In a strategic move reflecting the evolving landscape of law firm financing, a Los Angeles-based private equity law firm has sold a stake in its back-office operations to external investors. This transaction underscores a growing trend among legal practices to attract outside capital by divesting non-legal functions, thereby adhering to regulations that restrict non-lawyer ownership of law firms.
The firm established a management services organization (MSO) to manage administrative functions such as accounting, marketing, and technology support. By selling a stake in this MSO, the firm secures additional funding while maintaining compliance with professional conduct rules that prohibit non-lawyer ownership of legal practices.
This approach is gaining traction within the legal industry. For instance, in December 2025, the Hargrove law firm, specializing in estate planning, partnered with Conditor Equity, which invested in NetLaw, Hargrove’s digital management services platform. This investment aimed to enhance technological infrastructure and expand service offerings, illustrating how law firms are leveraging MSOs to attract external capital while preserving the integrity of their legal services.
Similarly, in April 2026, Arizona-based Rafi Law Group separated its back-office services to receive a $125 million investment from an outside investor. This capital infusion was intended to support national expansion and technological advancements, demonstrating the potential of MSOs to facilitate growth and innovation within law firms.
These developments highlight a significant shift in the legal sector’s approach to financing and growth. By creating MSOs and selling stakes in these entities, law firms can access external capital to enhance their operations and expand their services, all while adhering to ethical standards that govern the profession. This trend is likely to continue as firms seek innovative solutions to meet the demands of a rapidly changing legal market.