KPMG, one of the Big Four accounting firms, has taken a significant step in expanding its footprint in the legal services industry by launching a legal practice in Arizona. This move signals a transformative shift in the legal landscape, particularly in how traditional law firms compete with multidisciplinary service providers. The implications of KPMG’s expansion extend to law firms, corporate clients, and the broader legal ecosystem.
In August 2020, the Arizona Supreme Court approved changes to the regulation of the practice of law including elimination of a rule that bars nonlawyer ownership of law firms. This included striking Arizona Ethics Rule 5.4, which had long prohibited nonlawyers from owning stakes in law firms. The Arizona Supreme Court’s order also outlined a new form of law practice, referred to as an “alternative business structure” (ABS), which permits fee sharing between lawyers and nonlawyers. The order also approved Court Rule 31.1(c), which reads that “[a]n entity that includes nonlawyers who have an economic or decision-making authority … may employ, associate with, or engage a lawyer or lawyers to provide legal services, to third parties….” In creating the ABS, the Arizona Supreme Court noted that the modifications to the rules could “transform the public’s access to legal services” and should both protect the public and increase access to legal services.
Since taking effect in 2021, Arizona’s ABS program has primarily attracted legal technology firms and alternative legal service providers. KPMG’s approval is different. Its application for an ABS license was approved in February 2025, allowing it to operate KPMG Law US as an independently managed subsidiary of KPMG LLP. The approval, however, does include a condition prohibiting KPMG Law from performing legal services for audit clients.
In a company statement, Rema Serafi, New York, NY, Vice Chair—Tax for KPMG LLP, said, “KPMG Law US is uniquely positioned to transform the delivery of legal services.” Serafi further stated that “[b]y combining cutting-edge artificial intelligence and advanced technology solutions with legal services, we are proud to be a first mover with this capability….”
KPMG’s entry into the legal services market presents both challenges and opportunities for traditional law firms.
KPMG’s move into the Arizona legal market represents a broader trend of professional services firms encroaching on traditional legal territory. This trend has been well-documented in Europe, where firms like KPMG, PwC, Deloitte, and EY have integrated legal services into their business models.
The future of multidisciplinary legal services in the U.S. will likely depend on several factors:
Should firms be concerned over KPMG expanding its practice beyond Arizona’s borders? In a prepared FAQ, according to Robert Ambrogi in a recent article, the company had this to say about potential extra-jurisdictional practice outside of Arizona:
How can KPMG Law US operate outside Arizona? KPMG Law US will operate within each State’s ethics rules just like every other law firm. We can co-counsel, refer or partner with separate staffing firms and other law firms, to expand services across jurisdictions, subject in all cases to legal and ethics rules in its various jurisdictions. Other ABS law firms operate this way, and the model is also consistent with common practice among law firms. For decades, US law firms, both small and large, have used co-counsel arrangements and staffing companies to scale and provide coverage for their work across different jurisdictions.
While Arizona has permitted nonlawyer ownership of legal service providers, the broader U.S. legal industry remains largely opposed to such changes. The American Bar Association and other state bar associations have historically resisted deregulation, citing concerns over maintaining professional independence and ethical standards. The “ABS model raises ethical concerns, particularly in estate planning and business succession planning, where fiduciary duties and client confidentiality are paramount,” says Matthew F. Erskine, Worcester, MA, in a recent contribution to Forbes. He notes that “[c]ritics argue that allowing non-lawyers to own legal service providers could compromise lawyer independence, potentially prioritizing profitability over ethical obligations. Conversely, proponents suggest that increased competition will drive better client service, enhanced transparency, and more accessible legal support, especially for middle-market clients who may not traditionally engage with high-end law firms,” writes Erskine. “Also, the firms remain bound by the obligations of the Arizona Rules of Professional Conduct 1.1 (Competence) and 1.7 (Conflicts of Interest),” he adds.
KPMG’s foray into legal services could prompt further debates on regulatory reforms. If Arizona’s model proves successful—demonstrating that nonlawyer ownership enhances competition without compromising ethical integrity—other states may reconsider their stance. However, opposition from traditional law firms and legal professional associations could slow this progress.
KPMG’s launch of legal services in Arizona is a landmark development with far-reaching implications for the legal industry. By leveraging the state’s progressive regulatory framework, KPMG has positioned itself as a formidable competitor to traditional law firms. While the move presents challenges for law firms, it also opens the door for increased innovation, competitive pricing, and greater efficiency in legal service delivery. The long-term impact of this shift will depend on how regulators, law firms, and clients respond to the evolving landscape. If successful, KPMG’s Arizona initiative could pave the way for a broader transformation of the U.S. legal market, potentially reshaping the profession for years to come.
