KPMG: Already has an ABS in England and Wales
KPMG is set to become the first of the Big Four accountancy firms to set up a regulated law firm in the US.
KPMG Law US has filed an application with the Arizona Supreme Court to become an alternative business structure (ABS) – Arizona was the first US state to ditch the ban on non-lawyer ownership of law firms four years ago.
This will allow it to practise law across the US and not just Arizona, subject to the rules in different states – the federal system means that each state’s supreme court governs legal practice within their jurisdiction – “which is something that no Big Four network firm can currently do”, a KPMG US spokesman noted.
He explained: “KPMG Law US will be positioned to deliver innovative and quality services for legal teams, drawing on the KPMG network’s global experience as well as our technology capabilities and scale.
“Legal teams navigate complex challenges with the support of traditional law firms. They also face substantial and wide-ranging process challenges that can benefit from legal expertise and technology at scale. We aim to solve those pain points, especially on tight timelines.
“This focused effort is a natural extension of our capabilities and will complement the services of traditional law firms.”
The spokesman added that the firm would “strive to set the bar for quality and ethics in legal services”. The focus will be on large-scale, process-driven work.
KPMG has an established ABS in England and Wales, and in all employs approaching 4,000 lawyers providing legal services in more than 80 jurisdictions.
In the last financial year, tax and legal services grew by 10%, making it the fastest growing function across the KPMG global network. This was attributed to “client demand for our AI-enabled managed service and transformation capability, our legal capability and assisting clients navigate global tax reform”.
Arizona has now licensed 105 ABSs, including some that also have ABSs over here, including alternative legal services providers Elevate and Axiom, and consumer businesses LegalZoom and Rocket Lawyer.
Utah began a regulatory sandbox that allows ABSs in 2020, but unlike in Arizona the rule changes are not permanent. The seven-year pilot was amended last September with what the Utah Supreme Court called “the Utah innovation requirement”.
To meet this, an entity must demonstrate that a sandbox authorisation will allow it to reach Utah consumers currently underserved by the legal market.
The court said: “The Utah innovation requirement is intended to act as a fairly high bar for participation in the sandbox. Only applications that present an innovative service model with the potential to expand access to legal services in Utah should be submitted for court approval.
“The impact on Utah consumers must be substantial relative to the entity’s overall reach. National and international companies that expect to serve only an incidental number of Utah clients will not qualify.”
The court is also re-evaluating existing participants to check they meet the new requirement. If they do not, they will have to exit the sandbox.
Meanwhile, the Washington Supreme Court announced last month that it is to press ahead with its own regulatory sandbox.
The Washington State Bar Association will implement and run the pilot in partnership with the court’s practice of law board, allowing successful applicants to practise law under “timebound, limited exemptions from otherwise applicable court rules and statutes governing the practice of law in Washington”.
A major block in the US is the rule against the unauthorised practice of law. While this concept does not exist in the UK, the notion of unregulated legal services providers does not exist in the US – only licensed lawyers who are members of their state bar are permitted to deliver legal services.
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