McDermott Will & Schulte Considers Outside Investment in Firm

McDermott Will & Schulte said Wednesday it is in preliminary discussions about selling a stake in the law firm to outside investors, a novel move that could advance acceptance of non-lawyer backing of Big Law operations.

“This is all very preliminary and we are fielding inbound interest,” firm chairman Ira Coleman said in a statement. “We are constantly approached and we always listen to new ideas.”

The Financial Times earlier Wednesday said the firm is exploring a restructuring that would let it sell a stake to private equity groups, based on reporting from five unidentified people. The approach under consideration would split the firm into a business owned by lawyers that advise clients and a separate operation that would sell administrative services to the lawyer-owned firm, according to the FT.

Such an embrace of non-lawyer investment would represent a sea-change in the traditional business model the legal industry has embraced. Big Law firms in the US are strictly lawyer-owned, which critics say stifles innovation and makes legal services overly expensive.

While law firms have experimented with outside investment in a few states such as Arizona that allow alternative structures, none are of the size and heft of McDermott. The firm formed out of the combination of two legacy operations this year, with a combined revenue of $2.8 billion in 2024. While rankings by the American Lawyer for 2025 have not yet been released, the firm’s revenue will likely place it the 20 largest firms in the US by that measure.

Investor Approach

The McDermott approach reportedly under consideration would utilize a so-called managed service organization that would handle back-office functions such as technology services. The approach would allow investors share in the revenue generated by McDermott without running afoul of state rules against non-lawyer ownership of law firms.

“This is how we find the best opportunities to attract and retain the industry’s top talent and what our clients expect from us,” Coleman said in his statement about being approached with ideas. “We’re excited to learn from other leading organizations as we challenge the status quo.”

The MSO model has allowed private equity firms to share in the revenue generated by physicians’ practices and other professional services. Such models, while rare in the legal profession, have been employed there. Rimon PC was one of the first law firms to sell its back office functions, now known as Briefly, to private equity firm AlpineX.

“In most states, you can’t own part of the law firm unless you’re a licensed lawyer,” said Ericka Adler, a shareholder at Roetzel & Andress who works on MSOs for the healthcare industry. “This model is appealing because it allows people who aren’t lawyers to do to law firms what they’re doing to health care practices.”