Law Firms NAICS 541110

Dec 19, 2025 - Law Firms Look to MSOs for Capital Investment

• US law firms are increasingly exploring management services organizations (MSOs) to attract outside capital while complying with ethics rules that bar non-lawyers from owning law firms. MSOs let investors own entities that handle back-office functions - such as technology and operations - without sharing in legal profits, opening a route for private equity and litigation funders to invest in legal services. Firms including McDermott, Will & Emery and Cohen & Gresser are in talks about potential MSO deals, and investors like Burford Capital are engaging on MSO planning. This trend responds to rising capital needs due to technology costs and lawyer compensation, and follows regulatory changes in some states that loosen ownership restrictions. While the American Bar Association has not formally approved MSOs, recent state ethics opinions suggest potential permissibility. Industry observers predict MSO arrangements and other investment models could expand through 2026, reshaping legal market dynamics.
• US law firms are increasingly moving away from remote work policies that became common during the pandemic, according to industry recruiters. The shift highlights the industry’s effort to balance employee satisfaction with maintaining productivity and competitiveness in a tight labor market. More firms are asking lawyers to come into the office three to four days a week, seeing in-person work as key to collaboration, mentoring younger associates, and maintaining a firm culture. While many firm leaders say this approach helps productivity and keeps teams connected, not all lawyers are happy with the change. Some are pushing back or are even considering leaving for firms that still offer more flexibility. Despite this, the overall trend is clear: remote work is fading as the standard practice in the legal industry. A small number of firms continue to use flexibility for recruiting, but for the most part, law firms are emphasizing face-to-face interaction.

• Artificial Intelligence is rapidly transforming the legal sector, according to Thomson Reuters’, The Future of Professionals Report 2025. Legal professionals expect to save nearly 240 hours annually per person (roughly $19,000) through AI-driven efficiencies in research, drafting, document review, and other routine tasks. Currently, about 30% of legal professionals use AI regularly to begin or refine their work, while 46% of law firms have invested in AI-powered tools over the past year, per the report. Firms with formal AI strategies are 3.5 times more likely to see a return on investment and twice as likely to experience revenue growth than firms using ad hoc approaches, highlighting a widening competitive gap. AI adoption is also reshaping staffing models and productivity expectations, allowing lawyers to focus on higher-value advisory work rather than repetitive tasks.
• US law firms are seeing record pricing power, with average work rates up 7.4% so far in 2025, according to Thomson Reuters. Strong demand for legal services; particularly in corporate, litigation, and regulatory work, has allowed firms to raise fees and take advantage of favorable market conditions. But higher rates don’t come automatically from long-standing client relationships; these connections contribute little to setting a firm apart from competitors. Realization rates are fairly similar across firm sizes and practice areas, which suggests that reputation, specialized expertise, and operational efficiency are becoming more critical. At the same time, economic uncertainty is making clients more cost-conscious, prompting them to explore lower-cost providers or alternative fee arrangements. For US law firms, these trends present both a golden opportunity to capitalize on demand and a challenge to maintain pricing power in a shifting market.