Arizona Law Firm Secures $125 Million Back Office Investment

An Arizona law firm announced it will separate its back-office operations to accept a $125 million external investment. The move creates a management services organization, or MSO, distinct from the legal practice. The investor was not named beyond being a U.S.-based manager with legal investment experience.

Deal purpose and plans

The cash will fund national expansion, technology upgrades and infrastructure. The firm also plans to partner with other personal injury law firms. Founder Brandon Rafi said the MSO model will allow growth without compromising attorneys’ decision-making.

Rafi Law Group opened in 2015. It focuses on personal injury cases, including car and truck accidents. The firm has represented nearly 100,000 clients.

Why the MSO structure

The MSO separates functions such as accounting and marketing from legal services. That separation enables outside capital while preserving lawyer independence. Rafi said the structure provides guardrails that keep outside funding from intertwining with legal work.

Rafi expects the MSO to support new and existing firms. He said it could service many firms and that his team is already in talks with other personal injury practices. The investor took a minority stake in the MSO.

Advisors and transaction details

The firm engaged Keefe, Bruyette & Woods, Inc., a Stifel Financial Corp. subsidiary, to broker the transaction. Rafi also hired attorneys from Greenberg Traurig to ensure compliance with ethics rules and state regulations. The announcement came on a Monday.

Context in the legal market

MSOs have grown from physician-owned practices into the legal sector. Some firms have already separated back-office functions to secure outside capital. Rimon PC sold its back-office operations in 2019 to private equity, creating the business now known as Briefly.

Other players have pursued similar moves. A Texas litigation-finance firm acquired an MSO in October to serve mass-tort firms. Major law firms have discussed outside investment and stake sales in recent months.

Regulatory and legislative environment

Arizona’s alternative business structure program permits non-lawyer ownership of firms. That program has attracted many mass-tort and personal injury practices. Regulators have updated rules to restrict lead-generation arrangements tied to such structures.

Legislatures in other states have responded. California passed a law in January limiting alternative firm arrangements. Illinois introduced a bill in February that would ban fee-sharing with firms run by non-lawyers and would cover MSOs.

Industry impact

Personal injury and mass-tort firms are at the center of the MSO trend. Litigation funders also show interest in such models. Observers expect consolidation in the market, and Rafi aims for his operation to be a leading consolidator.

• Firm: Rafi Law Group
• Founder: Brandon Rafi
• Founded: 2015
• Clients represented: nearly 100,000
• Investment: $125 million for back-office investment
• Structure created: management services organization (MSO)
• Deal broker: Keefe, Bruyette & Woods, Inc.
• Legal counsel: Greenberg Traurig

Filmogaz.com will monitor further developments as the MSO pursues expansion and partnerships. The firm said it will continue to watch evolving rules closely.