Big Law’s Next Taboo
Ben Thomson, LawFuel contributing editor
McDermott Will & Schulte has decided to dip a cautious toe into capitalism’s deep end, confirming it’s in “preliminary discussions” about selling a slice of the firm to outside investors.
Chairman Ira Coleman delivered the usual corporate zen: they get “inbound interest,” they “listen to new ideas,” all very mindfulness-session-meets-private-equity. But behind the serenity, the Financial Times reports something punchier. Five unnamed insiders say McDermott is eyeing a restructuring that would split the business in two: a lawyer-owned legal advisory arm and a parallel, investor-friendly vehicle flogging administrative services back to the mothership.
If McDermott pulls off the deal it will mark a proper rupture in Big Law’s pretend-monastic business model. The industry has dabbled with non-lawyer ownership in Arizona and a handful of other regulatory sandboxes, but nothing at McDermott’s scale.
KPMG Law was set up in Arizona using the same regulations as we have reported, but a major firm like McDermott is something new and exciting for private equity to turn its attention to.
This is a $2.8 billion operation that will almost certainly land in the US top 20 when the American Lawyer rankings drop.
Coleman insists the whole exercise is about “attracting and retaining top talent” and “challenging the status quo,” which is PR-speak for “every other industry has been cashing PE cheques for years and we’re tired of pretending we don’t want one too.”
Rimon PC tried a version of this earlier, offloading its back office to AlpineX and rebranding it “Briefly.” Healthcare firms have been running the MSO model forever. Lawyers, naturally, convinced themselves they were immune.
Ericka Adler of Roetzel & Andress summed up the obvious: non-lawyers can’t own law firms in most states, so MSOs let investors “do to law firms what they’re doing to health care practices.” Which may be a polite way of saying that Big Law is finally admitting it fancies a bit of private equity attention, even if it has to engineer a workaround to get it.
