In January 2026, Dudley DeBosier—a leading Louisiana personal-injury firm—announced a high-profile private equity partnership. The deal used a management services organization, or MSO: a split-entity workaround in which attorneys keep ownership of the law firm while a PE-backed vehicle acquires the operating platform—technology, billing, marketing, HR, and everything else that isn’t “practicing law.” The buyer, Orion Legal, has broader ambitions: building a national consolidation platform for personal-injury practices, echoing the roll-up playbook PE has already run in healthcare and accounting.

Dudley is not an outlier. Cohen & Gresser, an elite boutique, is reportedly in PE negotiations, with its founder citing “over a decade” of preparation for institutional capital. McDermott Will & Schulte is exploring an MSO transaction. In a new essay, I argue that the market is moving—and the profession’s oversight infrastructure is nowhere near ready.

The Workaround

Here’s the core logic. ABA Model Rule 5.4 prohibits nonlawyer ownership of law firms—a restriction that also limits access to outside capital, constrains the recruitment of nonlawyer talent, and effectively locks firms into the partnership model regardless of size or complexity. As AI integration raises capital intensity across the sector, the pressure for alternative financing is growing rapidly.

The MSO is the market’s answer. It separates the regulated legal practice (attorney-owned) from the business platform (investor-owned), connected through a long-term management services agreement. The firm practices law; the MSO runs everything else. In theory.

The problem is that this structure rests on a fragile assumption: that “business operations” and “legal practice” can be clearly and durably separated. Healthcare’s three decades of MSO experience suggests otherwise. There, arrangements that started with clean governance and independent practice boards drifted toward de facto investor control over professional decisions—through staffing, scheduling, intake systems, and revenue optimization tools. Each step was individually defensible as a “business function.” Cumulatively, they transformed the MSO from service provider to shadow practice manager. Regulators have since challenged structures at PE-backed healthcare firms, and several states have enacted legislation restricting MSO control.

Accounting tells a similar story. Since 2021, PE has reshaped that profession through hundreds of transactions. The SEC is now “closely monitoring” structural changes for independence risks. The PCAOB has flagged PE investment as an inspection priority while the American Institute of Certified Public Accountants (AICPA) is considering its most significant ethics code amendments since 2000.

The Governance Gap

Law is next—but with even less external oversight. No state bar has issued model governance standards for law firm MSOs. No court has adjudicated the boundary between permissible management services and impermissible control. No regulatory body has established any registration or approval process for these transactions. The ABA reaffirmed Rule 5.4 in 2022 without addressing the governance questions MSOs pose, even as the structure is becoming the de facto channel for outside capital in most states.

This is not a garden-variety compliance problem. The tensions are practical and daily. The MSO can set marketing strategy—but those choices shape case mix and attorney workload. It can build AI-powered intake tools—but technology decisions can implicate matter selection and case valuation. Its executives coordinate daily with the firm’s managing partner on conversion rates and case throughput. When does discussing operationally important metrics become the kind of pressure on legal judgment that Rule 5.4 was designed to prevent?

A Floor, Not a Ceiling

My essay proposes a minimum governance framework organized around three pillars. First, structural safeguards that limit MSOs to genuine support functions and give firms a real termination right if independence is compromised. Second, board composition requirements, including independent directors and a standing ethics committee. Third, management and monitoring mechanisms, including a compliance function reporting to the ethics committee rather than the CEO.

The proposal is deliberately modest, setting a floor implementable through ABA guidance, state bar opinions, or legislation. In accounting, alignment of interests between investors and firms drove rapid sector transformation, with regulators scrambling only after the fact. Law has the advantage—and arguably the responsibility—of moving third. The window to establish governance before a crisis forces the issue is closing fast.

Lev Breydo is an assistant professor at William & Mary Law School, affiliated professor at the Mason School of Business, and faculty fellow at the W&M Center for the Study of Law and Markets. This post is based on his forthcoming essay, “Private Equity’s Law Firm Workaround: MSOs, Rule 5.4, and the Governance Gap,” forthcoming in the Yale Law Journal Forum and available here.