utah—with their ABS structures—are opening the door for non-lawyer ownership models that could reshape the legal landscape. At the same time, PI firms are facing increasing operational and financial pressures that require significant investment to remain competitive.
For firm owners, attorneys, and investors, the real question isn’t just whether private equity is taking over—it’s whether independent PI firms can navigate these market shifts successfully without the help of private equity for funding, management, technology or other investments.
The Role of Private Equity in PI Law
Historically, law firm ownership was restricted to licensed attorneys, but regulatory changes in Arizona, Utah, and potentially other jurisdictions have allowed non-lawyer investment which is unlocking paths for PE-backed acquisitions.
Why PI Firms Are Attractive to Investors
Recurring Revenue & High-Value Cases. Personal injury cases often yield large settlements and steady revenue streams, making them ideal for investors looking for predictable returns.
Scalability & Marketing Efficiency. PE firms specialize in scaling businesses, and leveraging digital marketing and case acquisition strategies can drastically increase case volume and profitability.
Operational Improvements & Profit Margins. Tech-driven case management, AI tools, and centralized operations can significantly improve efficiency, reduce costs, and enhance case processing speeds.
PE firms have already begun making moves where possible, but significant increase in activity is expected in coming years. However, they are not the only force reshaping the industry.
Beyond PE: The Rise of ABS & Large Plaintiff Firm Expansion
While private equity sees opportunity in the fragmentation of PI law, they are not acting alone. Other key drivers of market consolidation include:
Alternative Business Structures (ABS) & Non-Lawyer Ownership Models. Arizona and Utah have already introduced ABS models, allowing law firms to be owned by non-lawyers and corporate entities. This trend may spread to other jurisdictions, introducing new business players into the market and further accelerating consolidation.
Large Plaintiff Firms Expanding Through Acquisitions. Well-known plaintiff firms are aggressively acquiring smaller firms to expand into new markets. Many firms see growth through acquisition as the best strategy to increase their case volume and market dominance.
The Rising Costs of Running a Competitive PI Firm. Technology investments in AI, automation, and data-driven case analysis are becoming essential for firms to compete. Digital marketing costs and client acquisition expenses have risen dramatically, forcing smaller firms to seek outside funding or merge with larger firms. Staffing shortages and the need for top-tier legal talent require firms to rethink their long-term financial and operational strategies.
These factors mean that consolidation isn’t just happening because of PE—it’s happening because the financial and operational demands of running a successful PI firm are rising.
Succession Challenges: What Happens to PI Firms When the Owner Must Exit?
At the same time, many successful PI firm owners are reaching retirement age without a clear succession plan. Studies indicate that only one-third of law firm owners have a structured exit strategy. Without proper planning, these firms face:
Client & Case Disruptions. Without a structured transition, firms risk losing clients and active cases, reducing the firm’s valuation.
Staff & Partner Uncertainty. Legal teams rely on continuity. Without a clear plan, top attorneys may leave, making the firm even less attractive to buyers.
Missed Financial Opportunities. A well-planned exit maximizes firm value, while a rushed or forced sale often results in a lower valuation.
Lack of a succession plan may be the final factor opening the need and significant opportunity for PE to move into the space. Additionally, for some of these firms who have reached a certain scale or overall value, PE would have already been needed to fund any purchase through a sale or succession. The tens of millions of dollars or more of funding required for a buyout would be beyond most banks’ lending platforms and so PE lending would be required to provide the purchase price. However, if PE is already involved then being the purchaser, not just the lender may offer the easier exit for some of these larger firms. That will be particularly true if the time to exit is short due to a health crisis or an owner who has waited too long to plan for their succession.
Key Steps for PI Firm Owners to Prepare for the Future
To navigate these changes effectively, PI firm owners should take proactive steps now.
- Develop a Comprehensive Succession Plan. A strong succession plan provides clarity on the firm’s future, whether the goal is an internal transition to junior partners, a merger or an external sale. This process should begin at least 3-5 years before the anticipated transition.
- Conduct a Professional Valuation. Understanding what a law firm is worth is crucial for making informed decisions. Valuations should consider discretionary income, case pipeline, firm brand value, and client retention rates.
- Explore Multiple Exit Options. Rather than defaulting to private equity, firm owners should explore alternatives. Options can include an internal buyout (selling to existing partners or associates can ensure continuity); a merger with a larger firm (aligning with a regional or national firm can provide stability while preserving client relationships; or a gradual transition with earnouts (structuring deals with performance-based payouts allows owners to maximize value over time).
- Prioritize Client and Employee Retention. One of the biggest risks during a transition is the loss of clients and staff. A well-structured plan should include strategies for client introductions, team retention incentives, and leadership continuity.
The Future of PI Law: A Balancing Act
The next decade will define the future of personal injury law. On one hand, private equity-backed consolidation could create stronger, more efficient firms. On the other, a failure to address succession challenges could lead to instability, client losses, and undervalued sales.
For PI firm owners, the key is to plan ahead, know their options, and make strategic choices. Whether selling to private equity, merging, or transitioning internally, those who take control of the process will ultimately achieve the best outcomes for their firm, their clients, and their legacy.
Private equity may see fragmentation as an opportunity, but independent PI firms still have the power to shape their own future—if they take control of the process.
