I doubt things would have been much different. It wasn't "mired" in legal issues, there was one lawsuit was brought against one company selling the code (not developers or users or hobbyists) in 1992, in '93 their injunction was denied and the case collapsed from there with a counter suit launched. It was all settled in 94.
The myth is that BSD development ceased or scaled right back, but that really wasn't the case. NetBSD's initial release was early 93, FreeBSD's initial release was late 93. Clearly they had been busy developing things leading up to it, and were confident enough to release entire new forks.
The lawsuit is a commonly cited reason, but I think that's more of a retroactive justification that's doesn't really come with solid evidence or reasoning.
https://web.archive.org/web/20190605151240/https:/www.softpa...
You read things like this and it's just handwaving without much actual evidence at best, and at worst grasping at straws, with the usual bitter sour-grapes lines like "One of the reasons that he was a real volunteer and has a demanding day job (as we can see later this was almost never true for Linus Torvalds)."
Linux was just 3 years old at the time the lawsuit was settled, a project from an undergrad, whereas BSDs had much longer commercial and serious academic heritage, the Berkeley Software Distribution that 386BSD came from had started 15 years earlier! Fact is Linux was starting from well behind at that point. Linux simply gathered more momentum, whether it was the technology, the people, the community, the GNU userland, I don't know but I'm pretty sure the lawsuit was a very minor part of it and what effect it did have would not have shifted overall trajectories or ultimate outcome.