KPMG Wins Approval to Launch First US Law Firm for Big Four (1)

KPMG gained approval to practice law in Arizona, making it the first Big Four accounting, tax, and consulting company set to operate a law firm in the US.

The Arizona Supreme Court today granted KPMG a license to operate a so-called alternative business structure. KPMG Law US will be an independent law firm operated as a wholly-owned subsidiary of the company.

The law firm will provide legal services that include integrating legal contracts and tech systems after corporate mergers, KPMG has said. KPMG’s tech capabilities, scale, and pricing structure give it an advantage over traditional law firms, Stuart Bedford, the company’s global head of legal services said in an interview earlier this month.

“KPMG Law US is uniquely positioned to transform the delivery of legal services,” Rema Serafi, KPMG’s vice chair for tax, said in a statement. “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 move follows years of Big Four expansion into legal services in other markets, such as the UK and Australia. Professional regulations for US lawyers have largely barred non-lawyers from owning law firms. The Arizona ABS program created an exception in 2021, hoping new law firm models would spur better access to costly lawyer advice. Mass tort firms have taken to Arizona’s alternative business structures and use them for lead generation and advertisement nationally.

KPMG Law US can practice law in the state on the condition that it refrains from performing legal services for any of KPMG’s audit clients, the court said in the Thursday order. The restrictions have broader application beyond US securities law that prohibit accounting firms from performing legal services for its US clients.

The initiative faces several questions, including to what extent, or how, KPMG Law will provide services in other states. Law firms tracking new competition will be watching to see what types of legal matters clients hire KPMG to handle.

“One question is are they engaged in the unauthorized practice of law in other states in which they are giving advice because that’s where the clients are located,” said legal ethics professor Bruce Green, who teaches at Fordham Law School.

David Rizzo, the designated compliance lawyer for KPMG Law US, told an Arizona committee reviewing its application that it will use staffing agencies and co-counseling relationships with other law firms to serve clients in other jurisdictions.

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“It’s going to be my job to ensure that Arizona lawyers are not holding themselves out as lawyers in other jurisdictions,” Rizzo told the committee. “We are aware of the kind of trouble that sloppy operations can get us in.”

The bulk of KPMG’s expected US legal offerings are aimed at complementing outside and in-house legal teams in day-to-day corporate management, Christian Athanasoulas, global head of international and M&A tax at KPMG, who oversaw the company’s license application, told Bloomberg Law in January.

The approval follows a January recommendation by Arizona’s Committee on Alternative Business Structures. The state’s highest court requested additional information on KPMG’s plans later that month.