Managed service organizations (MSOs) have carved a niche for themselves operating back-end operations for medical and dental practices. These entities have proven to be favored structures for private equity firms keen on making inroads in the healthcare sector. Today, private equity firms are eyeing similar opportunities within the legal profession, according to legal professionals engaged in brokering these MSO transactions. The growing evidence of this trend is seen in private equity-backed law firm, Briefly’s, recent acquisition of the back-office assets and personnel of distributed firms OGC, Scale and Rimon.
A parallel can be drawn between the choices made by medical practitioners and lawyers. Much like doctors and dentists who acknowledge their specialization in patient care rather than in information technology or human resources, lawyers are recognising the benefits of focusing on their legal expertise while leaving non-legal, operational tasks to others, particularly as many states prohibit non-lawyers from running legal practices or sharing profits.
Noteworthy in the landscape is Federate, a venture led by an ex-leader from Rimon who plans to carry out a similar model bolstered by funding from legal industry insiders. This model, where non-legal functions are rolled into separate entities run by professionals, may change not only how traditional law firm structures operate but also create a viable pathway for non-lawyer investment into legal practice. This could potentially unlock a whole new pool of capital for a profession that is predominantly self-funded.
For more insights into this developing phenomenon, you can refer to a detailed discussion found on Law.com’s article on the topic.