Healthcare's Lessons for Law About Private Equity Unclear

Legal ethics attorneys Trisha Rich and Joshua Porte were quoted in a Law360 article on private equity's growing interest in law firms, noting that today's investors have largely learned from early missteps in healthcare. They observed that modern deals tend to favor continuity, protecting firm culture and preserving lawyers' daily practice, rather than pursuing aggressive, short-term changes. One emerging trend in the legal industry that has long since been used in healthcare is relying on management services organizations (MSOs), which enable investment in back-office functions and thus serve as a workaround for prohibitions on non-lawyer firm ownership. Ms. Rich and Ms. Porte, who have worked on deals between private equity firms and law firms, advised interested parties to draw on healthcare's experience to guide a steadier, ethics-forward approach tailored to the legal market.

"Certainly the funds we've been working with, they're taking an approach that is much more akin to the current philosophy that pervades in healthcare, which is that the first principle is, 'Don't break it,'" Mr. Porte said. "Don't break it; don't mess up the culture; don't change the demands on lawyers in their day-to-day experiences. We're counseling clients on that as well. Learn from mistakes in healthcare, and start this industry off on the right foot."

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