The ownership structure of personal injury law firms is changing. Private equity capital has moved from circling the industry to actively entering it. Whether your firm operates in a state that permits alternative business structures or not, these developments will shape the competitive landscape you practice in.
This article breaks down the core concepts trial lawyers should understand, the operational implications for your practice, and the steps you can take to position your firm for whatever direction you choose, whether that is pursuing outside capital, acquiring other practices, or simply building a more valuable and resilient firm.
The ABS Model in Practice
Arizona has become the primary laboratory for Alternative Business Structures. The state now has over one hundred approved ABS law firms operating under regulatory oversight from the Arizona Supreme Court. These structures permit non-lawyer ownership and direct private equity investment into law firms through a formal application and approval process.
The mechanics are worth understanding. Under an ABS, outside investors can hold equity interests in a law firm. The firm remains subject to professional responsibility rules, and lawyers retain authority over legal decisions, case strategy, and client matters. However, the business operations, technology investments, and capital allocation decisions can involve non-lawyer stakeholders in ways that would be prohibited in most other jurisdictions.
ABS firms in Arizona can work with out-of-state firms through traditional referral and co-counsel arrangements. This means the effects of Arizona’s regulatory experiment are not confined to that state’s borders. Firms operating under ABS structures may compete for cases nationally, and their operational advantages, particularly in technology and marketing, may pressure traditional firms in other markets.
Other states are watching closely. Utah has implemented sandbox programs to test modified ownership rules. Washington has undertaken formal reviews of its regulations. California has moved in the opposite direction, tightening restrictions and limiting fee-sharing arrangements with ABS entities. The regulatory landscape remains in flux, and trial lawyers should monitor developments in their home jurisdictions.
MSO Structures as the Alternative Path
For states that do not permit ABS, private equity has found another entry point through Managed Services Organization models. The MSO structure separates the law firm from a management company that handles administrative functions. The law firm remains lawyer-owned and maintains full control over legal work. The MSO provides technology, marketing, finance, human resources, analytics, and other non-legal support under a management services agreement.
This approach mirrors what has occurred in healthcare, where management companies support physician groups while clinical decisions remain with licensed providers. The parallel is instructive. In the MSO model for law firms, trial strategy, case selection, settlement authority, and expert retention stay with the lawyers. The MSO handles the business infrastructure.
The ethical lines are important to understand. State bar rules continue to prohibit fee-sharing with non-lawyers and the unauthorized practice of law. An MSO that attempts to influence case decisions, control intake screening at a substantive level, or direct settlement strategy would cross into prohibited territory. Well-structured MSO relationships keep these boundaries clear through carefully drafted management services agreements that define the separation of functions.
For personal injury firms, the MSO model means that private equity is evaluating your practice even if you operate in a state without ABS rules. Investors view the MSO as a path to bring capital, systems, and scale to firms without requiring changes to state ownership regulations.
What Investors Evaluate in a Personal Injury Practice
Understanding what private equity looks for helps trial lawyers recognize where their own operations may need improvement, whether or not outside investment is a goal.
Investors focus on predictability and scalability. They want to see clean financials with accrual-based accounting and consistent reporting. They expect documented systems and standard operating procedures for intake, case handling, client communication, and conflicts. Real-time data on case inventory, cycle times, marketing costs, and fee recovery demonstrates that a firm operates as a business rather than a personality-driven practice.
Leadership structure matters. Firms where every significant decision runs through a single partner present greater risk than firms with defined management roles and delegated authority. Investors want to see that the practice can function effectively without depending entirely on one individual.
Ethics and compliance receive scrutiny as well. Documented policies, regular compliance reviews, and clear separation between any MSO functions and legal decision-making signal a firm that takes its professional obligations seriously. Intake decisions that remain with licensed attorneys inside the firm, rather than outsourced decision-makers, demonstrate appropriate controls.
Brand and intellectual property carry weight in valuations. Firms with distinct positioning, recognized thought leadership, and proprietary technology or processes command higher multiples than undifferentiated practices. The ability to articulate what makes your firm different, and to back that claim with evidence, affects how buyers assess your value.
Operational Implications for Lien Resolution
When outside investors evaluate a personal injury practice, they examine the entire case lifecycle. Settlement administration often receives particular attention because it directly affects cash flow, client satisfaction, and operational predictability.
Lien resolution is a pressure point. Delays in resolving healthcare liens extend case timelines, tie up trust account funds, and create unpredictability in financial projections. Investors look for firms that treat lien resolution as a structured process rather than an afterthought. Clean, repeatable systems for identifying, tracking, and negotiating liens signal operational maturity.
From a valuation perspective, firms that have removed settlement bottlenecks through systematic processes or strategic partnerships present cleaner books and more predictable timelines. These characteristics translate directly to investor interest and deal terms.
Positioning Your Firm for the Future
Whether you intend to pursue private equity, acquire other practices, or remain independent, the operational improvements that matter are largely the same.
Document your processes. Written standard operating procedures for intake, case handling, client communication, and conflicts create institutional knowledge that survives staff turnover and demonstrates professionalism to any potential partner or acquirer.
Clean your financial reporting. Accrual-based accounting, consistent categorization, and clear separation of firm revenue from any affiliated entities build confidence in your numbers. Sloppy books reduce trust and valuation.
Build data infrastructure. Dashboards that track case inventory, marketing performance, cycle times, and outcomes enable better decisions internally and demonstrate sophistication externally. Firms that measure their performance can improve it. Firms that cannot show their numbers force outsiders to guess.
Formalize leadership. Define management roles, delegate authority, and create succession pathways. A firm that runs on systems rather than heroic individual effort is more sustainable and more valuable.
Treat lien resolution as a core operational function. Whether you build internal expertise or partner with specialists, systematic approaches to lien resolution improve client outcomes, accelerate cash flow, and demonstrate operational discipline.
The Bottom Line
ABS and MSO models are not distant developments. They are actively reshaping the competitive environment for personal injury firms. The capital, technology, and operational discipline that these structures enable will continue to raise expectations across the industry.
Trial lawyers who understand these dynamics can make informed decisions about their own practices. The firms that invest in operational excellence today will have options, whether that means attracting outside investment, acquiring other practices, or simply building a more profitable and resilient business.
Why Synergy Is Built for This Moment
At Synergy, we’ve always believed that lawyers should focus on securing justice while we handle the friction points that slow firms down. Now, with the rise of different business structures and the need to be as efficient as possible, we’re doubling down on that mission, helping firms integrate the best tools with the best people to achieve Peak Practice.
🔗 Want more insights like this?
If you’re a personal injury lawyer ready to scale, streamline, and step into your role as CEO, let’s talk. Join the Peak Practice Community, and learn how Synergy can help you eliminate settlement bottlenecks, resolve complex liens, and maximize recoveries. Learn more here: https://partnerwithsynergy.com/peak-practice/
If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/
