KPMG is using Arizona as an entry to take its legal business national, a move certain to grab the attention of Big Law rivals.
The accounting giant’s US law firm has spent the past six months, since gaining approval to exist in Arizona, forming co-counsel relationships with attorneys licensed in states with tighter restrictions on who can own law firms, Tom Greenaway, its principal, said in an interview. KPMG Law US wants to provide some services the company already offers elsewhere around the globe.
“What this market really needed was tech-enabled legal service providers to take some of that high-volume, routine work off our clients’ shoulders,” Greenaway said. “That will allow us to deliver those services back to them with a quality and scale and speed that we believe nobody else in the market can provide right now.”
The moves are significant because the company’s broad network of corporate clients, and its ability to invest in technology, threaten traditional law firm models. How successful KPMG will be in taking market share from the traditional firms largely hinges on what services it can provide outside Arizona in larger markets.
KPMG Law US—the first US law firm owned by a Big Four accountancy—is cross-selling services to existing clients of its accounting and consulting practices, according to Greenaway. It’s also working with lawyers in other KPMG business segments on projects spearheaded by the new operation.
The firm is focusing primarily on work that Greenaway said doesn’t fit into Big Law’s business model. Partners at those firms commonly charge four-figure hourly rates, too expensive for the commoditized compliance work KPMG seeks.
Top firms will continue to steer massive corporate transactions, but KPMG wants the business that comes after a deal, like harmonizing commercial contracts and dissolving entities. It’s also acting as a consultant to at least one corporate legal department.
The First Six Months
Greenaway previously worked in KPMG’s national tax practice, joining the company after serving as a senior attorney at the Internal Revenue Service.
His first task in the new role was making the case for the Arizona Supreme Court to award the company a license to operate as an alternative business structure. The state is one of a handful that have loosened strict rules against non-lawyers owning law firms.
Greenaway continues to be based in Boston but said he spends significant time in Arizona. His group shares an office with KPMG in Tempe, one of the company’s more than 75 US locations.
The two operations keep everything separate, from physical entrances to software, to comply with state rules prohibiting non-lawyers from influencing the independence of attorneys.
“From a technology and information security perspective, it is as if we are in two buildings on different sides of the street,” Greenaway said.
The new firm has kept a low profile, with its website listing no lawyers. KPMG Law US also hasn’t announced any client engagements or lawyer hires. The low profile should not be interpreted as inactivity, Greenaway said.
The firm is working on a proposal for a general counsel at an unnamed company whose department is getting an investment as part of the CEO’s “transformation agenda,” he said.
“The general counsel with whom we’re speaking said ‘I’m taking this as an opportunity—I very rarely get investment money and I now I need to know how to spend it,’” Greenaway said.
He said lawyers from other KPMG business segments also provide services through the firm, though he declined to say how many attorneys are working at KPMG Law US.
“Let’s say an attorney who is practicing in our M&A practice in KPMG is giving advice to a client from a public accounting perspective,” he said. “If we think about adjacent use cases like dissolving an entity—that is a legal consideration. Lawyers from that team who know the issues can join KPMG Law for that project.”
Beyond Arizona
KPMG’s plan to work with clients outside of Arizona will test state-by-state rules on the practice of law, according to legal ethics experts.
“It sounds like what they want to do is practice nationally from a Tempe office,” said Bruce Green, a Fordham Law School professor. “The rules of professional conduct will be tested.”
Out of state lawyers generally can form co-counsel relationships for temporary projects, according to Green, but those relationships have time limits.
Podcast: KPMG’s Move to Practice Law in Arizona May Signal Paradigm Shift
Greenaway said the restrictions are the same as for any lawyer who wants to help a client in another state.
“We have to make sure we associate with attorneys who are licensed in that jurisdiction,” he said. “Those licensed local attorneys have to be an active participant of our engagement team.”
The company’s plan has been met with some hostility, including in neighboring California. A bill to ban fee-sharing with firms owned by non-lawyers in other states was introduced less than two weeks before KPMG won approval to launch its Arizona firm. The legislation has since been watered down to cover only certain contingency and referral fees.
The American Bar Association opposes fee sharing with non-lawyers. The arrangements are inconsistent with the legal profession’s core values, according to a resolution its House of Delegates passed in 2022, reasoning it would undermine loyalty to clients.
There may also be competitive reasons for some of the opposition.
“It appears that what KPMG wants to do is legal work around mergers, whether it’s in connection with the closing of the acquisition or post-acquisition services, and in the end they will be taking work away from lawyers,” said Stephen Younger, a senior counsel at law firm Withers.
KPMG officials describe the firm’s work as largely supplementary to that performed by large law firms. They don’t plan to negotiate billion-dollar deals or litigate cases in court. Instead, they’re looking to fill a gap with services those firms don’t offer.
“We’re competing against traditional law firms and public accounting firms when they can do the work,” Greenaway said. “Nobody can provide the breadth of services that we can.”
Emily R. Siegel also contributed to this story.
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