A Big Footprint from the Big Four as KPMG Enters Legal Market
KPMG has established KPMG Law US, a subsidiary of KPMG LLP, becoming the first Big Four accounting firm to own a law firm operating in the U.S. legal market. (KPMG, Press Release). KPMG is a global tax and advisory corporation with a workforce of more than 275,000 workers across 142 countries. Id. In a historic move, the Arizona Supreme Court recently granted KPMG the approval to act as an Alternative Business Structure (“ABS”) and offer clients legal services. (Sara Merken, Reuters). This post will discuss the context behind KPMG’s entry into the legal market and the far-reaching implications of this decision, including ethical implications and market disruption.
In 2020, Arizona became the first state in the United States to lift the state restrictions that require law firms to be owned by lawyers and allow non-lawyers to have an economic interest in law firms. (Mark Maurer, Wall Street Journal). This change reflects Arizona’s attempts to expand the “public’s access to legal services, primarily to address a shortage of lawyers available to assist on family law, immigration, and other issues.” Id. The Arizona committee overseeing the ABS program unanimously approved KPMG’s license in January, but the Arizona Supreme Court only approved the license on February 27, 2025, with several restrictions. Id. Whether this move ultimately advances Arizona’s access to justice goal remains to be seen, given KPMG’s likely focus on high-end corporate legal services.
KPMG’s license comes with several restrictions, including the condition that KPMG cannot perform legal services for any of KPMG’s or its network firms’ audit clients. (Sara Merken, Reuters). KPMG will have to conduct “semiannual audits to review internal firm policies and procedures to ensure compliance with the rules and regulations of the ABS license.” (Jon Campisi, Consulting Magazine). Additionally, KPMG cannot practice law in other states where clients may be located, but KPMG plans to address this by using “staffing agencies and co-counseling relationships with other law firms to serve clients” in other states. (Justin Henry and Roy Strom, Bloomberg Law).
This one-stop-shop approach is a novel business growth opportunity for such a large company with a broad financial services workforce. The work of consultants, accountants, and lawyers under one umbrella can increase efficiency and better financial management. (Kara Sears, Law Shun). This multidisciplinary approach can allow KPMG to gain a competitive edge in the corporate customer market.
Despite these benefits, this move has several challenges, such as the complicated intersection of the legal and business advisory roles. (Mark Maurer, Wall Street Journal). As a firm driven by financial services and consulting, KPMG’s mission and structure have the potential for conflicts of interest. Id. In a 2020 CPA study, 60% of surveyed accountants reported offering “strategic advisory services,” reflecting the broader trend of accounting firms diversifying their service offerings by adding new services such as consulting, cash flow analysis, payroll services, technology services, and data analytics. (CPA, Business Model Trends for Accounting Advisory Services Report).
Meanwhile, lawyers are bound by strict ethical rules under the ABA while providing legal services, which can at times conflict with the work of accountants. For example, a lawyer’s duty to maintain client confidentiality may directly oppose an accountant’s obligation to disclose certain financial information in official statements. (Kara Sears, Law Shun). Model rules also bar lawyers from sharing fees or partnering with non-lawyers, “clashing with the multidisciplinary structure of accounting firms.” Id. Accountants can represent multiple clients if objective, but lawyers face stricter conflict of interest rules and the inability to represent clients that have a conflict, even if the lawyer remains objective. Id. Without strict safeguards in place dividing up legal and business advice, KPMG risks violating ethical standards and facing legal backlash from competitors and courts.
KPMG’s expansion into legal services also has potential consequences of market disruption and the monopolization of business markets. Law firms that provide services to KPMG’s clients now face new competition to their transactional corporate departments, as the new KPMG Law stands poised to take over contracting, remediation exercises, and mergers and acquisitions documentation. (Debra Cassens Weiss, ABA Journal). Considering the size of KPMG’s client base, this transition could leave transactional law departments with revenue loss when faced with competition from a one-stop shop of accounting, consulting, and legal advice.
Although no global accounting firm has replicated KPMG’s move within the U.S., KPMG is not the first accounting firm to receive court approval in Arizona for an ABS license. (Mark Maurer, Wall Street Journal). Aprio, an accounting and business advisory firm, plans to partner with Radix Law to develop a new law firm in Arizona, after being approved in 2024. Id. Meanwhile, there is already an existing expansion of the Big Four accounting, tax, and consulting companies into legal services in international markets such as the U.K. and Australia, so it stands to reason that the Big Four would expand within the U.S now that the opportunity has emerged for non-lawyer supervised companies to enter the legal market. (Justin Henry and Roy Strom, Bloomberg Law).
The Arizona Supreme Court’s approval of KPMG’s law firm sets a new business model in motion, offering clients the convenience of a one-stop shop while raising concerns about market disruption and ethical duties. As other accounting firms consider entering the U.S. legal market, the industry faces a shift that challenges traditional law firms. KPMG’s method to address these concerns will be telling for the future of the legal profession and could set a precedent for further expansion by other non-traditional legal providers.