Law firms courting capital and investors looking to cash in on firms have a new buzzword: the MSO, or management services organization, a model that could reshape a segment of the U.S. legal market.
The approach, long used in healthcare and other industries, lets investors take a stake in a separate entity handling law firms' non-legal, back-office operations. The MSO is paid by the firm for its services but does not share in its profits, steering clear of ethics rules that bar non-lawyers from owning law firms in most U.S. jurisdictions.
At least two U.S.-based international law firms, McDermott, Will & Schulte and Cohen & Gresser, in recent weeks acknowledged exploring potential MSO deals.
If the model gains steam, it would be the latest chink in barriers dividing outside capital and law in the United States, where the litigation finance industry and state-level regulatory changes have already given investors a larger foothold in the legal profession.
Sara Merken has more on the trend in this week's Billable Hours.
