KPMG has received a historic license from the Arizona Supreme Court, becoming the first Big Four firm to enter the US legal sector. This move is expected to intensify competition for top talent and clients.
The Arizona Supreme Court has granted KPMG a special license to practice law, allowing it to establish KPMG Law US as an independent legal entity. This decision makes KPMG the first of the Big Four accounting firms to launch a legal division in the United States.
The firm will operate as an Alternative Business Structure (ABS), a model that permits nonlawyers to own and provide legal services. Through KPMG Law US, the firm aims to integrate technology and legal expertise, offering services such as legal managed services, legal operations consulting, and legal technology innovation.
Reshaping Legal Services with Technology
KPMG sees this expansion as a game-changer. “KPMG Law US is uniquely positioned to transform the delivery of legal services,” said Rema Serafi, KPMG’s vice chair of tax. “By combining artificial intelligence and advanced technology with legal expertise, we are proud to be a first mover in this space and offer the most holistic tech-enabled legal services in the market.”
The US legal industry is the largest in the world and has historically been closed to nonlawyers due to regulations by the American Bar Association (ABA). The ABA’s rules restrict law firm ownership to licensed attorneys, preventing firms like KPMG from directly competing in the space. However, Arizona’s ABS program, launched in 2021, allows nonlawyer ownership, providing KPMG with a path into the industry.
Arizona is not the only state exploring legal market reforms. Washington has permitted limited nonlawyer ownership since 1991, and Utah is running a similar program.
A Market in Transition
Experts see Arizona’s ABS model as a step toward modernizing legal services. Lucy Ricca, executive director at Stanford Law School’s Deborah L. Rhode Center on the Legal Profession, told Business Insider that these reforms aim to increase access to legal services.
“The Arizona ABS reforms are market-driven changes designed to bring capital, diversification, and competition to a sector that has long been controlled by a professional monopoly,” Ricca said.
Despite this, critics argue that allowing nonlawyer ownership could create conflicts of interest and threaten the independence of legal professionals.
To address these concerns, KPMG has committed to adhering to all state ethics rules. Additionally, the Arizona Supreme Court has imposed a key restriction: KPMG Law US cannot provide legal services to clients for whom it conducts financial audits.
Intensifying Competition in Legal Services
KPMG’s legal expansion aligns with its broader business growth. Its tax and legal division was the firm’s fastest-growing sector last year, increasing by 10% globally.
The new firm will not be limited to Arizona. KPMG Law US plans to serve clients nationwide through partnerships, co-counsel agreements, and referrals to staffing firms and other law firms.
Despite its historic entry, some experts believe KPMG will not immediately disrupt the legal industry. “Legal services are built on long-term reputations. Any new entrant will have to prove itself before competing with established firms,” said Kirsten Keegan Vasquez, vice president at legal recruiting firm Major, Lindsey & Africa.
However, Vasquez noted that KPMG’s move will likely drive competition for top lawyers and clients.
Stanford’s Ricca echoed this view, stating that while market shifts will create winners and losers, they ultimately lead to a more diverse and competitive legal industry. “For decades, the legal sector has lacked true competition. This change signals a more dynamic and evolving marketplace,” she said.
With KPMG’s entry, the US legal market is entering a new era—one where technology, alternative ownership models, and competition reshape the industry.
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