KPMG Pursuing Alternative Business Structure Approval in Arizona
January 9, 2025, 8:51am CST
A subsidiary of accounting firm KPMG US has applied to operate as an alternative business structure in Arizona under the state’s ethics rules that allow non-attorneys to own or invest in law firms. (Photo from Shutterstock)
KPMG, a global leader in audit, tax, and advisory services, has taken a significant step in the legal sector by seeking approval for its subsidiary, KPMG Law US, to operate as an alternative business structure in Arizona. This proposal hinges on the acceptance of Arizona’s unique ethics rules, which permit non-lawyers to own or invest in law firms. This regulatory framework is designed to encourage innovative legal service delivery, enabling companies like KPMG to extend their range of services beyond traditional legal advice.
If the Arizona Supreme Court approves this application, KPMG Law US intends to complement the offerings of conventional law firms. A spokesperson for KPMG remarked that the company’s legal teams encounter considerable process challenges that could be alleviated with enhanced legal expertise and advanced technology. The firm’s goal is to resolve these issues effectively, particularly given the demanding timelines often present in legal matters.
The proposed legal services are not merely ancillary; rather, KPMG Law US aims to integrate legal functionalities into managed services such as contract lifecycle management. By doing so, KPMG seeks to redefine the way legal services are provided, focusing on efficiency and innovative solutions to complex business challenges. Such an approach could lead to improved legal outcomes while also streamlining operations for clients in various sectors.
Industry analysts consider this approval a potential “game changer” for KPMG and the legal landscape. KPMG Law already operates in over 80 jurisdictions internationally, employing more than 3,750 professionals. However, restrictions in most U.S. states against non-lawyer ownership of legal firms limit KPMG’s ability to fully engage with the legal market. Consequently, gaining a foothold in Arizona could set a precedent for similar ventures across the country.
As part of the ongoing evaluation process, the Arizona Supreme Court’s Alternative Business Structures Committee is set to review this proposal on January 14. The final decision will rest with the state Supreme Court, which has already granted over 100 alternative business structure approvals in various legal domains—including personal injury, mass tort law, product liability, and trust law. The state’s administrative move to recognize non-traditional legal entities suggests a broader acceptance of innovative legal service models.
KPMG’s expansion strategy includes plans to recruit up to 3,000 lawyers in the coming years, thereby bolstering its legal capabilities significantly. This aggressive hiring approach indicates KPMG’s commitment to becoming a formidable player in the legal service sector, offering a range of legal solutions that align with clients’ needs while embracing technological advancements.
Conclusion
The application for an alternative business structure by KPMG Law US in Arizona marks a pivotal moment in the evolution of legal services in the United States. Should this application be approved, it will not only enhance KPMG’s service offerings but may also encourage other firms to explore similar business models. The evolving nature of legal services necessitates a balance between traditional practice and innovative solutions, and KPMG is positioning itself at the forefront of this shift.
FAQs
What is an alternative business structure (ABS)?
An alternative business structure (ABS) allows non-lawyers to own or invest in law firms, promoting innovative service delivery models in the legal sector. ABA Rules on ABS vary by jurisdiction, with some states adopting them more readily than others.
Why is KPMG Law US interested in Arizona?
KPMG Law US is pursuing operations in Arizona due to the state’s favorable regulatory environment that allows non-attorney ownership of legal firms. This regulatory framework could significantly enhance KPMG’s ability to deliver integrated legal services.
What types of services will KPMG Law US provide?
KPMG Law US aims to provide legal functionalities integrated with managed services like contract lifecycle management, focusing on improving effectiveness and efficiency in legal processes.
How will this approval impact traditional law firms?
The approval may lead to increased competition but could also foster collaboration, as traditional law firms may partner with entities like KPMG Law US to leverage technology and resources, ultimately enhancing client service.
What is the status of KPMG’s application as of now?
The Arizona Supreme Court’s Alternative Business Structures Committee is scheduled to review the application on January 14, with the final decision resting with the state Supreme Court.