Robert Ambrogi Blog
In a historic development for the legal profession, KPMG LLP, the U.S. audit, tax, and advisory firm, became the first Big Four firm with a subsidiary licensed to practice law in the United States, as the Arizona Supreme Court approved the application of KPMG Law US to be licensed as an alternative business structure under Arizona’s liberalized rules that allow businesses to practice law.
In an order issued today, the Supreme Court approved KPMG Law’s application, which Arizona’s Committee on Alternative Business Structures had recommended in favor of in January.
KPMG said the new firm will build on its established presence in Arizona, where it already serves more than 100 clients. KPMG Law US will operate as an independently managed subsidiary of KPMG LLP and maintain strategic alignment with the KPMG LLP Tax practice, the company said.
“This approach combines innovation with the longstanding KPMG LLP commitment to quality, ethics, independence, and professional standards, so clients may benefit from comprehensive, integrated professional services,” the company said.
The new law firm also will collaborate with the KPMG global network of law firms already operating in more than 80 jurisdictions, the company said.
KPMG Law US will work with KPMG LLP to provide legal managed services, legal operations consulting, and legal technology innovation, they said, all with a focus on helping business clients gain efficiencies and empower their legal teams to concentrate on strategic priorities.
“KPMG Law US is uniquely positioned to transform the delivery of legal services,” Rema Serafi, vice chair, tax, at KPMG LLP, said in a statement. “By combining cutting-edge artificial intelligence and advanced technology solutions with legal services, we are proud to be a first mover with this capability and to offer the most holistic range of tech-enabled services in the marketplace for our clients’ evolving needs.”
KPMG provided the following FAQs about its legal practice in Arizona, which I am printing verbatim:
What is it? KPMG Law US is a subsidiary of KPMG LLP that will practice law in the United States. KPMG Law US will strive to set the bar for quality and ethics in legal services. It will be governed by the same high ethical standards that apply to other law firms and will build on our long-standing commitment to quality, ethics, independence, and compliance with professional standards.
Why is it first? In August 2020, the Arizona Supreme Court voted to reform regulations to allow for more innovation in legal services, specifically allowing nonlawyers to have an economic interest in law firms. The KPMG Law US application was just approved by the Arizona Supreme Court.
Why does it matter for businesses? 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.
What’s the role of technology? KPMG Law US is uniquely positioned to deliver innovative services at scale, enabled by significant technology platforms and investments. These services will leverage technology investments, and the cloud-based and generative AI enabled Digital Gateway platform to unlock insights and drive quality. Digital Gateway serves as a control tower for a company’s suite of tax and legal data, providing advanced analytics and reporting capabilities, empowering tax and legal teams to enhance governance, manage risk and provide actionable insights.
How will KPMG Law US scale globally? Globally, KPMG member firms have delivered innovative legal services for more than a decade, now in more than 80 jurisdictions. KPMG Law US will leverage our global network’s experience and capabilities, coordinating with KPMG legal business services around the globe to support clients.
- From the KPMG International press release, “Tax & Legal Services grew by 10%, driven by client demand for our AI enabled managed service and transformation capability, our legal capability and assisting clients navigate global tax reform.”
How can KPMG Law US operate outside Arizona? KPMG Law US will operate within each State’s ethics rules just like every other law firm. We can co-counsel, refer or partner with separate staffing firms and other law firms, to expand services across jurisdictions, subject in all cases to legal and ethics rules in its various jurisdictions. Other ABS law firms operate this way, and the model is also consistent with common practice among law firms. For decades, US law firms, both small and large, have used co-counsel arrangements and staffing companies to scale and provide coverage for their work across different jurisdictions.
What is our presence in Arizona? KPMG US serves 100+ clients in Arizona through approximately 300 people across our Audit, Tax, Advisory, and BPG teams. Our presence has grown 35% since 2020 as we support the growth of the Arizona economy. Partnering with resources in other jurisdictions, KPMG Law US will serve clients nationally, including in Arizona. We have established relationships with law firms to support legal teams today.
What are example services? KPMG Law US will primarily deliver large-scale, process-driven work, such as volume contracting, remediation exercises, M&A-driven harmonization of contracts, and other legal managed services.
- M&A harmonization: Business combinations and separations demand integration and segregation of contracts, respectively. Due to our significant technology investments, there are opportunities in the market to provide these required tasks, at scale, with better controls and more standardized outcomes.
- Remediation exercises: Businesses operate in a dynamic business and regulatory environment, and they often need to tailor and update contracts and other arrangements to account for changes in circumstances and other developments. Like with M&A harmonization, there is an opportunity to assist clients on these matters, at scale, with our technology-enabled services.
- Volume contracting: Volume contract managed services will enable companies to design playbooks and technology-enabled solutions to handle high-volume contract obligations that currently burden legal departments. For example, many of businesses spend too much time administering non-disclosure agreements and other form-driven contracting exercises. We will be able to help relieve those burdens so legal departments and other legal advisors can focus on their core missions.