A management services organisation (MSO) structure is letting new US law firms raise capital from private equity and venture funds, accelerating the growth of AI-native start-ups that challenge traditional Big Law models. The structure sidesteps rules that ban non-lawyer ownership by splitting a firm into a lawyer-owned practice and a separate business that houses technology and back-office functions.
Peter Sacripanti, former co-chair of McDermott Will & Emery and now chair of Broadfield, is building a challenger firm with funding from the founders of Alvarez & Marsal. He said the combination of climbing rates and AI's capabilities makes change inevitable. "With the never-ending spiral of rates constantly climbing, law firms - unless they change their model - are pricing themselves out of the market," he said. "When you combine that with the increase in the capabilities of AI, and what that should do to deliver value to clients, it's time for a change."
The MSO model splits law firms in two
The MSO structure originated in personal injury firms and is now used by technologists building AI-native law practices. Broadfield's MSO, SHP Legal Services, shares a parent company with Alvarez & Marsal, giving the firm a relationship-building opportunity and the chance to work alongside the consulting group on certain projects. The structure lets outside investors own the MSO while lawyers own the legal practice, keeping ethical rules intact.
Josh Porte, partner at Holland & Knight who has advised on more than a dozen MSO deals, said the model is "precision-engineered" for AI-native firms. "It contemplates this really strong relationship between the business people, and the software and the technologists, with the lawyers - and you can design that environment from the ground up," he said.
AI-native firms use agents instead of junior lawyers
Norm Law, an offshoot of legal tech company Norm AI, opened in 2025 and uses AI agents in place of junior lawyers for routine corporate work. The firm serves asset managers and other financial services clients. Mike Schmidtberger, Norm Law chair and a 35-year veteran of Sidley Austin, said the model differs sharply from Big Law's approach of "hiring vast numbers of young lawyers and then winnowing them all the time." The power of AI means Norm Law promises to meet or beat the cost of a traditional law firm doing routine corporate work, he added.
Schmidtberger joined Norm Law in January 2026 as a bet on disruption from AI-native start-ups. "There's a lot of energy around all the new possibilities, and a lot of folks trying to figure out how to transition legacy businesses," he said. "All I know is that standing still is a very bad strategy."
Big Law fights back with tech investment
Kirkland & Ellis, the world's highest-grossing law firm, has set aside $500mn to create its own AI platform and agreed a multiyear deal with Palantir to develop technology for private equity fundraising. Other large firms, including McDermott Will & Schulte, are considering converting to an MSO structure in part to raise capital for technology investment. Executives across Big Law also expect they will increasingly charge for AI-assisted legal advice based on the value it provides to a client, rather than billing by the hour, bringing them into line with start-ups already pricing that way.
John Budetti, a former private funds lawyer at Kirkland & Ellis who now runs consultancy M37 LegalTech Strategies, sees an intensifying battle between Big Law and AI-native firms that layer lawyers onto their technology. "Both models are challenging. It is hard to change the Big Law hourly business model, and it is hard for newcomers to win business," he said. "But clients are urgently signalling a desire for competition."
Why this matters for legal professionals
The rise of AI-native firms and MSO structures is redefining junior lawyer roles as AI agents handle routine tasks, while demand grows for legal engineers who combine legal and tech expertise. Law firms exploring AI integration can find relevant guidance through AI for Law Firms Programs, and paralegals facing automation can prepare with AI Legal Assistant Courses. Unpredictable litigation and complex deal work may resist fixed pricing, but routine tasks such as setting up new businesses or making patent applications could increasingly be sold per project, changing how legal professionals deliver and price their services.
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