For a long time, law firm ownership followed a fairly predictable path. You built a practice, developed a reputation, brought on associates or partners, and assumed the firm would carry on much the same way when you eventually stepped back. Outside capital was rarely part of the conversation, and most ownership decisions stayed comfortably within the profession.
That predictability is slipping away.
Management Services Organizations (MSOs) and private equity-backed platforms are becoming a real presence in the legal market. Some firm owners are actively exploring these options. Many others are not. But regardless of interest level, these models are already influencing how firms compete, how value is measured, and how future transitions are planned.
You don’t have to participate to be affected. You do, however, need to understand what’s changing around you.
Understanding MSOs and Why They’re Showing Up More Often
At a basic level, a Management Services Organization is a separate entity that handles the non-legal side of running a law firm. That usually includes marketing, intake, finance, HR, technology, compliance, and administrative support. The firm continues to practice law. The MSO focuses on keeping the business running smoothly.
This model isn’t new. Healthcare has relied on MSOs for years, largely because physicians recognized that modern professional practices are complex businesses. Legal has been slower to adopt the structure, partly due to regulation and partly due to culture. Both are changing.
For law firm owners, the appeal tends to be practical rather than theoretical. MSOs can:
- Reduce the day-to-day operational burden on owners, allowing them to focus on their passion
- Introduce professional management and consistency
- Support growth without rebuilding systems from scratch
- Create flexibility around succession or partial liquidity
From an investor’s perspective, MSOs also make law firms easier to evaluate and support economically. That matters, even if you never plan to engage with investors yourself.
Where Private Equity Fits In
Private equity firms raise capital and invest in businesses they believe can grow through better systems, scale, and management. In legal, that investment most often flows through MSOs or alternative ownership structures where regulations permit.
For some law firm owners, private equity-backed MSOs provide access to resources that would otherwise take years to assemble. Capital for growth, experienced operators, and infrastructure can support expansion, marketing investment, or leadership transitions that are difficult to finance inside a traditional partnership model.
That said, private equity brings a particular mindset. Investors care about predictability, scalability, and transferability. They want businesses that perform consistently and do not depend on a single individual. That way of thinking is influencing how firm value is assessed across the market, not just in firms that accept outside capital.
A Familiar Pattern from Other Industries
I’ve worked with many lawyers over the years who were confident they had plenty of time to sort out succession for their firms. They had profitable practices, loyal teams, and clients that led to work year after year. However, most of these firms weren’t interested in or felt the need to invest in the firm’s systems, to remove themselves from the key passthrough of knowledge and decisions, or to change the way the firm operated. Then, life seems to happen. An unexpected health issue or some other life event forced them to step back faster than planned—often without a strategy of how their firm can operate without them.
What surprised these attorneys isn’t the lack of interest in the firm. Instead, it’s how differently buyers and succession advisors evaluated it. The firm worked well day to day, but much of its success was tied directly to them as owners. Systems were informal and lacked current legaltech or uniform steps of delivery. Leadership beyond the founder was untested. The firm truly was an extension of the owner and dependent for its success on the owner’s continued daily efforts. Transition suddenly becomes harder than anyone expected.
This story isn’t unique, and it isn’t a judgment. It’s a reminder that markets value structure, process, and transferability, often more than owners anticipate.
Dental, veterinary and other health professionals went through a similar shift years ago. Many professional groups assumed MSOs and private equity were irrelevant until competitors with better infrastructure began pulling ahead. Almost overnight, it seemed that the business environment changed.
Legal is now experiencing that same pressure.
Regulatory Shifts and the Arizona Case Study
Arizona’s adoption of Alternative Business Structure (ABS) rules allowing non-attorney ownership caught many lawyers’ attention in 2021. It did not force firms to change how they operate, but it did signal something important. Long-standing assumptions about ownership and regulation are no longer untouchable and that is where MSOs sprang into use across the country
Bar associations remain appropriately cautious, with a focus on protecting clients and professional independence. Still, regulatory experimentation matters. It creates reference points, attracts capital, and encourages new models that may influence other jurisdictions over time.
For law firm owners, the takeaway is not that non-attorney ownership is inevitable everywhere. It’s that the profession is no longer insulated from broader market forces. Paying attention to structure has become part of running a firm responsibly.
How These Changes Affect Firms That Never Participate
Even firms with no interest in MSOs or private equity are feeling the effects.
Well-capitalized platforms are increasing competition for cases by investing heavily in digital marketing, intake technology, and analytics. Operational expectations are rising as more firms adopt sophisticated systems. Perhaps most importantly, the way firm value is defined is evolving.
Where value once rested largely in a founder’s reputation or relationships, today’s market places more weight on institutional strength, including:
- Repeatable processes
- Diversified leadership
- Durable branding
- Clean, understandable financials
- Up-to-date systems and tech
Firms that postpone addressing these areas often do so unintentionally. Over time, that delay can quietly limit available options. And even if you never plan to sell to private equity, your firm’s value can still be impacted by competition that chooses to evolve—or reduce their operational burden by taking on private equity investment.
When an MSO Partnership or Sale Can Make Sense
There are situations where partnering with an MSO or pursuing a sale aligns well with an owner’s goals. These often include:
- A desire for partial liquidity without a full exit
- Growth constrained by operational complexity
- No internal successor with the capital or appetite to lead
- A wish to step back from management while continuing to practice
In these cases, the conversation usually centers on control. Owners who engage early tend to have more flexibility around timing, economics, and ongoing involvement.
When Selling to an MSO Might Not Be the Best Fit
Challenges tend to arise when owners explore these options reactively. Fatigue, market anxiety, or peer pressure can lead to rushed decisions. Firms with unclear financials, heavy founder dependence, or unresolved leadership issues may discover their negotiating position is weaker than expected.
By the time many owners seek guidance, optionality has already narrowed. That outcome is rarely intentional, but it is common.
Planning Your Exit Without Forcing a Decision
The owners who navigate this landscape best are not the ones who rush to act. They are the ones who take the time to understand their firm’s true position. That includes knowing where value resides, how dependent the firm is on the founder, and what realistic paths forward exist.
This kind of planning does not require committing to a particular outcome. It requires replacing assumptions with information. And it’s not a one-size-fits-all approach. The right decision for one owner—such as selling to private investors—might not work for another firm.
You don’t need to decide today, but you do need to understand today.
A Final Thought on Selling Your Law Firm
MSOs and private equity are part of a changing legal marketplace. Choosing not to engage with them does not preserve the status quo; it simply makes clarity more important.
For law firm owners, the real objective is maintaining the ability to choose on their own terms, with time to think and information to rely on. That kind of control is built well before any decision becomes urgent.
