“Arizona Law Firm Severs Back Office for $125 Million Investment” —

• “Rafi Law Group is separating back-office services from its legal operation to receive $125 million from an outside investor, the personal injury firm announced Monday.”
• “Rafi’s move to create a management services organization, which separates functions such as accounting and marketing from legal offerings, is a creative approach by firms to gain outside investment while bypassing state requirements that lawyers own firms. After catching on in physician-owned medical practices, the strategy is gaining traction in the legal industry though remains rare.”
• “‘MSOs keep that separation,’ Rafi said. ‘Attorneys maintain their independence so that they can make those decisions that are best for the clients.’”
• “Rimon PC [California] in 2019 became one of the first law firms to sell its back office functions, now known as Briefly, to private equity firm AlpineX. McDermott Will & Schulte said in November it is in preliminary discussions about selling a stake in its law firm to outside investors, and Quinn Emanuel founder John Quinn said in an interview last month that he envisions MSOs becoming more common.”
• “Some MSOs are entities spun off from law firms so that outside investors can take direct stakes, while others are created to offer services directly to firms. Texas-based Certum Group, which specializes in litigation finance and related insurance offerings, acquired an MSO in October targeting mass-tort firms and has already partnered with several of them.”
• “Mass tort and personal injury firms have been described ‘ground zero’ for MSOs.”
• “MSOs offer a different route to outside capital than Arizona’s alternative business structures. Though the firm is based in the state, Rafi said the MSO better suited the firm’s needs since there are guardrails that prevent the intertwining of outside capital into the law firm.”
• “Alternative structures have caught the attention of legislators. California enacted a law in January that blocks alternative law firms from operating in the state through arrangements with local firms. Illinois introduced a similar bill in February, which also bans firms from sharing fees with firms operated by non-lawyers and also includes MSOs.”
• “Rafi said he hired attorneys from Greenberg Traurig to help navigate the MSO through ethics guidelines and state regulations. He said he’ll continue to keep a close eye on legislation.”

“The Back-Office Back Door to Nonlawyer Investment in Law Firms” —

• “Managed service organizations running the back office of many medical and dental practices have already gained prominence as private equity’s structure of choice for entering the health care sector, according to lawyers brokering these so-called MSO deals. Now, investors are eyeing similar opportunities in the legal industry.”
• “Briefly, backed with private equity capital from AlpineX, has grown by acquiring the back-office assets and personnel from distributed firms OGC, Scale and Rimon, among others, and bundling them into a single facility that now operates under the name Briefly. Federate seeks a similar trajectory.”
• “But unlike the private equity-backed Briefly, Federate co-founder T.J. Henry, a former chief legal and growth officer at Rimon, isn’t accepting private equity capital for his newly created legal MSO venture.”
• “Even though such an arrangement wouldn’t violate Rule 5.4 of the ABA’s professional conduct code, Henry said he wants to avoid any ‘adversarial relationships’ between lawyers at Federate’s firms and investors seeking to profit off the back office. Instead, Henry said he’s approaching various professionals in the legal industry, lawyers and nonlawyers alike, whose incentives are aligned with his.”
  ‘What we’ve learned in prior situations is that … investments from private equity come with complications because you’re beholden to fund timelines and the idea that you need to exit,’ Henry said.”
• “Charles Rutstein, CEO of Briefly sponsor AlpineX, rejected the notion that private equity’s business model was misaligned with law firms and said fund timelines aren’t as constricting as many think.”
• “Rutstein said Briefly is still in an initial hold period with AlpineX and it’s too early to say if or when AlpineX will sell, adding, ‘there’s no urgency’ on AlpineX’s part.”
• “‘Businesses bought by private equity sponsors grow quickly with investment from new owners,’ he said, noting that private equity has already permeated legal services through tech vendors like Intapp. ‘Private equity brings capital, talent and experience to dramatically improve experience for attorneys that we serve,’ he said.”
  Rutstein added that, in the example of Briefly, the upshot is a sophisticated back-office operation for small firms that couldn’t provide one on their own.”
• “The management and fee agreements between MSOs and the practices they serve are highly regulated so as to discourage unqualified management of clinical practices and the funneling of capital away from patient care, according to lawyers involved in MSO transactions.”
• “MSOs have become a common vehicle for private equity firms to profit from clinical practices without running afoul of regulations concerning nonphysician ownership, said Ericka Adler, health care group manager at Ohio-based midsize firm Roetzel & Andress, but they are careful not to structure the fee as a de facto fee-sharing agreement.”
• “Rutstein said Briefly and AlpineX retained legal ethics counsel to structure their agreements with firms, going to pains to refrain from interfering in the professional independence of the lawyers they serve.”
• “Briefly’s fees are structured on a per-attorney, per-month basis to decouple it from attorney professional independence, Rutstein said, adding that ‘it makes no difference for us to take a case to trial or settle it. We don’t make a dollar less in that scenario.’”
• “Briefly’s contracts provide it with the discretion to raise prices, but fee increases are ‘not tied to [firm] financials in any kind of direct way,’ but to inflation and Briefly’s own cost of services. This way, there’s no arguing that there’s fee-sharing with the law firm.”
• “Rutstein said he didn’t know whether Briefly’s service agreements stipulate the division between legal and nonlegal functions, as D’Agostini said is common in the medical field. But Rutstein said he wouldn’t have a problem signing such a contract. Rutstein said AlpineX and Briefly refrain from getting involved in the business operations of the law firms they serve, such as brokering a merger between any of the firms.”
• “While some view nonlawyer ownership of law firms as a welcome influx of capital and business acumen to a stodgy business model resistant to innovation, others see a troubling encroachment on the independence of lawyers by investors with no fiduciary duties to clients.”
• “From the elevation of nonlawyers to C-level positions to litigating cases with financial support from nonlawyer investors to Arizona and Utah’s experimentation with nonlawyer investment and ownership, there are many ways for nonlawyer professionals to control and profit from the provision of legal services.”
• “Eric Pacifici, founding partner of SMB Law Group, said the infusion of capital and business know-how offered by private equity should be welcomed by the industry.”
• Attorney Stephen Younger, a former president of the New York State Bar Association, said nonlawyer profit sharing in Arizona and Utah has failed to deliver on the promise to close the access-to-justice gap and has instead funneled capital out of the practice of law to private equity and other nonlawyer investors.”
• “There are also potential conflicts of interest if a lawyer cross-sells services of a nonlawyer partner or a nonlawyer investor pushes a trial lawyer to compromise his or her duty of care for a paycheck, Younger said.”
• ‘If you plant a (venture capital) person at the table, there’s greater risk of them saying, ‘Just settle the case’ as opposed to saying, ‘She’ll do better next year because we’ll have a trial date next year,’’ Younger said.”
• ‘The legal profession is governed by professionals,’ Younger continued. ‘They’ve gone to law school for three years. You can’t just ignore that and say we’re going to abolish licensing of lawyers. We need to have licensing to protect consumers. I’m all for tech companies, but … I don’t think we should be turning keys to the profession over to tech companies.’”

“Legal Department Infighting Breaks Out Between AI Doubters and Devotees” —

• “AI is causing infighting on legal teams, as lawyers with deep-seated distrust of the technology clash with those eager to leverage it for greater speed and efficiency. That was one of the findings of a new survey of 252 legal professionals on legal department AI use. The report, released by the legal staffing firm Paragon Legal, found that while AI tools have become fixtures in legal departments, skepticism about their reliability runs deep.
• “Data for the survey was collected in October 2025.”
• “According to the survey, 67% of legal professionals said they have had to correct AI-generated work, and only 21% said they placed ‘high trust’ in AI-generated legal work, while 42% said they had little to no trust at all.”
• “There is little appetite among those surveyed for delegating high-stakes tasks to AI. Fifty-eight percent of those surveyed said they would not feel comfortable submitting an AI-drafted document to a regulator or court. The findings suggest that even as legal teams integrate AI into their workflows, attorneys remain reluctant to cede final judgment to the technology because of a significant trust gap.”
• “The survey arrives as the legal industry continues to grapple with where to draw the line on AI delegation. OpenAI earlier this year moved to halt the provision of direct legal advice through its products, a signal that even the most prominent AI developers are still working through the professional and ethical boundaries of the technology in legal contexts.”
• “‘For in-house leaders, this shift signals a need for balance, not retreat. Legal departments should continue testing AI for routine, low-risk work while reinforcing the human oversight that protects quality, compliance, and reputation. The goal isn’t to eliminate human input; it’s to deploy technology in ways that make your people more effective,’ Paragon wrote in its analysis accompanying the survey data.”
• “The survey identified several factors dampening enthusiasm. When asked what would most increase their trust in AI systems, 41% of respondents pointed to mandatory human sign-off requirements, while 20% cited explainable decision-making and 17% called for built-in compliance guardrails.”
• “Notably, 15% said nothing would make them trust AI regardless of safeguards, a contingent that legal technology vendors may find difficult to win over.”
• “The top concerns of automating legal work included hallucinations and lack of accuracy, ethical concerns, liability exposure and the possibility of data breaches.”
• “Adoption is also generating friction internally. Nearly half of respondents—47%—said AI automation had sparked conflict within their legal teams, a finding that points to unresolved questions about roles, accountability and quality control as departments scale up their use of the technology.”
• “Paragon also asked respondents how AI has made their work better, and 69% responded that it improved the speed of their work, while 39% said it lowered costs and 31% reported it increased consistency.”
• “Sixty-eight percent of those surveyed said their departments plan to automate new functions in 2026, with 46% saying they expected their teams’ use of AI to ‘increase moderately.’ Half of respondents said they felt pressured to appear more ‘tech forward’ by experimenting with AI, while 67% reported that they’ve already experimented with AI to write or improve internal policies.”