Key points:
- KPMG would be the first Big Four accounting firm to deliver legal services in the U.S. under Arizona’s alternative business structure program.
- The firm plans to operate within Arizona’s regulatory framework but faces questions on compliance in other states.
- No timeline has been given for a final ruling.
The Arizona Supreme Court has put KPMG’s bid to establish a law firm on hold, requesting further information before making a final decision, Bloomberg Law reports.
- The court was expected to rule on KPMG’s application this week, following a recommendation from Arizona’s Alternative Business Structures (ABS) committee. Instead, it has asked the firm to clarify aspects of its proposal, leaving the timeline for a decision uncertain.
- “The KPMG application remains under review,” said Alberto Rodriguez, the court’s communications director. He added that there are “no specifics or timeframe” on when a final ruling will be made.
- KPMG, which had not immediately commented on the development, is seeking to become the first Big Four accounting firm to deliver legal services in the U.S.
Regulatory Challenges
Arizona is one of the few U.S. states that allow nonlawyer ownership of law firms through its ABS program, which was launched in 2021 to expand access to legal services. The program permits law firms to share ownership with business professionals, a departure from the traditional attorney-only model.
Utah has a similar but temporary regulatory sandbox, while Washington state recently announced a 10-year pilot program exploring nonlawyer firm ownership, according to Law.com.
Despite receiving committee approval, KPMG’s plan has raised regulatory questions. Committee members at a Jan. 14 meeting asked how KPMG Law US—its proposed legal division—would provide services in states that do not allow fee-sharing with nonlawyers.
- David Rizzo, KPMG Law US’s designated compliance lawyer, said the firm would rely on staffing agencies and co-counsel agreements to serve clients in jurisdictions outside Arizona.
- “It’s going to be my job to ensure that Arizona lawyers are not holding themselves out as lawyers in other jurisdictions,” Rizzo told the committee. “We are aware of the kind of trouble that sloppy operations can get us in.”
While KPMG’s application remains under review, the firm’s potential approval could open the door for other Big Four firms to follow suit.
