A private equity group calls the owner of a successful Omaha practice. The pitch is specific, with the group proposing to buy the business side of the practice, leave the professionals in charge of the work, and pay a price based on a multiple of the practice’s annual earnings. The owner’s first question is usually whether the deal is even legal.
Private equity in Nebraska professional practices works through structures that keep the license in professional hands while an investor owns the operations. The rules differ by profession, and understanding the structure helps owners identify licensing restrictions and the contract terms that require negotiation. This post covers accounting and law practices in detail. Healthcare ownership follows separate licensing and payment rules that need their own review.
Why is private equity buying professional practices?
Professional practices produce steady, recurring revenue, depend on repeatable back-office work, and sit in fragmented markets full of owner-operators approaching retirement. An investor can combine several practices under one management platform, centralize billing, marketing, technology, and human resources, and earn a return on the efficiency gains. Owners may receive cash at closing and growth funding, while investors acquire a platform they can expand or sell.
Law firms joined this trend later than other professions because their ownership rules are stricter. Several law firm investments were announced in 2026.
What rules govern private equity in Nebraska professional practices?
The rule depends on the profession. An ordinary Nebraska professional corporation may have only licensed professionals in the same field as shareholders. Accounting firms have a separate statute that allows qualifying owners who are not CPAs. Lawyers are governed by the Nebraska Supreme Court’s rules, which bar nonlawyer ownership of a law firm.
Under the Nebraska Professional Corporation Act, a professional corporation’s shareholders must be individuals licensed or otherwise legally authorized in Nebraska to render the same professional service. Neb. Rev. Stat. § 21-2202. The organizers must be Nebraska residents who are each authorized to render that service. Neb. Rev. Stat. § 21-2204.
The Act polices ownership at every step. A professional corporation may issue shares only to persons duly registered in Nebraska to render the same professional service, and a shareholder may transfer shares only to a person licensed to render that service. Any share issued or transferred in violation of the statute is null and void. Neb. Rev. Stat. § 21-2208.
A corporation must certify that its shareholders, directors, and officers, other than the secretary and assistant secretary, are licensed for the same services, and covered unlicensed participation exposes it to suspension. Neb. Rev. Stat. § 21-2216.
An officer, shareholder, agent, or employee who has been rendering professional services to the public and becomes legally disqualified must immediately sever employment and financial interests. Neb. Rev. Stat. § 21-2213.
For an investor, those provisions mean a direct purchase of shares in an ordinary Nebraska professional corporation does not work, because a transfer to an unlicensed buyer is void. Two professions follow different rules. Accounting firms are governed by Neb. Rev. Stat. § 1-162.01, discussed below. The Professional Corporation Act applies to attorneys only to the extent the Nebraska Supreme Court determines necessary and appropriate. Neb. Rev. Stat. § 21-2220.
What is a management services organization?
A management services organization, or MSO, is the structure that lets outside capital participate without owning the license. The practice stays owned by licensed professionals. A separate company, the MSO, takes over non-professional functions such as billing, intake, marketing, technology, facilities, and human resources. After the investor buys the MSO, the practice signs a long-term services agreement and pays the MSO a fee.
The fee structure carries most of the legal risk. A fixed fee set at fair market value for services actually delivered reduces fee-sharing concerns, but the form of the fee does not by itself establish compliance. A fee tied to a percentage of the practice’s revenue invites the argument that the MSO is sharing in professional fees or controlling the practice. The services, the compensation, and the contractual control each require review under the rules of the applicable profession.
Term, termination rights, control over hiring and budgets, non-compete provisions, and ownership of client records all determine whether the professionals still run their practice.
What about accounting firms and private equity?
Nebraska permits qualifying non-CPA ownership of accounting firms under a separate statute. Under Neb. Rev. Stat. § 1-162.01, firms may have owners who are not certified public accountants if the statutory conditions are met. Those conditions include aggregate caps of forty-nine percent on non-CPA equity capital or voting rights and on non-CPA profits or losses, each applied separately, limits on how many owners may be entities instead of individuals, and further requirements for entity owners and for non-CPA owners who participate in the firm. An issuance or transfer that violates the section is void.
Natural-person non-CPA owners must actively participate in the firm if they own it directly, or in the partnership, LLC, or corporation through which they hold beneficial ownership. Entity owners must hold the permit the statute requires and meet its conditions on the entities above them. A passive contribution of capital does not satisfy these requirements, so compliance with the percentage caps alone does not establish eligibility. A proposed investment requires review of the buyer’s structure, its beneficial owners, and its role in the firm.
Can private equity own a law firm in Nebraska?
No. Nebraska’s rule on professional independence, Neb. Ct. R. of Prof. Cond. § 3-505.4, follows the ABA model approach. It prohibits sharing legal fees with nonlawyers, forming a partnership with a nonlawyer when the partnership’s activities include the practice of law, and practicing law through a for-profit professional corporation or association when a nonlawyer owns an interest, serves as a director or officer, or has the right to direct or control the lawyer’s professional judgment. The comment explains that these provisions protect the lawyer’s independent judgment.
Nebraska courts have treated violations seriously. In State ex rel. Counsel for Dis. v. Cannon, 266 Neb. 507, 666 N.W.2d 734 (2003), the Nebraska Supreme Court disbarred a lawyer. The record included a fee-splitting arrangement with a nonlawyer that ran for at least five years. The Court stressed that the case involved five counts of misconduct and two prior reprimands, so the disbarment rested on the cumulative record. 266 Neb. at 511, 515-16.
In Rozmus v. Rozmus, 257 Neb. 142, 595 N.W.2d 893 (1999), the Court dismissed an appeal for lack of standing. The lower courts had disqualified a for-profit corporation and its attorneys on the finding that the corporation was practicing law without complying with the Professional Corporation Act and the Supreme Court’s corporate practice rules, and the motions alleged violations of the then-current prohibitions on fee sharing with nonlawyers and on practicing in a corporate form with a nonlawyer director or officer. The Supreme Court did not decide whether those findings and allegations were correct.
Which jurisdictions permit limited nonlawyer ownership?
A few jurisdictions allow some form of nonlawyer ownership, each with its own conditions, and they are described here for reference only. Arizona eliminated its version of the rule in 2021 and licenses alternative business structures, meaning law firms that nonlawyers may own under a state license. KPMG Law US, which received conditional approval in February 2025, is one Arizona-licensed example.
Utah permits nonlawyer ownership through entities authorized under its regulatory program. The District of Columbia allows qualifying individual nonlawyer professionals to participate in a firm and excludes passive investors.
Puerto Rico permits specified nonlawyer interests up to forty-nine percent, subject to conditions. None of these permissions changes Nebraska’s rule.
Which transactions and investment discussions illustrate the trend?
Recent announcements include investments in management companies that support law firms. Other firms have reported preliminary discussions without announcing a completed investment. Examples follow.
Uplift Investors formed Orion Legal as an investment vehicle and announced its first investment in January 2026, in Louisiana personal injury firm Dudley DeBosier, with plans to expand nationally.
Rafi Law Group, a Phoenix-area personal injury firm, separated its back office into Rafi Law Services, which announced a $125 million investment. Reports put the valuation of that management company at about $450 million.
Charlesbank Capital Partners announced an investment in WSHB Support Services, the management company formed by insurance defense firm Wood Smith Henning & Berman, on October 19, 2026. The announcement states that transaction terms were undisclosed and that the firm’s lawyers keep authority over legal work.
Massumi + Consoli, a Los Angeles transactional boutique, separated administrative functions into a new company, ElevenHundred+, in a transaction with Trive Capital. Bloomberg Law reported that certain partners agreed to a one-time reduction of their equity distributions, the profit payments owners receive, to invest in the venture.
Discussions are also under way at larger firms. Morgan & Morgan has acknowledged that it is exploring outside capital, and reports say JPMorgan is advising it. McDermott Will & Schulte confirmed preliminary discussions about outside investment in November 2025. Neither has announced a completed investment.
How are states responding?
California and Colorado have enacted fee-sharing restrictions, and Texas has issued advisory guidance on percentage-based vendor fees. Each measure has its own scope and exceptions.
Several states have moved to limit the model. California’s AB 931, signed in October 2025, restricts direct and indirect legal fee sharing with out-of-state alternative business structures, subject to specified exceptions. Its contract exception requires a stated dollar amount for services, no payment for referrals or leads, and no payment contingent on a case recovery, and it applies to contracts entered on or after January 1, 2026.
Colorado’s HB26-1421, signed in June 2026 and effective August 12, 2026, restricts fee sharing connected to Colorado legal rights and creates private enforcement. The statute does not itself prohibit MSO flat or hourly compensation that is neither a percentage of legal fees, revenue, or profit nor tied to case outcomes.
The Texas Professional Ethics Committee concluded in Opinion 706 (February 2025) that a lawyer may not pay a nonlawyer-owned vendor a percentage of the firm’s revenue. That opinion is advisory and does not bind the Texas Supreme Court, and Nebraska lawyers should read it as a warning about percentage-based fees.
These rules changed several times in the past year. Nebraska owners should confirm the current text of Rule 3-505.4 and any new guidance before relying on this summary.
What does this mean for a mixed-practice firm?
Recent announcements include personal injury and insurance defense firms, where intake, advertising, and process drive the economics. A firm that handles business, family, estate, and real estate work depends on relationships and individual judgment, and those practices do not industrialize as cleanly. An MSO arrangement can provide liquidity for a retiring owner or funding for technology and marketing. Whether a particular arrangement complies depends on the compensation, the services, and who controls what, and Rule 3-505.4 contains no general safe harbor for MSO arrangements.
What should a Nebraska owner do before signing?
Review the ownership rules for your profession, the structure of the investor’s entity, and the services agreement before signing anything, and confirm each with counsel. Our corporate and M&A practice and business law practice review these questions for owners.
Start with the license. Identify which statute and ethics rule governs your profession and what ownership structure it allows. Confirm that the term sheet routes the investor’s money through an arrangement that your profession’s rules permit.
Examine the services agreement as closely as the purchase price. Look at the fee formula, the term, who can terminate, what happens to client records and staff on termination, and whether any provision lets the MSO direct professional decisions. A provision that looks like operational convenience can function as control. Owners who remain with the practice should also revisit their own buy-sell agreements, because the default rules rarely fit a deal with an outside investor.
Plan the exit. Investors expect to sell the platform within a few years, a dynamic covered in our guide to Nebraska small and mid-size business mergers and acquisitions. Find out what the next buyer could demand of your practice, including renewal of the agreement, new restrictions, and changes in management.
Consider the cultural fit. A practice that built its reputation on personal service can lose it when growth targets drive staffing and pricing decisions. Owners who stay on after a sale should decide in advance what authority they keep.
Frequently Asked Questions
Can a private equity firm buy a Nebraska professional corporation outright?
For most professions, no. The ordinary rule limits shares to licensed professionals in the same field, and an issuance or transfer that violates it is void under Neb. Rev. Stat. § 21-2208. Accounting firms have a separate exception for qualifying minority ownership under Neb. Rev. Stat. § 1-162.01, and law firms follow the Supreme Court’s rules. Investors generally buy an MSO that serves the practice.
Can non-CPAs own part of a Nebraska accounting firm?
Yes, if they meet the statute’s conditions. Neb. Rev. Stat. § 1-162.01 includes aggregate caps of forty-nine percent on equity capital or voting rights and on profits or losses, along with requirements for entity owners and a requirement that non-CPA owners actively participate in the firm, directly or through the entity that holds their interest. A passive investor does not qualify.
Can a nonlawyer own any part of a Nebraska law firm?
Ordinarily no. A nonlawyer investor cannot own a Nebraska law practice. Nebraska Rule of Professional Conduct § 3-505.4 prohibits nonlawyer ownership interests in a firm that practices law, sharing legal fees with nonlawyers, and nonlawyer direction of a lawyer’s professional judgment. Rule 3-505.4(d)(1) permits a fiduciary representative of a deceased lawyer’s estate to hold that lawyer’s interest for a reasonable time during administration. The separate exceptions for payments after a lawyer’s death and for compensation plans for nonlawyer employees do not authorize outside investor ownership.
Is an MSO arrangement with a law firm legal in Nebraska?
It depends on the specific agreement. Rule 3-505.4 contains no safe harbor for MSO arrangements. A reasonable fixed fee may reduce fee-sharing concerns, but the form of the fee does not by itself establish compliance, and control over legal judgment violates the rule. Have counsel review the agreement before signing.
Should I sell my practice to private equity?
That depends on your goals, your profession’s rules, and the terms. Compare the cash available at closing with the authority you would keep, your continuing obligations, and the proposed exit terms. A careful review of the structure and the services agreement should come before any decision.
Talk to a Nebraska Business Attorney Before You Sign
If a private equity group has approached your practice, Horgan Law LLC can review the proposed ownership structure, assess licensing and control risks, and negotiate the services agreement. Contact us at 402-965-0652 or visit our contact page to schedule a consultation.