Drew Sanders/PitchBook News
Tyson & Mendes, a law firm that defends insurance companies against legal and financial claims, is seeking private equity investment, according to people familiar with the matter.
The San Diego-headquartered firm has held talks with multiple PE investors about forming a management services organization, which would allow outside investment in the part of the business that does not provide legal advice, the people said.
The law firm, which employs more than 250 attorneys across 22 states, is being advised by Marks Baughan, a boutique M&A adviser that specializes in the legal sector.
In June, Tyson & Mendes acquired fellow insurance defense firm Rebar Kelly, adding 21 attorneys from New York, Pennsylvania, New Jersey and Connecticut, ahead of a potential transaction.
Tyson & Mendes and Marks Baughan did not immediately respond to requests for comment.
So-called MSOs are legal entities created to house a law firm’s business operations. Lawyers retain ownership and control of the law firm, while an investor-backed entity owns or provides functions such as technology, billing, human resources and administration.
This structure allows law firms to fund expensive technological upgrades and save money by pooling back-office functions.
Tyson & Mendes is one of several legal defense firms exploring a deal, the people said. PE investors see an opportunity to consolidate a fragmented collection of regional practices underpinned by predictable, recurring revenue.
“Insurance defense is like a municipal bond—it’s not high rates, but it’s very consistent volume,” said an M&A lawyer who advises on such deals.
Market participants say the emerging strategy is less about buying a single trophy firm than about assembling a geographically diverse platform with multiple insurer relationships and limited dependence on any single rainmaker.
“I know for a fact there are private equity firms targeting insurance defense, intellectual property and trusts-and-estates boutiques specifically to do roll-ups,” said Frederick Shelton, CEO of Shelton & Steele, a firm-side MSO adviser.
Interlock Equity, Lightyear Capital, Renovus, Littlejohn and Riverside have expressed interest in legal-services deals, while Trive Capital has already transacted, backing this year’s MSO deal for Masumi + Consoli, which specializes in middle-market M&A, PE and debt financing.
The ultimate aim is to scale in a market that has barely consolidated. The US legal industry generates roughly $400 billion in annual revenue, yet even the largest firm, Kirkland & Ellis, only recently crossed $10 billion.
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