Forbes [no paywall]: “Law firms are a lucrative $400 billion market that has long been shielded from outside ownership. In search of fresh turf, buyout firms may soon be hunting among the gray flannel suits...Considering that the buyout business has ballooned to more than 4,000 firms competing for deals, law could represent a new, fertile hunting ground. According to IBISWorld, law firms raked in $381 billion in revenues in 2023. Moreover, American Lawyer’s annual ranking of the world’s 200 biggest law firms by revenue, reports that the top five in the U.S. alone bagged $21.8 billion in 2022. Leading the pack, Chicago’s Kirkland & Ellis, with its army of nearly 3,000 attorneys focusing on big-time corporate deals. All told 425,000 law firms in the U.S. pocketed $78 billion in profits last year, according to IBISWorld, flaunting a 20% average profit margin—slightly higher than a darling of private equity, software publishing. Plus, with law being as fragmented as it is, it’s practically screaming for consolidation, one of private equity’s favorite tactics. If the stodgy legal establishment is hoping to keep buyout firms at bay, it may need more than just the velvet rope of ethical rules. Lee Minkoff, a managing director at Renovus Capital, a private equity firm in Wayne, Pennsylvania, has found one foothold into the legal market. Harbor Global, created from eight Renovus acquisitions, offers a business and tech services platform for law firms and legal departments. They’re not quite on the inside, but they’re on the cusp where it’s still plenty lucrative. Minkoff estimates the law firm tech market in the U.S. and U.K. (where Harbor has its largest footprint) is good for $25 billion in yearly sales. “Speaking for myself, I think the rules are going to continue to change, like what you have seen in Arizona and Utah,” Minkoff said. “You can lend to firms, you can invest in cases, but you can’t acquire equity. There are investment firms trying to figure out how to do that, whether directly or indirectly. If you buy a financial advisor’s book of business, you’ll be paying a multiple of three or four times revenue, if not more. Right now you’d be paying one times or less for a lawyer’s. There are, of course, differences, but that’s an attractive deal in terms of relative valuation.”…”