Private equity firm Charlesbank Capital Partners has completed an investment in Los Angeles-based Wood Smith Henning & Berman (WSHB), in a reported $700 million deal.
The transaction uses a management services organisation (MSO), separating the firm's legal practice from its business operations in a structure attracting growing interest from US law firms and investors.
Private equity firm Charlesbank Capital Partners has completed one of the largest investments in a US law firm to date, backing Los Angeles-based Wood Smith Henning & Berman (WSHB).
The deal values the non-legal operations at around $700 million, the Financial Times reported, and marks a significant development in private equity's push into the American legal market, where professional ethics rules have historically prevented non-lawyers from owning law firms.
WSHB specialises in defending insurers, corporations and institutional clients in litigation. The firm has more than 550 lawyers across 23 states.
A different structure
Charlesbank is investing through a newly established management services organisation (MSO) called WSHB Support Services. The entity will provide the firm's non-legal infrastructure and operational support, while WSHB's lawyers retain control over legal advice and client matters.
Charlesbank's investment will support WSHB's expansion into new markets, practice area capabilities, technology investment, including AI and data science.
Daniel Berman, executive chairman and co-founder of WSHB said: “We set out to build a forward-thinking firm that endures well beyond its founders and offers a better model for the lawyers who practice here today and in the future.”
He added that the investment will help the firm better serve clients in a “complex and dynamic litigation environment”.
PE moves in
The deal comes as private equity firms explore opportunities beyond personal injury practices, which attracted much of the industry's early investment.
Earlier this year, Los Angeles corporate law firm Massumi + Consoli agreed a similar arrangement with Trive Capital, while Arizona-based personal injury firm Rafi Law Group announced a $125 million investment in its MSO.
Larger US firms have also explored the model. McDermott has held discussions about potential MSO arrangements, while Quinn Emanuel and Paul Weiss have reportedly held talks with private equity investors or advisers.
The developments contrast with the UK, where law firms have been able to accept non-lawyer ownership since the introduction of alternative business structures.
Interest in outside capital is growing among British firms too, including Manchester sports law specialist Centrefield, which recently secured backing from Palatine to support its expansion in the US and Europe. Another sports law boutique - Northridge - also secured a minority investment from US firm Cordillera earlier this year.
The WSHB deal suggests investors are increasingly willing to navigate the more restrictive US regulatory environment to gain exposure to the legal services market.
Advising
Gipson Hoffman & Pancione and Troutman Pepper Locke advised WSHB on the transaction.
Weil, Kirkland and Frankfurt Kurnit Klein + Selz advised Charlesbank, with Kirkland advising on the debt financing.
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