Legal industry analyst Nicola Shaver identified Landfall IP as one of the leading AI-native law firms globally—and the only patent practice on the list.
November 23, 2025
BY Michael Drapkin
In the past handful of years, the traditional law firm model: partners co-owning the practice, billable hours gatekeeping the economics, and lawyers controlling both legal delivery and firm financials, is being challenged on three fronts. Those shifts are modest today but could prove seismic tomorrow, as recent developments indicate that real change is coming. Below is a look at three emerging trends: alternative business structures (ABS), management-service-organization (MSO) models, and “AI-native” law firms.
1. ABS (Alternative Business Structures) & the Arizona Experiment
Historically in the U.S., law-firms’ ownership was limited: only licensed lawyers (or regulated legal entities) could hold equity or share in profits.
Then a few jurisdictions opened a different path. The state of Arizona became the first U.S. state to adopt a formal ABS licensing regime, allowing non-lawyers to have an economic interest, decision-making authority, and/or ownership (subject to regulatory compliance) in a firm providing legal services.
What that means:
• ABS entities in Arizona must be licensed under the Arizona Supreme Court rules.
• Non-lawyers cannot themselves provide legal services (only licensed lawyers can).
• In practice, it opens law-firm ownership/structuring to financial investors, alternative investors, or hybrid professional-services players.
But there are meaningful limitations:
• Geographic reach: Even in Arizona’s ABS regime, the vehicle is still constrained by the fact that other states (e.g., see AB 931 in California) continue to follow the traditional rule scheme. By way of example, Arizona ABSs cannot simply set up branch offices in other jurisdictions where non-lawyer ownership is prohibited.
• The regulatory guardrails remain: For example, the Arizona rulebook still requires at least one lawyer-licensed in Arizona to serve as the compliance lawyer.
• The innovation upside is real but so are the ethical/regulatory limitations.
Takeaway:
ABS structures signal a shift, not just in ownership but in how law firms might finance, govern and grow. But for now, they’re regionally constrained (largely in Arizona, Utah, Puerto Rico, & DC) and must navigate legacy ethics rules, inter-state practice hurdles and reputational risks. The “land-lock” effect remains.
2. MSOs (Management Services Organizations) & Law-Firm Finance
A second frontier is the use of what we’’ll call MSO models – structures in which the law-firm (lawyer-owned entity) contracts to a separate entity (often non-lawyer owned or backed) for non-legal/operational functions (technology, billing, back-office, brand, client intake). In turn, that separate entity may attract external capital, permit liquidity for lawyers, or operate on scalable business lines tied to the law-firm rather than direct legal service delivery.
In recent weeks, global firms like McDermott Will & Schulte are reportedly exploring exactly this: a split between a lawyer-owned legal-services provider and a separate MSO owned (or partially owned) by non-lawyer investors. Financial Times Article
Why this matters:
• Payout / liquidity for lawyers. Traditionally, equity partners in law firms get their payout via profit-shares tied to billables, collections, firm profit metrics, etc. An MSO structure can allow a lawyer-owner to monetize some equity in the operational entity, and allow outside investors to acquire stakes in the non-legal business.
• Professional management & efficiency. By separating legal practice from the operations/back-office/technology business, you open the possibility for a management team (with finance/tech/operational executives) to run the MSO and optimize efficiency (tech stacks, process improvement, shared services). That in turn can make the law-firm’s cost-base leaner and growth-scalable.
• Outside investment without debt. Many law firms have expansion plans (global growth, tech build-out, cross-border M&A) but are constrained by partner capital contributions/aversion to debt/partner lock-in. An MSO permits outside capital to invest in the non-practice business, generate returns from service fees paid by the law-firm, and avoid direct ownership of legal practice by non-lawyers (thereby staying within ethics constraints).
Caveats and watch-points:
• As noted above, the regulatory framework in many states still prohibits non-lawyer ownership of the legal-practice business. So law firms must effectively ensure the lawyers retain decision-making authority over legal work. The MSO interface must be structured carefully.
• Because this is early in the U.S. market, there isn’t yet a widely-accepted valuation/model for law-firms + MSOs, nor published returns/outcomes for investors.
• The cultural challenge: law firms are built on partner autonomy, lock-step compensation, billable-hour heritage, and servant-lawyer ethos. Shifting to a model where non-lawyer managers/ investors are behind the scenes changes that dynamic and may require a firm-wide mindset change (governance, metrics, incentives).
Bottom line: MSOs are emerging as a powerful lever for firms wanting to scale, access capital, bring in professional management, and provide partner liquidity-all while retaining lawyer ownership of legal delivery. For firms ready to evolve, this might be the next frontier.
3. AI-Native Law Firms: Rethinking Delivery
Beyond ownership and finance lies a deeper, structural transformation: how legal services are delivered. Rather than simply moving a traditional law-firm remote or layering in technology incrementally, a set of new “AI-native” firms are designing from the ground up for tech-first, scaled, efficient legal delivery. They are rethinking workflow, knowledge management, pricing and client incentives.
Two firms stand out, with more on the way:
• Crosby (“a hybrid law-firm merging legal and engineering talent, delivering contracts at the speed of software”).
• Eudia Counsel (launched as the AI-native law firm by the legal tech firm Eudia).
Key attributes of AI-Native firms:
• They typically operate on fixed-fee or subscription models rather than purely billable hours.
• They use AI/automation to accelerate workflows, improve consistency, codify legal expertise, and scale delivery (e.g., Crosby’s contract automation can deliver redlines, commentary and negotiation-ready responses in hours rather than days).
• They target high-growth, sophisticated clients (start-ups, tech firms) and scale operations with software economics rather than linear lawyer hours. The emphasis is on “speed of software” and “legal at scale” rather than incremental remote-lawyer models.
• Because these firms start with the tech-first mindset, they sidestep some of the legacy infrastructure burdens of large law-firms: fewer legacy systems, less partner-lock, more process discipline.
Why this matters:
• For clients, it offers the promise of more predictable pricing, faster turnaround, and better alignment of incentives (when the firm builds knowledge or IP rather than billing hours).
• For these new entrant law firms, it presents a blueprint to compete in the tech-driven era, not just by adding e-billing or remote work, but by fundamentally rethinking how they source, deliver and package legal work.
• For the profession, it signals that the biggest disruption may come not from ownership changes (ABS/MSO) but from delivery-model innovation.
Heads-up:
• These AI-native firms are still relatively small and focused, not yet replacing full-service AmLaw firms.
• Clients will still need complex, bespoke lawyer-delivered services; the AI-native model is currently a better fit for defined, repeatable workflows (contracts, compliance, IP, due diligence).
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Putting it All Together: A New Era of Law-Firm Design
When you bring these three threads together – ABS ownership, MSO finance/management, and AI-native delivery – a new architecture for law-firms starts emerging:
• Firms that look like businesses: they raise capital (via MSOs or ABS), bring professional management, invest in tech, treat lawyers as key contributors but not the only business drivers.
• Firms that deliver like software companies: they automate repeatable legal work, build knowledge engines, shift from hours to value, and scale with fewer marginal lawyer-hours.
• Firms that serve like platform-oriented enterprises: they align incentives, integrate non-legal professionals (ops, data, AI engineers), and partner with clients rather than purely bill hourly.
For established firms, the question is not whether to evolve, but how fast and where. Do you adopt ABS or MSO models now and rethink partner capital/payout? Do you build an AI-native wing or acquire one? Do you partner with tech-first entrants to hedge disruption? The firms that win will combine lawyer expertise, business architecture, financial evolution, and technology-scale delivery.
For clients and in-house teams, this means more options, more innovation, and lower cost and higher speed for many types of work – but also a new ecosystem in which value = outcome + knowledge + scalability, not just hours.
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Final Thoughts
The legal profession is often characterized as slow to change. But the convergence of ABS, MSO and AI-native models suggests the tipping point is near. The implications for partner economics, firm governance, client value, investment in legal tech and competitiveness are profound.
Law firm design is no longer just “how many partners do we have” or “what’s our billable-hour target.” It’s increasingly about architecture: ownership, operations, technology and scale. The firms that lean into that architecture now will set the template for the next generation.
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