Private Equity Investment in Law Firms and Ethics: Model Rule 5.4, State Regulation, and Business Models

Mr. Palenschat focuses on private credit and complex leveraged finance. He counsels direct lenders, banks, hedge funds, and other credit investors and borrowers on direct-lending and syndicated facilities for acquisitions, growth capital, refinancings, recapitalizations, and liability-management solutions. His practice spans the full credit stack — first-lien/second-lien, unitranche and bifurcated structures, mezzanine and unsecured notes, holdco PIK instruments, and debt-like preferred equity — with a particular emphasis on speed-to-close, execution certainty, and commercially practical negotiations in competitive sponsor processes. Mr. Palenschat also regularly advises on opportunistic and special-situations transactions, including structured capital, bridge-to-refi, non-pro rata solutions, rescue financings, and NAV/asset-backed facilities, and guides credit investors and borrowers through amend-and-extend, exchange/uptier and liability-management transactions, as well as workouts and restructurings. He has worked on more than US$50 billion of financing value across sectors including software/tech, healthcare, business services, industrials, consumer, and fintech. 

Mr. Pera is one of the nation’s leading legal ethics practitioners. For more than 30 years, he has represented lawyers, law firms, clients, and those who do business with lawyers and law firms, on the widest possible array of issues relating to legal ethics and the regulation of lawyers. His practice is national in scope. The ABA Center for Professional Responsibility has bestowed on him the prestigious Michael Franck Award, their highest award for work in the field of ethics and professional responsibility over his career. For 20 years, in addition to his work as a practicing ethics lawyer, Mr. Pera has been a leader at the highest levels of the ABA on revisions to the Model Rules of Professional Conduct and other important lawyer conduct issues. He was the youngest member of the ABA “Ethics 2000” Commission that rewrote the ABA Model Rules of Professional Conduct and served three years as chair of the ABA Center for Professional Responsibility. Mr. Pera speaks and writes extensively on the ethical and regulatory aspects of the rapidly-changing legal services market. He represents clients in matters ranging from lawyer discipline to lawyer malpractice to expert witness work. He also represents and advises clients — including lawyers and their firms and other businesses and investors — on a wide range of potential business ventures, especially those trying business models new to the legal services market. Mr. Pera advises on the ethical and lawful use of innovative marketing techniques, as well as lawyer and law firm relationships with vendors of all kinds, from marketers, to outsourcing vendors, to litigation funders.