Arizona Alternative Business Structures – What KPMG Law US Could Mean for the Future of the Legal Community

By Courtney Czochara. 

The “Big Four” accounting firm KPMG has been making headlines recently—and not for their accounting services. KPMG is attempting to make its entry into Arizona’s legal market under the subsidiary KPMG Law US, positioning itself as the first of the Big Four global accounting giants to offer legal services in the United States. 

KPMG has targeted the Arizona market for its legal breakthrough because Arizona is one of the few states that allows what are called Alternative Business Structures (“ABSs”). ABSs are entities that provide legal services, but unlike traditional law firms, they often have nonlawyer owners, managers, and decision-makers. Thus, Arizona’s ABS program provides a platform for KPMG to integrate legal services into its United States business model. 

Although Arizona’s ABS program has been in place since 2021, a Big Four firm utilizing this business opportunity could mean a shift in Arizona’s legal community, as the other Big Four firms are likely to follow suit. It could even prompt a shift in the national legal landscape because more and more states may want to jump on the ABS bandwagon in an attempt to attract Big Four legal services. With KPMG Law US’s ABS application in Arizona currently on hold, questions remain about whether and when the firm will receive approval—and what its entry could mean for the future of legal services in the United States.

Brief Overview of Arizona’s Alternative Business Structure Program

In 2021, for the first time in the United States, the Arizona Supreme Court created an ABS program via an administrative order, which permitted the formation of “a business entity that includes nonlawyers who have an economic interest or decision-making authority in the firm and provides legal services.” This means that business entities in Arizona can provide clients a mix of legal and other business services as a “one-stop shop.” It also allows nonlawyers to share in the business’s legal profits, something formerly prohibited under Arizona Professional Ethics Rule 5.4. The decision served to foster innovation in the delivery of legal services, expand law firm investment opportunities, and increase access to legal assistance in the state. 

As of February 2025, the Arizona Supreme Court has approved over one hundred ABSs. Many of the active ABSs provide unique services that combine the disciplines of various industries with that of legal practice, such as medicine, technology, engineering, and estate planning. Despite Arizona’s trailblazing efforts, many states’ professional ethics rules still prohibit business partnerships between lawyers and nonlawyers that involve the provision of legal services. These sustained prohibitions reflect an air of uncertainty surrounding the ethical implications of ABSs. Some critics believe that allowing nonlawyer partners in these circumstances may enable them to negatively influence lawyer partners’ professional judgment, potentially leading to a prioritization of business profit over competent legal representation. Others contend that the other professional ethics rules already prohibit such conflicts of interest and incompetent representation, making the ABS accountable for such misconduct and thereby serving as a deterrent. 

Whatever the national consensus appears to be, it seems that ABSs are here to stay in Arizona. However, it is important to note that, although Arizona’s ABS program has not given rise to any major ethical complications, there has not yet been an ABS of KPMG Law US’s magnitude, making it an unprecedented development in the state. 

KPMG Law US

Although KPMG Law US is set to be the first ABS of its caliber in the United States, KPMG and other Big Four firms are no stranger to combining their businesses with corporate legal services. Dating back several decades, KPMG and its rivals were providing legal services across the globe in Europe, Asia-Pacific, Latin America, and Africa, including tax and various other forms of transactional support. KPMG itself is already offering legal services in eighty other jurisdictions. It therefore comes as no surprise that KPMG is trying to beat the competition to the punch and set up a legal shop in the United States, taking full advantage of the Arizona ABS program for its multidisciplinary services. 

KPMG has indicated that they intend to offer legal services that are a natural extension of the financial and consulting services that they already provide, particularly post-transactional services such as contract integration for mergers. Between offering a comprehensive range of services under one roof and leveraging its extensive global presence and client base, KPMG has a clear advantage over traditional corporate law firms as it relates to post-transactional services. KPMG, however, insists that they intend to offer services that complement those of traditional law firms. So, traditional law firms should have no cause for concern, right?

Potential Impact on the Legal Community

KPMG Law US has quickly grabbed the legal community’s attention, prompting both local and national concerns about the future of the United States legal market. Given that the Big Four already have legal practices in other countries, it is likely that the other accounting giants will follow in KPMG’s footsteps and target the United States legal market. Although Arizona is one of only three states that allow ABSs, pressure and interest from the Big Four may prompt more states to eliminate their prohibitions on ABSs in an effort to attract more business. 

The potential national shift in the legal market could have a negative impact on traditional law firms, particularly those specializing in corporate and tax law, due to increased competition. And not just competition for business, but competition for talent as well. The option of a Big-Four-backed career path is likely to be an appealing alternative for business-oriented attorneys, especially those interested in cross-disciplinary work. This new career option for attorneys will decrease the size of the talent pool for traditional firms. Though this may seem like a negative result, it has the potential to lead to more competitive employment benefits and opportunities in the long run as traditional law firms are forced to adapt in order to entice and retain top talent. 

That said, it is uncertain whether such a large shift will even occur. First, there doesn’t appear to be a strong likelihood that other states will relax their prohibitions on ABSs given widespread ethical concerns. Take California, for instance. Despite being known for its progressive nature, in 2022 the California legislature passed a law to prohibit the State Bar from allowing corporate ownership of law firms or fee-sharing between lawyers and nonlawyers “due to grave concerns that it could undermine consumer protection by creating conflicts of interests that are difficult to overcome and fundamentally infringe on the basic and paramount obligations of attorneys to their clients.” This reflects the attitude of many states regarding the corporatization of law firms, indicating that the national shift is doubtful for now. 

Second, it is unlikely that Big Four legal services will cause significant disruptions to the business of traditional law firms. KPMG has indicated that their legal services will be adjacent to their consulting and accounting services, meaning they are primarily targeting their current client base. Thus, it might be unlikely to attract new clients who do not require their other services. Not to mention, KPMG doesn’t seem to be engaging in litigation services, which are often a large source of business for traditional law firms. 

Taking these considerations all together, it is unclear whether any substantial changes will actually manifest in the legal industry as a result of KPMG Law US’s entrance into the market. However, while the outcome remains uncertain, such changes are still possible, and traditional law firms and legal professionals should be prepared to adapt if and when they arise.