The legal industry in the United States is undergoing a major transformation, driven by regulatory changes and the growing overlap between technology, finance, and legal services. A key development in this shift is KPMG’s recent approval to provide legal services in Arizona through the state’s Alternative Business Structure (ABS) program. This marks the first time a Big Four accounting firm has been granted such a license in the U.S. As KPMG Law US begins its operations, traditional law firms must assess the impact of this change and adapt to a rapidly evolving and increasingly competitive landscape.
The Significance of KPMG’s Entry
KPMG’s move into the legal market is a milestone that could reshape the legal services industry. By leveraging artificial intelligence, advanced technology solutions, and its global network, KPMG Law US aims to provide tech-enabled legal services and legal operations consulting. The firm’s approach aligns with broader trends in the professional services industry, where clients seek integrated solutions that combine financial, tax, and legal expertise under one roof.
This development follows Arizona’s 2021 decision to eliminate the prohibition on nonlawyer law firm ownership, paving the way for alternative legal service providers to enter the market. Although the initial approval applies only to in-state clients, the potential for national expansion through co-counsel relationships could disrupt traditional law firm models far beyond Arizona’s borders. Arizona’s decision has received the most attention, but both Utah and the District of Columbia also allow for nonlawyer ownership of law firms, further signaling a shift in the regulatory landscape.
Implications for Traditional Law Firms
1. Increased Competition
Traditional law firms now face a strong competitor with vast resources, a global presence, and deep-rooted client relationships in the business and finance sectors. The Big Four accounting firms already provide advisory and compliance services to corporate clients—adding legal services to their portfolio creates a one-stop shop that may appeal to businesses looking for efficiency and cost savings.
2. The Rise of Tech-Enabled Legal Services
KPMG’s emphasis on AI-driven legal solutions highlights a shift toward technology-enabled legal services. Traditional law firms will need to invest in digital transformation to remain competitive. Clients increasingly expect streamlined, data-driven legal solutions that integrate with their business operations, making legal tech adoption a necessity rather than a luxury.
3. Pressure on Pricing Models
Large accounting firms typically operate on a different pricing structure than law firms, often favoring fixed-fee and subscription-based models over traditional billable hours. As KPMG introduces its alternative pricing strategies, traditional law firms may need to rethink their own fee structures to stay competitive, particularly for corporate clients seeking predictable legal costs.
4. The Expansion of Multidisciplinary Services
The ability of a Big Four firm to provide legal, tax, financial, and consulting services under one umbrella creates a compelling value proposition for clients. Traditional law firms may need to explore partnerships or expand their service offerings to maintain client relationships and compete with the multidisciplinary approach pioneered by firms like KPMG.
How Law Firms Can Adapt
Embrace Legal Technology
Investing in AI, automation, and data analytics can help law firms improve efficiency and deliver more value-driven services. Tools such as contract automation, predictive analytics, and legal research AI can streamline processes and reduce costs.
Focus on Specialization
While the Big Four may dominate in corporate and transactional work, traditional firms can differentiate themselves by specializing in niche practice areas where deep expertise is critical. Areas like litigation, intellectual property, family law, and criminal defense are less likely to be disrupted by large accounting firms.
Enhance Client Relationships
Law firms should prioritize personalized service and a deep understanding of client needs—areas where they can excel over larger, more generalized service providers. Building trust and offering tailored legal solutions can give traditional firms a competitive edge.
Consider Strategic Alliances
Forming partnerships with legal tech companies, consulting firms, or other service providers can help traditional firms offer a more comprehensive suite of services. These collaborations can expand service offerings without requiring massive internal investment.
The Bigger Picture: The Future of Legal Services
The entry of the Big Four into the U.S. legal market is just the beginning of a broader trend toward legal service commoditization and multidisciplinary professional services. With increasing regulatory flexibility, more jurisdictions may follow Arizona’s lead, further opening the market to nontraditional legal service providers.
The shift toward tech-driven legal services, alternative pricing models, and integrated business solutions means that traditional law firms must rethink their long-term strategies. The firms that embrace innovation, refine their service models, and prioritize client-centric approaches will be the ones that thrive in this new environment.
Conclusion
KPMG’s approval to offer legal services in Arizona marks a major shift in the U.S. legal market, opening the door for other Big Four firms to follow suit. Traditional law firms must recognize this as a turning point and take action to remain competitive. By leveraging technology, refining service models, and strengthening client relationships, law firms can navigate this evolving landscape and continue to thrive in the face of increased competition.
At 3sixty Consulting, we specialize in helping law firms adapt to industry shifts and optimize their operations. If you’re looking for strategies to stay competitive in this changing legal environment, contact us today to learn more about how we can help your firm succeed.