As law firms explore new avenues for growth, liquidity, and modernization, the conversation around outside investment has taken center stage. Firms across the U.S. are no longer asking if they can attract private capital — they’re asking how they can do it, and how soon.

This shift was the focus of Marks Baughan’s latest webinar Law Firm Value Creation: Securing Outside Investment — the second installment in the firm’s series exploring how law firms can leverage the Management Services Organization (MSO) model to access private capital while remaining compliant with ABA rules.

Hosted by Chris Hildreth and John Martin of Marks Baughan, the discussion featured Josh Porte, partner at Holland & Knight, and Mike Bryant, co-managing partner at Knox Capital Holdings. Together, the panel described how law firms can structure their MSOs, secure capital partners, and build strong relationships that fuel value creation.

The Regulatory Framework: ‘The Two Big Rules’

Holland & Knight’s Josh Porte outlined the two principal rules that govern every MSO transaction: the ownership rule and the fee-splitting rule.

The ownership rule requires that law firms be owned by lawyers and operated without interference or impairment of their professional judgment. In structuring the investments, the legacy law firm is reorganized into two sister entities– an MSO and the law firm.  To stay compliant, the MSO invests in only the non-legal, non-professional assets — allowing functions associated with the practice of law to remain within the firm.