We have them today too, they're called "gangs".
A benefactor might equip a regiment to serve under lawful military command by a state authority, but the legal status of private armies is, at best, dubious. In maritime law, which I am more familiar with, private men of war could be fitted out to prey on enemy shipping in wartime, but they were protected by official government documents called "Letters of Marque" which gave them the status of legal combatants. If you didn't have one you were considered a pirate without POW rights and could be hung on sight by anyone who caught you.
