Private equity has discovered law firms. If you come from healthcare, accounting, or other professional services roll-ups, a lot of what you see in legal will look familiar: fragmented markets, succession issues, under-invested operations, technology gaps, and room to professionalize. But if you treat law firms like another HVAC platform or dental roll-up, you will burn deals, damage your brand, and miss the real opportunity. I’ve spent my career on both the quantitative and human sides of this world—economist at the Federal Reserve, lawyer, statistician, and then over a decade in attorney recruitment before moving into true-sale law firm transactions. At The Law Practice Exchange, I now live full-time in the world where private capital meets law firm ownership. Here’s what private equity needs to understand before wading into law firm deals in a serious way. Law firms are not HVAC businesses (and you can’t treat them like they are) Many private equity teams show up in legal with a playbook that worked fine in other service industries: squeeze diligence hard, negotiate aggressively, optimize purely around EBITDA, then assume the relationship will survive closing. That is almost guaranteed to backfire in law. Law firm deals are fundamentally relationship-driven. You’re not just buying a cash-flowing asset; you’re stepping into the life’s work of one or more professionals. These owners are often deeply embedded in their community and bar, sometimes for decades. Their personal reputation and identity are tightly bound to the firm’s name and client experience. If they don’t like you—and I mean that literally—the deal will either die in diligence or the post-close performance will crater. I’ve watched sophisticated investors “win” a term sheet and then lose the deal because their behavior in diligence made the seller feel disrespected, rushed, or treated like a spreadsheet line item. In other sectors, you can sometimes power through that. In law, you usually can’t. What sellers actually care about (hint: price is third) Across mom-and-pop firms and $50M+ PI platforms, I see the same three priorities over and over again and in the same order: Client care and quality of service “Will my clients get as good or better service after I sell?” Many of these owners have represented the same families or communities for years. They worry about that legacy more than the last turn of the multiple. Succession, role, and lifestyle post-close “What will my life look like after this?” How much law will I still be practicing? Will I still be running a firm, or can I focus on what I actually love (e.g., trial work) while someone else runs ops? Can I consult from St. Barts or the Italian Riviera and not be chained to an office? Price and structure Yes, economics matter. But in law firm transactions, price is almost never the first filter. A slightly lower headline price with a partner they trust often wins over a maxed-out multiple with someone they don’t. If your entire pitch is about financial engineering and “unlocking value,” you’re speaking to their third priority and ignoring the first two. That’s a miss. Understand the economics: goodwill, margins, and multiples The biggest mistake I see is importing expectations from other industries straight into law without adjustment. Revenue, EBITDA, and margins For personal injury (PI) firms in the $10–$20M revenue range, you should often see 40–50% margins if they’re well run. By contrast, a large insurance defense firm might run closer to 10% margin and still be considered healthy. So a $20M PI firm and a $20M defense firm can have radically different enterprise values, even before you look at growth or scalability. Multiples: this is a goodwill transfer, not a laundromat sale We routinely see valuations in a band from roughly 0.5× revenue up to about 1× revenue, sometimes more when there is clearly scalable infrastructure, strong brand, and a genuine platform play. But you will not get the same EBITDA multiples here that you’ve seen in HVAC, dental, or other “simple” service roll-ups. Why? Because law firm deals are high-risk goodwill transfers: You’re buying client relationships, referral networks, and personal reputations. If the transition is mishandled and the seller feels burned, that goodwill can evaporate very quickly. As the market matures and non-lawyer ownership structures normalize, I expect multiples to rise. We’re not there yet. Coming in expecting “industry-standard private equity multiples” from other sectors is a fast way to alienate sophisticated sellers. Be realistic about the size and shape of the market Everyone says they want the “$50M–$100M revenue anchor platform” to start. Those firms exist—but there aren’t many of them, especially in PI. The reality of what we see in the market: A lot of attractive targets are in the $5M–$30M revenue range. There are some firms above $50M and a handful near or above $100M, but if your thesis only works at that top end, your funnel will be very thin. At The Law Practice Exchange, we currently represent firms from roughly $5M to $100M in value, with a heavy concentration in that $10M–$30M band. Many of those have enough infrastructure—intake, case management, basic ops—to serve as a legitimate anchor if your operating model is strong. If your minimum size is too rigid, you’ll skip over some of the most coachable, growth-oriented firms in the market. Don’t wait for “perfect” financials (you’ll be waiting a long time) Another pattern that kills deals: private equity buyers expecting quality of earnings-style, audit-ready financials as a starting point. Most high-performing law firms simply don’t have that. It’s not because they’re sloppy or hiding anything. They’re privately held, they’ve never had to present their financials to institutional capital, and their accountants are often tuned for tax efficiency, not transaction readiness. If you insist on QoE-grade packages before you’ll even take a call, you’ll lose most credible sellers before you start. For a better approach, get on the phone early and use high-level financials to decide if it’s worth moving forward. Then work with the firm (and intermediaries like us) to build