Tennessee Supreme Court Denies Private Equity Ownership of Law Firms

Legal Services Transactions Team Co-Leader Joshua Porte spoke with the Nashville Post about the Tennessee Supreme Court's decision to maintain the state's prohibition on nonlawyer ownership of law firms and fee-sharing arrangements with nonlawyers. The article explored how the ruling preserves the current Rule 5.4 framework for legal services investment in Tennessee while leaving open the possibility of future reforms. Joshua pointed out that although some states have considered alternative business structures (ABS) that permit nonlawyer ownership, Tennessee continues to rely on management services organization (MSO) arrangements as the primary avenue for outside investment in the legal industry.

"So while the ABS program is very limited to Arizona, capital has nevertheless been flowing into legal services via a different kind of transaction structure called a management services organization," he commented.

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