- Arizona’s Supreme Court has granted KPMG a license to practice law.
- The decision marks the entry of a Big Four firm into the US legal framework.
- The move is likely to create more competition for top talent and clients, one commentator said.
KPMG will become the first of the Big Four to set up a legal division in the US after the Arizona Supreme Court granted it a special license to practice law.
KPMG was approved to operate as an alternative business structure, or ABS, in Arizona — a license that enables it to establish KPMG Law US as an independent law firm.
The new entity will bring together technology and legal advice at scale, reshaping the market for legal services, KPMG said in a statement.
Its offerings will include legal managed services, legal operations consulting, and legal technology innovation.
“KPMG Law US is uniquely positioned to transform the delivery of legal services,” said Rema Serafi, KPMG’s vice chair of tax. “By combining cutting-edge artificial intelligence and advanced technology solutions with legal services, we are proud to be a first mover with this capability and to offer the most holistic range of tech-enabled services in the marketplace for our clients’ evolving needs.”
The US is the world’s largest market for legal services. It is mostly closed off to nonlegal professionals by an American Bar Association rule that only permits licensed lawyers to own or invest in law firms.
While the Big Four have set up legal divisions in other key markets, they have only operated advisory, audit, and tax divisions in the US until now.
Arizona’s ABS program sidesteps the rule and grants nonlegal professionals a license to provide legal services. More than 100 firms have been approved to practice law in the state since the ABS program began in 2021.
Arizona is not alone in offering market access to non-legal professionals. Washington has allowed limited nonlawyer ownership since 1991, and Utah is running a similar trial to the ABS program.
‘Market-based reforms’
Lucy Ricca, executive director at Stanford Law School’s Deborah L. Rhode Center on the Legal Profession, told Business Insider that Arizona’s ABS reforms were intended to widen the public’s access to legal services.
“The Arizona ABS reforms are market-based reforms, intended to open the power of capital, diversification, and competition in a sector, legal services, that has been stunted by the professional monopoly of lawyers,” she said.
Critics of the program argue that nonlawyer ownership in law firms creates a conflict of interest and undermines the professional independence of lawyers.
KPMG Law US will operate within each state’s ethics rules in line with every other law firm, the firm said.
As a condition of its ABS license, KPMG will not be allowed to provide legal services to clients for which it also performs financial audits, the Arizona Supreme Court said in a statement.
More competition
The Arizona court’s decision signals further expansion for KPMG’s tax and legal division, which was the fastest-growing arm of its business in its last financial year — up 10% globally.
KPMG Law US will not be limited to Arizona. It will also serve clients across the US by partnering, offering co-counsel, or referring to separate staffing firms and other law firms, subject to state rules.
Kirsten Keegan Vasquez, vice president of the legal recruiter Major, Lindsey & Africa, told BI that she doesn’t expect KPMG to swiftly disrupt the market.
“Legal services are hired based on long-term proven track record. Any new entry into the market is going to have to overcome that competitive energy,” she said.
However, Vasquez expected KPMG’s move to create more competition for top talent and clients among big law firms.
Stanford’s Lucy Ricca added: “There certainly will be winners and losers as the market grows and changes, but those pressures already exist in many ways.
“Every new entrant represents a growing and more dynamic market for legal services and a growing diversity in the supply of legal services. It means more competition, yes, but this is a market that has been stunted by a lack of real competition for decades.”
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