According to two persons familiar with the situation, Morgan & Morgan, the biggest personal injury law firm in the United States, has engaged JPMorgan to investigate a minority stake sale that would lead to a public listing in the coming years.
The family-run company is considering a deal that could raise over $1 billion and bring in an outside partner with expertise in getting companies ready for the public markets, especially private equity investors that have successfully completed initial public offerings.
Private equity investors are increasingly interested in professional services organizations, such as law firms and consulting firms, because of their consistent revenue and potential to apply AI to increase efficiency and profitability.
PRIVATE EQUITY STAKES
In order to prevent profit maximization from taking precedence over the interests of customers, the United States limits the ownership of law firms by non-lawyers. However, private equity might profit from expansion by employing a management services organizational structure, for example, in back office divisions.
Recent deals using this model include private equity firm Trive Capital buying a stake in law firm Massumi + Consoli and Orion Legal buying a position in law firm Dudley DeBosier.
According to one of the persons, Morgan & Morgan is investigating a similar structure with a private equity firm that might grow and professionalize the company in advance of a possible IPO.
In response to inquiries, John Morgan, co-founder of Morgan & Morgan, told Reuters that the talks are still in their early stages and that any potential capital increase is still uncertain.
“Like many firms in America, we are being approached constantly, and we listen,” Morgan said. “We are fortunate that we are a highly profitable firm that really doesn’t need money to invest in growth.”
John and his wife, Ultima Morgan, both lawyers, founded the firm in 1988 and turned what was a small business into a nationwide operation with offices in all 50 states. It has funded expansion with the firm’s own profits, without external cash.
M&M said by e-mail it has annual revenue of $2.4 billion.
The couple controls Morgan & Morgan with their children — Matt, Michael, Daniel and Kate — with equity partners owning the rest. The sons work as lawyers at the firm alongside their parents.
John Morgan said there would be ethical and regulatory issues involved in taking a law firm public, making any such plans distant.
JPMorgan declined to comment.
