In a novel move, Big 4 accounting firm KPMG has taken the first step in seeking to own and operate a law firm in the United States. Although permitted in other countries, the United States generally prohibits non-lawyers from owning a law firm. In 2020, however, Arizona became the first state to relax that standard thereby opening the possibility of what is apparently on the horizon.
There are about 1.3 million attorneys in the United States. Competition is considerable, and attorneys strive to develop a brand, a client base, and some way to set ourselves apart from the rest of the pack. Traditionally that “pack” has exclusively consisted of other members of the bar who have met specific requirements necessary to practice law due to the Rules of Professional Conduct governing attorneys. Those rules prohibit non-lawyers from owning U.S. law firms due to ethical concerns governing conflict of interest principles. (See, e.g. ABA Model Rule 5.4.) However, jurisdictions including Arizona and others have recently enacted reforms which would permit non-lawyer ownership under specific conditions.
Reportedly, KPMG Law US recently applied to the Arizona Supreme Court to operate as an “alternative business structure.” A court committee will soon consider the application and will decide on whether to provide the required licensure. According to KPMG, it would lean on its network and technology to provide compliance and contract-related services and other outsourced legal work in the states.
Per Reuters, Arizona has approved more than 100 alternative legal business structures including legal services and staffing companies such as LegalZoom, as well as large personal injury firms partially owned by non-lawyers. Similarly, Utah initiated a program in 2020 to allow nontraditional legal businesses to operate under eased rules with oversight. This is the first overture by an accounting firm to take advantage of these laws.
Critics may worry that allowing non-lawyers to own law firms could lead to conflicts of interest and compromise the quality of legal advice. On the other hand, those in favor of the change may argue that ownership by non-attorneys could improve access to justice through novel, innovative business structures which potentially could reduce costs. This development is certainly worth monitoring.