How Accounting Firms Gained a Path into Law Firm Ownership

In early 2025, a quiet but consequential regulatory decision in Arizona signaled a meaningful shift in the professional services landscape. The Arizona Supreme Court approved KPMG’s application to operate KPMG Law US, making it the first Big Four firm to own a U.S.-licensed law firm under an Alternative Business Structure (ABS).

While the headlines focused on KPMG, the larger story is structural. For the first time in U.S. history, a major accounting firm is legally permitted to combine licensed legal services with tax and advisory services under a single corporate umbrella. That development raises important questions for accounting firm leaders, particularly those focused on growth, advisory expansion, and long-term competitiveness in the middle market.

This is not simply a legal experiment. It is a signal that long-standing boundaries in professional services are beginning to move.

The Rule Change That Opened the Door

For decades, U.S. jurisdictions have generally prohibited non-lawyers from owning law firms. Those prohibitions were designed to protect attorney independence, preserve client privilege, and prevent commercial interests from interfering with professional judgment.

Most states continue to follow ABA Model Rule of Professional Conduct 5.4, which expressly restricts non-lawyer ownership of law firms and the sharing of legal fees with non-lawyers. The Model Rules, however, are not binding law; they serve as a template that states may adopt, modify, or reject.

Arizona chose a different path.

In 2020, the Arizona Supreme Court eliminated its version of Rule 5.4 and replaced it with a court-supervised regulatory framework permitting Alternative Business Structures. Under Arizona’s version of Professional Conduct Rule 5.4, non-lawyers may own or invest in law firms, provided those firms are licensed by the court and comply with detailed ethical, governance, and compliance requirements.

This distinction matters. Arizona did not “relax” the ABA Model Rule; it affirmatively departed from it. The court assumed direct oversight responsibility, effectively trading categorical prohibition for regulatory supervision.

That decision created a lawful pathway for accounting firms, technology companies, and other non-lawyer entities to own law firms in Arizona. KPMG Law US is the most visible result to date, but it is not the only one.

Why KPMG Law US Matters Beyond KPMG

KPMG Law US is structured as an independently managed subsidiary, designed to comply with ethics rules and audit-independence requirements. Its initial focus is not courtroom litigation or bespoke legal counseling. Instead, it targets process-driven legal work: contract lifecycle management, M&A-related contract harmonization, regulatory remediation, and other repeatable, operationally intensive legal services.

That focus is instructive.

These are precisely the areas where accounting and advisory firms already operate comfortably, where scale, process discipline, technology, and project management matter as much as traditional legal craftsmanship.

More broadly, Arizona’s ABS registry now includes a wide range of business models, from legal-technology platforms to hybrid professional service firms. What began as a regulatory experiment has become a functioning marketplace.

For firm leaders, the takeaway is not that every accounting firm should launch a law practice. It is that the menu of viable growth models has expanded.

A Growth Strategy Signal for Accounting Firms

For larger accounting firms, particularly those in the Top 500 range, this development deserves careful attention.

Many of the fastest-growing service lines in the middle market already sit at the intersection of accounting, finance, and law:

• Investment banking and transaction advisory
• Estate, trust, and wealth-transfer planning
• Corporate structuring, governance, and compliance
• Private-equity-backed portfolio company support

In these areas, clients are already coordinating between accountants, lawyers, bankers, and consultants. The Arizona ABS model raises a legitimate question: could some of that coordination move inside a single platform?

For smaller firms, this shift may point toward strategic partnerships rather than structural integration. For larger firms with sufficient scale, capital, and leadership depth, it invites a deeper exploration of whether, and where, expanded service models make sense.

Competitive Threat or Strategic Opportunity? Possibly Both.

It is still too early to know how U.S. clients will ultimately respond to CPA-owned law firms. In other countries, including Canada, integrated professional service models have been broadly accepted. In the U.S., client expectations around independence and specialization run deeper.

What is clear, however, is that client expectations continue to evolve. Middle-market businesses and private-equity sponsors increasingly value speed, coordination, and accountability. Whether or not they embrace fully integrated firms, they will compare their advisors against those that offer tighter alignment across disciplines.

In that sense, ABS is less about replacing traditional firms and more about resetting the competitive baseline.

Questions Every Managing Partner Should Be Asking

This moment calls for reflection, not reaction. Among the questions worth considering:

• Where does our firm genuinely create leverage across disciplines—and where do handoffs slow us down?
• Are we organized to support growth platforms, or optimized primarily for legacy service lines?
• If capital structure and ownership flexibility become strategic variables, are we prepared to evaluate them?
• Do our clients see us as a coordinator of experts—or simply one of several vendors?
• Are we thinking about the next five years as operators of a practice, or architects of an enterprise?

These are not legal questions. They are leadership questions.

What Comes Next—and How Fast?

Arizona remains an outlier, and regulatory adoption beyond a handful of jurisdictions will take time. Professional opposition, state-by-state fragmentation, and cultural resistance remain real constraints.

Still, regulatory change tends to move slowly, until it doesn’t. Once alternative models demonstrate commercial viability and ethical discipline, pressure builds. Whether other states follow Arizona in two years or ten, the direction of travel is worth watching.

A Turning Point, Not a Foregone Conclusion

KPMG Law US does not signal the end of traditional professional boundaries. It does signal that those boundaries are no longer immovable.

For accounting firms serving the U.S. middle market, especially those backed by private equity, operating across multiple offices, or investing in advisory growth, this is a moment to think carefully about strategy, structure, and scale.

The question is not whether every firm should pursue integration. The question is whether firm leadership is thinking broadly enough about what growth may require next.

This article is for informational purposes only and does not constitute legal advice.

Turning Industry Change into Intentional Growth

Hollinden works with accounting and advisory firms to help leadership teams step back from the noise and make clear, confident growth decisions. As industry boundaries evolve, thoughtful strategy, not reaction, will determine which firms lead the next chapter of the middle market.