McDermott Will Announces the Accuracy of My Crystal Ball... and Their Legal MSO!

McDermott Will & Schulte just publicly announced that they are exploring outside investment through an MSO platform. Yes, one of the BlueBloods of BigLaw has now publicly stated “Maybe a century old business model wherein people who aren’t trained to to handle the new, complex world of HR, Tech and other factors that didn't even exist when the profession started… could be improved upon!”

Wow! Who could have seen THAT coming!!! Oh wait. I have been scrying my crystal ball and publicly making a (what many called audacious) prediction that Legal MSO’s would become a billion-dollar industry by the end of 2026. McDermott alone, could move the needle halfway there.

For those of you new to my prognostications, I have previously predicted in Attorney at Law Magazine and The American Lawyer that:

• Virtual law firms and remote lawyering would be normalized - a year before COVID hit.

• AI would be the revolutionary tech to the profession - years before Chat GPT was released.

• The ABS model would attract major players - before KPMG opened their AZ Office.

• That Legal MSO's would become a Billion Dollar Industry by the end of 2026
  

Well, here’s what I’m predicting and yes, you heard it here first (again!):

Several other AmLaw’s will look at bifurcating their firms and creating MSO's, to create more efficient and profitable business models. Next year, you’ll see 2 - 5 AmLaw’s doing the same thing as McDermott – or at least initiating the process to do so.

But that’s not the most important piece of this productivity-enhancing puzzle!  While this model will help AmLaw’s with the bottom line, it will have a truly transformative effect on SmallLaw and MidLaw. That’s where the real action will take place.

Standard MSO’s will help younger firms and AmLaw split-offs gain a competitive edge by enabling them to gain access to the best talent, tech & AI and infrastructure available thus relieving them from the repetitious rote of payroll, HR, tech and more.

Long-Term Investment Fund (NOT PE) will help Boomers and senior Millennials to split off from AmLaws and will also relieve partners at smaller firms of all the administrative minutia. Additionally, they will infuse massive amounts of capital that will enable these firms to scale, and build succession and retirement plans other lawyers could only dream about.  

Analysis Paralysis vs. Alphas

But Small and Mid-Law will wait like they always do. Ninety nine percent of attorneys are allergic to innovation. Most will reject monumental movement until it becomes mainstream. While the best deals are always gained by early-market movers, the majority of attorneys will do what their Anti-Entrepreneur Instincts internally advise, and either laugh this development off, like they did with e-discovery and artificial intelligence; or become frozen by “Analysis Paralysis” when the deal of a lifetime comes their way – and then passes them by because they failed to act.

Which small to mid-law firms will thrive and become wealthier, more successful and longer-lived than their peers?

The ones with Alphas at the helm.

Those who are able to set aside their fear, calculate what is before them, and act. Just as with all evolutionary business developments, the “nimble market adaptors” will seize golden opportunities while their peers cling to the status quo. Their firms will grow and prosper while others "Gray out of existence" as younger attorneys are poached and older ones retire.

Months (or years!) after the First Market Movers have made their fortunes, the Legal Lemmings who have waited until AmLaws “Legitimize” this model, will then rush in to get mediocre, standardized deals. Afterward, they will proudly claim they “knew all along” that this was going to be the Next Big Thing. How do I know this? I've seen it happen million times before, with all the lawyers who scoffed, mocked and laughed at my previous predictions. "Remote attorneys and "legal AI"? Ha!! Pipe dreams!"

The profession itself, is profoundly predictable that way. FS Frederick Shelton advises his clients on law firm M&A, MSO's, AI and virtual law firm platforms. He can be reached at fs@sheltonsteele.com