Private Equity and the Business of Law: What It Means for Your Firm

Private Equity and the Business of Law: What Investors See—and What It Means for Your Firm

By Eric Thurston, President & CEO, SurePoint Technologies

Part of SurePoint’s Beyond Practice Management: The Future of Firm Performance blog series

In the last article, Transformation in Action, Olivia Mockel explored how law firms are redefining success through innovation, agility, and strategic reinvention. Now, Eric Thurston turns to one of the most disruptive forces on the horizon: private equity.

Private equity (PE) interest in law firms is accelerating. Regulatory shifts in states like Arizona, Utah, and Puerto Rico are opening the door to outside investment. At the same time, legal technology platforms and alternative legal service providers (ALSPs) have matured into scalable, data-driven businesses—creating a clear playbook for investors.

As someone who has led multiple businesses through private equity transitions, I’ve seen firsthand how investor discipline can unlock growth. But I’ve also seen how unprepared organizations struggle to adapt. Law firms must understand what PE sees—and what it demands—to stay competitive in a rapidly changing market.

Why Law Firms Are Attracting PE Attention

Legal services are essential and recurring. Clients rarely scale back dramatically, even during downturns. High-margin practices like intellectual property, antitrust, and regulatory work deliver returns that rival other professional services. And once a firm embeds itself with a client, those relationships often last for decades.

Yet technology penetration remains low. Many firms still rely on manual processes, disconnected systems, and partner-driven decision-making. For PE investors, that’s not a deterrent—it’s an opportunity. The potential for efficiency gains, roll-ups, and scalable growth is enormous.

As Daniel Glasser, founding partner at Chipman Glasser, LLC, a SurePoint Finance Core firm, puts it:

“Just like AI, this is an incoming tsunami that will completely transform the landscape. You can either get to higher ground and prepare, or you can put your head in the sand.”

The Hurdles to Integration

Despite the momentum, PE integration is far from straightforward. Rule 5.4 restrictions still block direct equity ownership in most states, and fee-splitting prohibitions complicate investor structures. Lawyers wrote the laws that protect their ownership—and they won’t give up that control easily.

Still, change is coming. Regulatory sandboxes are gaining traction, and Puerto Rico is preparing to allow up to 49% non-lawyer ownership by 2026. PE firms have deep pockets and long timelines. They’re not just interested—they’re committed.

What Makes a Firm Attractive to Investors

Not all firms are equally positioned. Consumer-facing practices like personal injury and immigration benefit from scalable marketing and intake systems. Process-heavy practices—compliance, contracts, employment—are well-suited to ALSP-style models. Corporate mid-market firms with repeatable service lines and younger partners open to outside capital are especially appealing.

But many firms share common weaknesses:

• Limited financial controls
• Underinvestment in technology
• Lack of documented processes
• Reliance on partner intuition over data

PE investors will ask:

• How involved is the owner in driving revenue?
• Is income partner-dependent or system-driven?
• Can the firm scale without sacrificing quality or culture?

Glasser warns that most firms aren’t ready:

“You’ll see increasing pressure for law firms to be far more intentional and strategic in terms of the metrics they are tracking. PE buyers will want to know how much income is driven by partners cranking out work versus a firm with steady cash flow and well-managed books.”

The Mindset Shift Required

Running a law firm like a business requires a different mindset. It means embracing metrics beyond billable hours. It means investing in marketing, client acquisition, and operational infrastructure. It means using dashboards, analytics, and automation to make intentional decisions—not reactive ones.

Even for firms not seeking outside capital, the writing is on the wall. PE-backed firms will have more resources for technology, talent, and growth. Traditional firms that fail to modernize will face increasing pressure—from clients, competitors, and the market itself.

Technology as the Enabler

Technology is central to this transformation. Tasks once performed by junior lawyers—document review, data analysis, administrative workflows—are already being automated. AI isn’t just replacing effort; it’s enabling better leadership.

At SurePoint, we’ve seen firms like Chipman Glasser, LLC use our Finance Core platform to customize reports, configure dashboards, and make more strategic decisions. The firms that embrace change and put tools to use thoughtfully are building a future that’s more intentional, more scalable, and more resilient.

What Comes Next

The industrialization of legal services is inevitable. Clients don’t want bespoke work for every task—they want results, delivered efficiently and transparently. Market pressure, coupled with investor discipline, will push firms toward professionalized management and scalable operations.

The winners will be those who embrace process, technology, and governance—without losing client trust. The firms that cling to partner-first models without operational sophistication may find themselves left behind.

Next in the Series: In our next article, The M&A Equation: How Law Firm Consolidation is Shaping the Future of Mid-Market, Eric explores the strategic forces driving law firm mergers—and what it means for the future of mid-sized firms. From technology investments to cultural alignment, discover why consolidation is no longer optional, but essential for survival and growth in today’s legal landscape.

State of the Legal Industry: Continuing the Conversation

Private equity surfaced as a topic of discussion in the attendee chat during SurePoint’s annual State of the Legal Industry webinar, reflecting growing curiosity around how outside investment, governance models, and operational discipline are influencing law firm performance.

To explore the trends that shaped law firm performance in 2025, watch the webinar on demand. You can also sign up to be notified when the State of the Legal Industry white paper is released later this year.