In Part 1 of a two-part blog series, Tom Lenfestey, founder and CEO of The Law Practice Exchange, explains how MSOs and private equity are reshaping growth and exit strategies for contingency fee law firm leaders.

What does your firm’s next chapter look like?

If you’re planning your succession, retirement, or simply exploring next steps, the landscape is changing quickly and so are your options for selling your law firm. As a law firm leader, you need to focus your attention on the forces driving that change.

Management Service Organizations (MSOs) and Private Equity (PE) firms are reshaping how plaintiffs’ practices operate, compete, and plan for the future. Whether you intend to engage with these models or not, their growing presence is already affecting your firm’s competitive position, long-term value, and personal exit strategy.

Understanding MSOs and Private Equity

What MSOs Do for Law Firms

Management Services Organizations (MSOs) are specialized companies that manage non-legal operations for law firms—marketing, client intake, HR, IT, financial management, and compliance. By handling the business side, MSOs enable attorneys to focus exclusively on practicing law while professionals manage the business side. The MSO model is also used in other industries, such as healthcare or professional services.

How Private Equity Enters the Picture

Private equity firms pool capital and deploy it into businesses, including MSOs and law firms where permitted. Their objective is to improve operations, achieve scale, and grow revenue over a 5–7-year investment horizon.

The appeal is straightforward. For law firm owners, MSOs and PE can provide:

• Immediate capital for growth
• Professional management expertise
• Economies of scale
• Expansion capacity without building everything internally
• Flexible transition options depending on personal goals

Unlike traditional partnerships where equity builds gradually, PE investment offers upfront liquidity and resources that can help you start your next chapter. That can look like expansion, funding your retirement, stepping back from your firm, or continuing to practice law without worrying about operational details.

How This Affects Your Law Practice

MSOs and private equity are influencing the plaintiffs’ bar in ways that affect every firm, whether or not you pursue a partnership.

• Case acquisition costs are rising. Well-capitalized competitors are outspending traditional practices on digital marketing, SEO, and intake technology.
• Operational standards are increasing. PE-backed firms are implementing sophisticated practice management systems, tech stacks, and data analytics that improve case selection and outcomes.
• Firm value is being redefined. Traditional plaintiff firms derived value from the founder’s personal reputation. MSOs and PE investors focus on institutional value—systems, brands, and processes that survive any single attorney’s departure.

Understanding what your firm is truly worth in today’s market has become essential. Professional valuation analysis can reveal whether your value lies in transferable systems or personal relationships that won’t survive your exit.

The Opportunities of MSOs and Private Equity

For law firm owners considering these partnerships, the benefits include:

• Growth capital for significant cases without cash flow constraints
• Professional infrastructure in HR, finance, compliance, and technology
• Geographic expansion capabilities
• Flexible transitions that provide liquidity while allowing continued involvement

Access to specialized financing, including solutions designed for law firm growth, can provide similar benefits for firms pursuing independent expansion.

The Challenges of MSOs and Private Equity

These opportunities come with trade-offs:

• Reduced autonomy in decisions about technology, staffing, and operations
• Cultural shifts as entrepreneurial practices adopt corporate structures
• Margin pressure affecting case selection and settlement timing
• Long-term satisfaction questions about practicing in institutional environments

Why MSOs Matter Now for Law Firms

“The legal landscape is evolving faster than most firm owners realize,” says Tom Lenfestey of The Law Practice Exchange. “Whether or not you’re interested in PE investment, understanding these market forces is essential for making informed decisions about your firm’s future.”

MSOs and private equity aren’t inherently good or bad. They’re options in a complex and expanding landscape. What matters is understanding how these forces reshape your competitive environment and what that means for your firm’s strategic positioning.

Understanding your strengths, vulnerabilities, and future pathways is the foundation for making informed decisions. Finding the right advisor for your law firm transitions can help you evaluate options before committing to any path.

In Part 2, we’ll explore strategic considerations, questions to ask before engaging with outside investors, and alternatives to PE investment that may better align with your goals.