KPMG’s ambitious entry into the United States legal market has encountered a potential regulatory impediment due to recent legislative developments in California. The state’s Assembly has passed a bill, A.B. 931, that seeks to prohibit California-based lawyers and firms from sharing legal fees with out-of-state alternative business structures (ABS). This legislative move directly challenges the operations of KPMG Law and similarly structured firms which have capitalized on Arizona’s more lenient ABS regulations. They allow for external investment in law firms, a concept that remains a contentious issue in many jurisdictions.
The bill arrives on the heels of KPMG’s historic approval to establish a law firm in Arizona, marking the first such venture by a Big Four accounting firm in the U.S. This initiative aligns with a growing trend where large accounting and consulting firms expand into legal services, capitalizing on evolving regulations in some U.S. states. Notably, Arizona’s decision to permit ABS structures has positioned it as a preferred jurisdiction for such enterprises. More on KPMG’s entry can be found in this report on their Arizona approval.
While KPMG’s strategic expansion into legal services signifies a potential shake-up of traditional legal markets, the limitations imposed by California’s proposed legislation underscore the complexity of navigating legal practice regulations across different states. California’s stance could thwart similar expansions by other global firms looking to use Arizona as a launchpad to enter the Californian legal market.
Ongoing developments will provide insights into whether this legislative effort succeeds in curbing the influence of alternative business structures and maintaining the conventional separation of legal and non-legal business ownership in one of the U.S.’s largest legal markets. For more details on this issue, read the full article on Bloomberg Law.