KPMG is poised to become the first Big Four accounting firm to establish a law firm in the United States, leveraging relaxed law firm ownership regulations in Arizona. This move marks a significant step in the accounting industry’s expansion into U.S. legal services.
Arizona’s Regulatory Changes Pave the Way
In 2020, Arizona became the first state to eliminate restrictions preventing non-lawyers from holding economic interests in law firms. This reform allows entities like KPMG to co-own law firms with court approval. On Tuesday, KPMG Law US, a subsidiary of KPMG US, successfully persuaded a court committee to recommend its approval to the Arizona Supreme Court for practicing law in the state.
Christian Athanasoulas, a U.S. tax practice leader at KPMG, highlighted that the subsidiary could also assist clients outside Arizona by collaborating with lawyers in other states. The Arizona Supreme Court is scheduled to decide on KPMG’s bid for final approval on January 28.
Impact on Legal Services and Competition
KPMG’s entry into the legal market could disrupt the traditional landscape, offering corporate legal departments more options for outsourcing work. Legal industry experts suggest that KPMG’s presence might intensify competition among the Big Four and traditional law firms. While KPMG does not plan to engage in high-stakes litigation, it aims to handle large-scale, process-related legal tasks, such as synthesizing contracts after mergers and acquisitions.
Athanasoulas clarified that KPMG Law US would adhere to the same ethical standards as other law firms. The firm plans to focus on volume contracting and managed services rather than litigation, addressing areas where clients often struggle with routine legal tasks.
Broader Implications for the Legal Industry
The move reflects a growing trend of non-traditional players entering the legal services market. David Wilkins of Harvard Law School emphasized that the Big Four could excel in integrating law, project management, and technology. These capabilities could appeal to corporate legal departments seeking efficient solutions for routine legal work.
Despite this shift, traditional law firms are expected to maintain their dominance in high-level transactional and litigation work. However, the presence of accounting firms like KPMG may continue to reshape the industry by providing innovative legal services, potentially making legal advice more accessible and affordable.
