Arizona has taken a major step in reshaping the legal industry by allowing KPMG, one of the Big 4 accounting firms, to establish a law firm in the state. Historically, legal practice in the U.S. has been restricted by Model Rule 5.4, which prevents non-lawyers from partnering in law firms. However, Arizona eliminated this rule in 2021 to increase access to legal services, becoming the first state to do so. Now, KPMG Law US has been granted approval to operate as an independent legal entity, marking a significant shift in how legal and financial services may be integrated.
KPMG’s legal division is not entirely new, as the firm already provides legal services in countries like Australia and the United Kingdom. In Arizona, its focus will be on offering corporate legal solutions that complement its existing financial advisory services. This includes handling regulatory compliance, post-merger integration, and other specialised legal matters that intersect with business operations. However, to comply with Arizona’s restrictions, KPMG Law US has agreed not to provide legal services to its audit clients, ensuring a clear separation between its legal and accounting functions.
While this approval is a major win for KPMG, it raises questions about the broader implications for the legal industry. Other states still enforce traditional rules prohibiting non-lawyer ownership of law firms, which means KPMG Law US may face limitations when handling multi-state legal matters. The firm plans to address this through collaborations with external law firms and staffing agencies. Additionally, its competitors—including Ernst & Young, PwC, and Deloitte—may now consider entering the legal market as well. As the legal landscape evolves, traditional law firms will be watching closely to see if this move signals a new era of corporate legal practice in the United States.