August Is Building GTC’s MSO Platform™

When a law firm sets up a management services organization, the usual sequence is to design the structure, sign the agreements, close and move on. The harder part comes afterward. An MSO only holds up if the fee, the agreements and the compensation stay in line with how the firm actually operates. Someone has to check them every quarter for as long as the structure exists.

Guardian Tax Consultants® (GTC™), based in Franklin, Tennessee, designs, implements and services MSOs, and its team has done this checking by hand for nearly a decade. Today we are announcing that August is building GTC’s MSO Platform™. AI agents will run the work in one record shared by the owner, the CPA, counsel and GTC’s team. The platform is being built for law-firm MSOs first. GTC’s announcement is at msoplatform.com.

The ongoing work deserves the attention, because it is where most of an MSO’s cost sits and where software can do the most.

What an MSO does for a law firm

Law firms set up MSOs for tax, transaction and business reasons. A well-built MSO may defer taxes, depending on the facts. It is also how outside capital reaches a law firm. Most states bar non-lawyers from owning a firm, but investors can own the MSO, which provides the firm’s non-legal services under a management agreement. The law practice stays owned by lawyers.

In GTC’s experience, an MSO can move a firm’s valuation from about two times revenue to seven to twelve times EBITDA. We expect most law firms to adopt one over the next decade.

Keeping an MSO standing

The structure holds only if the work behind it is real and documented every year. The IRS can generally review three years of returns, and a management fee without a documented business purpose is easy to challenge. Law firms carry a second layer of scrutiny, because state regulators look at who makes decisions inside the firm, how fees are shared and whether its lawyers stay independent of the MSO’s owners.

So the servicing never stops. Each quarter, a case manager gathers records, reviews the firm’s books against the management agreement and keeps an audit file current. The CPA relies on the audit file to support the firm’s deductions, and counsel relies on it to show the lawyers still run the practice. A single client can take more than 100 hours of case manager time in a year.

This labor is a large part of what an MSO costs to run, and it comes straight out of the earnings a buyer pays for.

One record for the owner, the CPA and counsel

The platform keeps each engagement in one record and follows GTC’s documented steps, from the feasibility study through implementation and the annual governance calendar.

August’s agents will prepare the feasibility analysis and discussion documents from call transcripts and financials. During implementation, they will track each step and flag what is blocking the next one. Once the MSO is running, they will assemble the quarterly review and the annual record.

Imagine a law firm three years into its MSO. At the end of each quarter, its case manager would normally pull the invoices, compare the management fee against the fee study, check compensation against the agreements and update the audit file by hand. On the platform, an agent assembles the review from the firm’s records and marks anything out of line, so the case manager starts with a finished draft and a short list of exceptions to resolve.

Everyone involved works from the same record. The owner can see what GTC did each quarter and where the case stands. The CPA gets the documentation behind the firm’s deductions, and counsel has the agreements and governance record in the same place. GTC’s team works every client from one view.

The initial build covers GTC’s feasibility and annual servicing work. After law firms, the platform will support the other industries GTC serves.

A process already written down

GTC came to us with its process already recorded. Its reference, The Durable Law-Firm MSO, sets out each step, and its team had been running those steps by hand across its clients for years. Earlier this month our team spent two days with Alex Jones and the GTC team in Franklin, working through each stage of an engagement with the people who run it.

“Designing an MSO is the first step. Keeping the fee, the agreements and the compensation in line every year after is where the work is. We’ve done that by hand for nearly a decade. The platform puts it in one record that owners, their CPAs and their counsel can all work from. August’s team came to Franklin and worked through our process with us, and that’s how we wanted to build it.”

Alex Jones — CEO, GTC

A written process matters for software like this, because an agent can run a process consistently only once someone has defined it. GTC had done the hard part before we arrived.

“GTC came to us with its process already documented, step by step. Running that process has always taken hours of people’s time every quarter. When AI agents do most of that work, an MSO costs less to run. That raises the firm’s earnings, and buyers price a firm on its earnings.”

Thomas Bueler-Faudree — Co-founder, August

What GTC means for August

Law firms already use August to build products for their own clients, and firms have launched 30 client portals on it. GTC joins firms on five continents building on August, among them Hughes Hubbard & Reed, Lobo de Rizzo in Brazil and Hicksons in Australia. The GTC build applies the same approach to the business side of a law firm, where the cost of running the structure decides much of what the firm is worth.

GTC sets out its approach to law-firm MSOs in The Durable Law-Firm MSO, available free at msoplatform.com. On November 10, GTC and Fox Rothschild will host a webinar for law firms on what an MSO does to a firm’s value, how the structure is set up, the ethics rules and keeping it compliant after closing. Registration details to follow.

We will share more once the first engagements are running on the platform, including how long a quarterly review takes with agents doing the groundwork. To talk about what this could look like for your firm, contact August.

About August

August turns existing law firms into AI-native firms. It builds the AI agents and client-facing products that firms use to run legal work and to sell services to their own clients. Firms have launched 30 client portals on August, and its library of more than 700 lawyer-approved agents covers transactional, litigation and advisory work. Firms on five continents use August. August is based in New York and holds SOC 2 Type II and ISO 27001 certifications. Learn more at august.law.

About GTC

Guardian Tax Consultants® (GTC™) is a national MSO consulting firm based in Franklin, Tennessee. GTC designs, implements and services management services organization structures for closely held businesses, including law firms, working alongside each client’s CPA, counsel and wealth advisor. GTC is a NASBA-registered CPE sponsor. Learn more at msoplatform.com.