Ben Thomson, LawFuel contributing editor
Burford Capital the litigation finance behemoth wants not just to bankroll lawsuits but to buy stakes in actual U.S. law firms. The move isn’t your garden-variety PE play; it’s a direct challenge to the profession’s no-capital-external-to-the-firm orthodoxy.
Burford, under the ever-quotable Jonathan Molot, (pictured above) told the Financial Times he is floating a structure ripped from healthcare and accounting playbooks: split a law firm into two entities, a lawyer-owned practice handling client work, and a Managed Service Organization (MSO) holding assets and providing back‑office muscle in exchange for a cut. It’s a classic “external capital without violating ethics rules.”
Molot’s eyebrow-raiser: “It’s a crazy thing … when law has grown up to be a multi‑trillion‑dollar industry …” His tone suggests he’s half convinced you’re only now realizing how absurdly under‑capitalized BigLaw has been.
Why It’s Actually Kind of a Big Deal
- If you’re trying to deploy AI, ditch the billable-hour hamster wheel, or chase bold expansion, access to capital is needed which creates a problem for law firms that have historically shunned non-lawyer ownership with the UK having ABS structures for law firm funding as used in the UK for law firm acquisition.
- Arizona is the only state that explicitly allows non-lawyer ownership. Elsewhere, the MSO work‑around offers a Shakespearian answer to the Bar’s “We must remain pure” chant.
- Burford’s not flying solo: Already used MSOs (and ABS-like structures) to inject outside capital into accounting, medical practices—and even their own 2020 equity play in London’s PCB Litigation.
Why Should Lawyers Care?
Because, as Molot puts it, “capital markets have had no interaction” with legal services. That’s tantamount to saying “We forgot to treat law like the megawatt industry it is.” Law firms have long been the industry’s least-invested unicorns.
The Burford move could result in a range of interesting developments, including enhancing firms’ experimenting with AI and new models without accountability to a partner’s overdraft.
It would almost certianly also provide a fresh rewards model, not necessarily the old equity-and-bonus dance.
But it may also be a potential slippery slope toward PE-style influence, unless the MSO lever is tightly controlled.
As Holland & Knight opined in a client memo, “Properly structured, MSOs can assist law firms in innovating …” If by “properly structured” they mean “without walking straight into a conflict storm,” fine.
Sidebar: Burford’s Why and How
Burford isn’t some fly-by-night operator but has significant clout and experience. With a $3 billion valuation, global reach, and public listing on both the NYSE and LSE, they’ve got the financial blandishments most firms only dream of.
They’ve already raised a $500 million bond offering this summer, putting real cash reserves behind their ambitions.
The Takeaway
Law firms have long been content—or forced—to be cash-strapped fiefdoms. Burford’s gambit forces a question: do firms want to be lean, proud solo outfits—or capital-backed, growth-ready powerhouses?
The MSO structure may be the Trojan Horse, but for BigLaw it is a case of deciding just how the changed future or the biglaw business is going to work – and be funded.
Burford Capital’s move to not just finance lawsuits but also seek ownership in the firms they’re funding is a bold shift in the litigation finance landscape. This will definitely impact the way law firms approach their partnerships.