THE BIG FOUR’S CAMEL’S NOSE IS ABOUT TO GET IN THE LAWFIRM TENT

By Anthony J. Biller, Partner

KPMG, one of the Big Four accounting firms, has taken a significant step towards entering the US legal services market. On January 14, 2025, the Arizona Supreme Court’s Committee on Alternative Business Structures unanimously recommended that KPMG Law US, a subsidiary of KPMG, be granted a license to operate as an alternative business structure (ABS) in Arizona. If approved by the Arizona Supreme Court on January 28, this move would make KPMG the first Big Four firm to establish a law practice in the United States, potentially reshaping the legal services landscape. Arizona was the first state to allow nonlawyer ownership of law firms.

KPMG’s Proposed Legal Services Model

KPMG Law US aims to focus on large-scale, process-related legal tasks rather than high-stakes litigation or complex advisory work. The firm plans to offer services such as:

• Synthesizing and re-drafting vendor contracts after significant M&A transactions
• Volume contracting
• Legal managed services
• Contract lifecycle management

Christian Athanasoulas, a US tax practice leader at KPMG, is quoted as explaining their firm is not looking to compete in “bet-the-company” matters but rather to address areas where clients struggle with large-scale, process-related legal tasks.

Implications for the Legal Industry

KPMG’s potential entry into the US legal market has sparked discussions about:

1. Disruption of traditional legal practice structures: The move challenges the long-standing separation between legal and accounting services in the US.

2. Increased competition: Traditional law firms may face new competition in specific practice areas, particularly those involving process-driven work.

3. Multidisciplinary service offerings: KPMG’s model aims to integrate legal services with other consulting divisions, including tax and accounting.

4. Regulatory changes: Several states other than Arizona are already experimenting with pilot programs with alternative legal service providers or considering proposals allowing nonlawyers to provide specific legal services. KPMG’s application may inspire other states to consider similar regulatory shifts, potentially leading to broader changes in the legal services market.

The Alternative Business Structure (ABS) Model

Arizona’s ABS program, which began in 2021, allows nonlawyers to own or invest in law firms. This regulatory change has already permitted over 100 entities to receive approval, mainly in areas such as personal injury, mass torts, and trusts and estates law.

Looking Ahead

The Arizona Supreme Court’s decision on January 28, 2025, will be crucial in determining whether KPMG can proceed with its plans. If approved, it could pave the way for other Big Four firms and alternative legal service providers to enter the US legal market, potentially leading to significant changes in how legal services are delivered and consumed in the coming years.