KPMG Becomes First Big Four Firm to Gain U.S. Legal Practice Approval in Arizona

In a landmark decision that could reshape the legal and professional services landscape in the United States, the Arizona Supreme Court has granted approval for KPMG to establish a legal services arm in the state. This makes KPMG the first of the Big Four accounting firms to gain the authority to practice law in the U.S., a move that may pave the way for similar expansions by its industry peers.

The newly formed entity, KPMG Law US, will operate as an independently managed subsidiary under an Alternative Business Structure (ABS), a legal framework that Arizona adopted in 2020 to allow non-lawyers to own or invest in law firms. The regulatory shift was designed to foster innovation and expand access to legal services, particularly for businesses and individuals who may struggle with traditional legal costs.

A Strategic Move into the U.S. Legal Market

KPMG Law US will primarily focus on technology-driven legal solutions, including legal operations consulting, contract lifecycle management, compliance advisory, and managed legal services. The firm has stated that it will not provide legal services to clients audited by KPMG LLP to prevent conflicts of interest, adhering to stringent ethical guidelines.

The expansion follows a growing global trend where major professional services firms integrate legal services into their consulting, tax, and advisory offerings. KPMG already operates legal practices in multiple countries, including the UK, Germany, and Canada. However, U.S. regulations had previously barred accounting firms from owning or operating law firms, making this Arizona ruling a breakthrough moment for the industry.

The Bigger Picture: Impact on the U.S. Legal Industry

The approval of KPMG Law US signals a potential shift in the U.S. legal profession, where non-traditional legal service providers are gaining ground. The move aligns with broader efforts to modernize the delivery of legal services through automation, artificial intelligence, and alternative legal models that challenge the conventional law firm structure.

While Arizona has been at the forefront of these regulatory changes, other states, such as Utah, have introduced limited reforms in legal services ownership. Efforts in states like California to implement similar models have encountered resistance due to concerns about maintaining the independence and ethical standards of the legal profession.

Industry experts suggest that KPMG’s entry into the U.S. legal market could encourage other Big Four firms—Deloitte, EY, and PwC—to explore similar opportunities. If successful, this move could accelerate the integration of multidisciplinary services, where legal, financial, and advisory expertise are offered as a comprehensive package to corporate clients.

Challenges and Future Outlook

Despite the potential for innovation, KPMG’s expansion into the legal sector is not without challenges. Traditional law firms, bar associations, and regulators may push back against further deregulation, fearing that professional service conglomerates could undermine the independence of legal practice. Additionally, clients and competitors will closely watch whether KPMG Law US can maintain high professional and ethical standards while delivering cost-effective and efficient legal solutions.

As KPMG Law US begins operations in Arizona, its performance could serve as a case study for the future of legal services in the U.S. If successful, this could mark the beginning of a new era where legal, financial, and advisory services are more closely integrated, potentially reshaping the competitive landscape for both the legal and accounting industries.