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KPMG could soon begin offering legal services in the US, after an Arizona judicial committee recommended approval of a licence that would make it the first Big Four accounting group to directly challenge traditional law firms in the country.
KPMG is attempting to prise open the US legal market using an Arizona programme that allows non-lawyers to own law practices, in the hope of selling a variety of routine legal services to corporate America.
A number of countries, including the UK, allow non-lawyers to own and run law firms, but such arrangements are largely blocked in the world’s largest economy. KPMG already offers such services in dozens of countries, including the UK, where non-lawyers are allowed to own and run law practices.
“We have been studying the Arizona structure for years and are excited by the opportunity it presents to us,” Tom Greenaway, a partner in KPMG’s tax division, told the state’s committee on alternative business structures. “The time is right, given the advances we have made with technology and the maturity of the market.”
KPMG says the licence will allow it to compete with law firms in the kinds of routine, or “process-driven”, legal work that can benefit from the use of technology. Such work could include reviewing and harmonising vendor contracts after a merger or acquisition, or managing employment or consumer lending contracts for large businesses.
“Our business is big business,” Greenaway told the ABS committee.
While there are pilot programmes in operation in Utah and pending in Washington, Arizona was the first state to permanently liberalise its legal market in 2021.
KPMG will be licensed as an “alternative business structure” if the state’s supreme court approves the recommendation made by its advisory committee on Tuesday.
Four other small firms also made ABS licence recommendations alongside KPMG on Tuesday, which, if all confirmed, would take the total licences handed out in the state to 108.
Christian Athanasoulas, KPMG’s tax practice leader for services, told the Financial Times that a US law licence would allow the firm to dramatically increase the services it could sell to companies’ in-house legal departments, not just in Arizona but nationally.
“Traditional law firms don’t necessarily have a footprint in all 50 states,” he said. “When they are thinking about ways to serve clients across the entirety of the US, they can use staffing companies or partner with law firms in other states, and we believe that we will be able to do many of those same things.”
Legal services would not be sold to KPMG’s audit clients, the firm said, due to rules protecting the independence of audit work.
Globally, KPMG reports legal fee income as part of its combined “tax and legal services” division, which accounted for $8.7bn of its $38.4bn in revenues in the year to September. It was the fastest-growing division, with fee growth of 10 per cent, year on year.
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