This year, external capital entered the strategic vocabulary of Australian lawyers, writes Kim Wiegand.
Earlier this year, I wrote about private equity (PE) investment into the legal industry as a trend I was seeing internationally and just beginning to hear about on Australian shores. At the time, it was little more than whispers, anomalous examples, and unconfirmed interest.
For more than a decade, PE investment in law firms has been something Australian managing partners have largely watched from afar. It played out first in the UK following the Legal Services Act 2007, and more recently in the US through managed services organisations (MSOs) and regulatory sandboxes. Australia observed, curiously, cautiously, and often sceptically.
When I penned that original piece, I saw PE as an interesting trend worth monitoring. I was wholly unprepared for the wave that followed in 2025. Interest from firms, open conversations with investors, and commentary across the legal market accelerated quickly.
For a moment, I wondered whether this was simply the Baader–Meinhof phenomenon – you know, when you consider buying a yellow car and suddenly, they appear everywhere (questionable life choice aside). But after many more conversations, it became clear this was not a frequency illusion. It was a catalyst for structural change.
And importantly, it is a catalyst that sits alongside other forces already reshaping the market: AI and legal technology adoption, shifts in operating models, pricing and value reframing for clients, and intensifying competition.
The year 2025 marked a clear turning point. For the first time, private equity entered the strategic vocabulary of Australian law firms. Whether or not a firm ever takes external capital, it now needs to understand what investors see, what they value, and what this means for firm strategy and the partnership model.
I noted, in that May piece, that rising investor inquiry across class actions, employment, personal injury and insurance. That interest has only accelerated. Conversations that were once hypothetical are now grounded in data, structures, and real proposals. External capital has shifted from taboo to tool, if I can be so kitsch.
Managing partners are now openly discussing capital strategies that go well beyond debt facilities or partner reinvestment. Boards are examining minority investment models, MSO-style dual-entity structures, mergers that create investor-scale platforms, partner liquidity pathways (particularly around succession and partial exits), and spin-outs of commoditised revenue lines.
Not every firm is looking for capital, and nor should they be. But every firm should understand the structural shift capital brings.
This is no longer an abstract international trend. There are now clear local examples. Slater & Gordon’s stabilisation under Allegro Funds, Wotton + Kearney’s investment from Straight Bat, Hamilton Locke’s corporatised platform within the HPX Group, and IPH Group’s listed model have all helped legitimise the conversation. Not to mention the various MSOs and spin-offs underway across the market. Firms can now see what external capital looks like in practice, and as we know in law, visibility matters.
One of the most profound internal shifts I observed this year was how firms began dissecting revenue into value segments.
Many discovered that a significant proportion of revenue sits in repeatable or commoditised work. That is work that often behaves very differently to the premium advisory brand firms present to the market. That realisation is prompting harder questions about brand alignment, structure, focus and investability.
Investor interest, however, remains disciplined rather than speculative. Public commentary from investors active in professional services consistently points to the same fundamentals. As Jeff Zindani, managing director at Acquira Professional Services, has observed, private equity capital offers firms the “firepower to scale, innovate and future-proof their businesses”, but only where there is a clear growth narrative and operational readiness.
At the same time, investors are explicit that financial performance alone is not enough. Market analysis in the UK has noted that investors must grapple with the “deeply rooted culture of law firms”, including the importance of partner reputation, governance dynamics and people-led value creation, tied together in a clear and realistic strategy.
In other words, firms are not expected to be perfect. But they are expected to know who they are and where they are going, in tangible and realistic terms.
Indeed, across most conversations this year, the dominant tone was pragmatic. My sense is that many managing partners shifted from “We’re not taking PE” to “We should prepare as if we might.” In my view, that is the right position, both from a sustainability perspective and commercially.
External capital can act as a mirror. It forces firms to confront truths they may have postponed about governance, margins, operating models, technology investment, and succession. Investor readiness, in this context, is simply modern business readiness.
Looking ahead to 2026
The relevant question is not whether external capital belongs in legal services, but how deliberately firms sharpen their approach to value creation and governance, regardless of ownership model.
First, revenue certainty and quality. Firms are increasingly distinguishing between revenue that is partner-dependent or intermittent and revenue that is repeatable, scalable, and defensible. This is not a lens many firms have historically applied, but it is becoming unavoidable.
Second, performance categories rather than traditional practice group labels. Leading firms are becoming more explicit about which work creates value, which is strategically necessary but marginal, and which may dilute focus or margin.
Third, governance that enables action. Clear decision rights, accountability, and the ability to act decisively are becoming differentiators, often more so than formal structure alone.
Structural thinking will also accelerate. Spin-outs, MSOs and HoldCo models are emerging not as ideological end states, but as tools to create and realise value.
Finally, transformation capability will separate leaders from laggards. Technology spend is now table stakes. Execution to adoption, behavioural change and alignment with economics, all critical factors that drive value.
Signals to watch in the year ahead include:
The year 2025 was the year the conversation matured, and 2026 may just be the year the market begins to really move. In my view, the firms that prepare, whether they take investment or not, will shape the next decade. The rest will spend it reacting, perhaps with fewer options.
Kim Wiegand is the founder of Julip Advisory.
