Law firm founders often make a critical mistake when evaluating legal managed services organizations: they either talk to the first one that calls or every one that does.
Neither approach works well. The first leaves no basis for comparison. The second turns the process into a blur of indistinguishable pitches, where founders struggle to remember which platform promised “reimagined legal services” and which had the former Goldman Sachs banker on its team.
The issue extends beyond legal MSOs
This mistake is hardly unique to legal MSOs. The legal profession has repeated it for decades—whether in legal recruiting, law firm mergers, or private equity. When the author started in legal recruiting 30 years ago, the prevailing philosophy was simple: expose attorneys to as many firms as possible, then tell them to accept the highest offer. The logic seemed sound—until candidates completed a dozen interviews and realized every firm described itself as having “the best culture” and “unparalleled mentorship.”
The alternative approach proved equally problematic. Some recruiters directed candidates toward firms that paid upfront retainers, labeling those opportunities as ideal. Neither method considered what truly mattered: fit, growth, and long-term satisfaction.
Choosing an MSO carries higher stakes. A founder isn’t just selecting an employer but a long-term business partner who will influence the firm’s technology, hiring, marketing, and strategic direction for years. Price is important, but it’s only one factor in a broader decision.
Deal terms outweigh valuation
Founders who fixate on valuation multiples often miss critical details. The process is like buying a car at a great price—only to find the financing includes 40% interest. Terms, governance, and alignment can determine a deal’s success or failure.
One financial advisor even asked about ways to bypass Rule 5.4, the ethics rule barring non-lawyer ownership of law firms. Another investor stated outright that their goal was to help partners “pick the most profitable cases.”
Related: Lawyers set unrealistic standards for themselves
Legal ethics attorney Trisha Rich has observed that every transaction must be structured to comply with ethics rules rather than circumvent them. After evaluating more than 70 MSOs and rejecting 60, the lesson is clear: “The risk that some participants in this growing market will eventually violate ethics rules appears high.”
A focused approach works best
The solution isn’t to speak with one MSO—or 20. The first leaves founders negotiating against themselves. The second turns the process into a time-consuming task, where they can’t recall whether Platform A had the AI strategy or the managing director who repeated buzzwords excessively.
A targeted approach—engaging with two to five carefully selected MSOs that align with the firm’s culture and goals—creates enough competition to drive leverage without overwhelming the process. It also allows founders to compare not just financial terms but the people they might work with for years.
Austin Maloney, a legal MSO partner at Hunton Andrews Kurth, shares this view. “Upfront cash grabs attention,” he said. “It matters, but it’s only one of many factors that determine long-term value.”
The approach isn’t about a fixed number. It’s about balance—enough competition to create leverage, enough variety to compare strategies, but not so many that the process becomes exhausting. Experienced buyers recognize the first offer as just the starting point. Sellers should do the same.
Founders who seek guidance on these decisions often find structured advice helps them avoid costly mistakes.
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