When Accounting Firms Own Law Firms: Strategy, Risk, and Opportunity for Multidisciplinary Platforms

KPMG Law passed its first anniversary in February, and the year since launch turned out to be more interesting than the original headline suggested. This was never going to be a simple story about an accounting giant crossing into legal services. KPMG is doubling down, putting a dedicated leader in charge of growing the practice, and Arizona’s program, the one that made KPMG Law possible in the first place, has kept expanding well beyond KPMG alone. At the same time, a handful of states have decided they want no part of this and moved to actively block it. The picture today looks different from the one at launch, and firm leaders thinking about their own multidisciplinary strategy deserve the current version, not the one from a year ago.

One Year In, and Growing

In late February, KPMG named Christian Athanasoulas, a more than 25-year veteran of the firm, to a newly created role: Head of KPMG US Legal Services. His job is to align strategy across KPMG Law and the firm’s broader legal business services. That appointment is worth pausing on. Firms do not typically build a dedicated executive role around a practice they still consider an experiment.

The numbers back that up. KPMG’s global Tax & Legal Services line grew 7.5% in its most recent fiscal year, and the broader market for alternative legal services is seeing sustained double-digit growth, with legal managed services, exactly the kind of process-driven work KPMG Law focuses on, among the fastest-growing pieces of it. That focus has not shifted since launch, either. KPMG Law still sticks to contract lifecycle management, post-merger contract integration, and regulatory remediation rather than litigation or bespoke legal counsel, the same operationally intensive work accounting and advisory firms already handle comfortably.

Arizona Keeps Expanding

Arizona is where all of this became possible, and the state has not slowed down. Its Alternative Business Structure program has now licensed more than 150 entities since Arizona did away with its non-lawyer ownership prohibition, everything from small firms with a single non-lawyer partner to larger, outside-backed operations like KPMG Law. Washington State just joined the list too. Its Supreme Court authorized a ten-year pilot of its own, which opened to applicants in October 2025 and allows non-lawyer-owned companies and nonprofits to deliver legal services under close court supervision. That is a real expansion of the underlying idea, not just another state studying it from a distance.

Three Other Models, Three Differences

Utah, DC, and Puerto Rico each allow some version of non-lawyer participation too, and it is tempting to lump them in with Arizona and Washington as more of the same trend. That would be a mistake. The three work nothing alike.

Let’s start with Utah, since its story is the most surprising of the three. On paper, Utah’s regulatory sandbox actually goes further than Arizona’s, waiving both the ownership restrictions and the unauthorized-practice-of-law rules for entities it approves, a broader carve-out than Arizona. In practice, though, the program has been shrinking rather than growing. Active participants have fallen from 39 to just 11 over the past three years as regulators tightened requirements, while Arizona’s list grew from 19 providers to more than 130 in that same window. Utah also closed its pure ownership-only application track at the end of 2024, and most of what remains in the sandbox now serves access-to-justice needs like housing and debt collection, not the corporate, process-driven work of KPMG Law.

DC’s version is the oldest of the four, and by design, the narrowest. Its rule allows a non-lawyer partner only if that person is an individual professional actively working alongside the firm on its legal services, not a passive investor writing a check from the outside. That distinction rules out anything resembling KPMG Law’s ownership structure entirely.

Puerto Rico is the newest of the group, and on paper, the most open. Its Supreme Court revised its version of Rule 5.4 in mid-2025 to allow non-lawyer ownership up to 49% of a firm’s shares, with a far lighter compliance process than Arizona requires: owners simply notify the court and file an annual sworn statement covering attorney headcount, investment amounts, and revenue. They cannot provide services to the firm or influence legal judgment, though, and Puerto Rico’s Supreme Court has said it plans to formally assess how the program is working after three years.

The lesson across all three is the same. “Permits non-lawyer ownership” means something different depending on the state, and the details determine whether a given model is even relevant to what a firm is trying to build.

Real Pushback Has Followed

Growth like this rarely goes unanswered, and California is the clearest example. Lawyers there can no longer share fees with firms structured like KPMG Law, the ones with non-lawyer owners, unless they meet a narrow set of conditions. That rule, AB 931, was signed into law in October 2025 and took effect this January. It survived an early court challenge and is being actively enforced today, though it was written as a temporary measure rather than a permanent one, set to expire in 2030.

Illinois has moved further and faster than most firm leaders probably realize. Lawmakers there just passed a bill placing real limits on how private equity and other outside investors can get involved with law firms, and it is likely to become law within weeks. The bill, HB 5487, cleared the General Assembly on May 31 and is now sitting on Governor JB Pritzker’s desk, where observers broadly expect him to sign it. Rather than banning these arrangements outright, it restricts non-lawyer entities from interfering with attorneys’ professional judgment, limits fee structures tied to firm revenue, and adds new disclosure requirements, with real statutory damages attached to violations. One detail is worth flagging here: the bill exempts law firms bringing in more than $300 million a year in legal revenue, so its actual target is mid-size, PE-backed arrangements rather than giants like KPMG’s legal practice. Beyond these two states, most of the country still holds the traditional Rule 5.4 line, and recent guidance has reinforced it, including a February 2025 opinion from Texas’s Professional Ethics Committee that bars lawyers from paying non-lawyer-owned vendors a share of firm revenue.

Put it all together and a clear picture emerges. The regulatory map is splitting rather than steadily opening in one direction, no matter how the KPMG headlines might make it seem, with a small number of states actively expanding the model while others build walls to keep it from reaching their own lawyers. Any firm evaluating this path needs to watch both halves of that map, not just the encouraging one.

That $300 million exemption in Illinois also does more limiting than it might first appear. There are more than 400,000 law firms in the United States, and only a small fraction of them clear $300 million in annual revenue, likely somewhere in the range of 130 to 170 firms nationally based on how the 2025 Am Law 200 rankings taper off (the 110th-ranked firm brought in roughly $442 million, with revenue falling to around $136 million by the 200th spot). A restriction pegged to that threshold leaves out nearly every firm in the country large enough to actually absorb a private equity investment of meaningful size in the first place, which narrows the practical field for this kind of deal far more than the headline number suggests.

The Wall That Matters Most

Whatever a firm’s ambitions here, one structural fact deserves attention before anything else. KPMG Law cannot provide legal services to any client for whom KPMG or its network firms conduct financial statement audits. That restriction comes from auditor independence rules that exist entirely outside state bar regulation, and it is the single condition that makes the whole structure defensible. Any firm exploring a similar move needs to treat that separation as foundational to the design from day one, not a compliance detail to sort out later.

Where the Overlap Makes Sense

Not every version of this story requires a headline-grabbing acquisition. Some of the clearest opportunities sit quietly in service lines where accounting and legal work already run side by side. Transaction advisory is the obvious example, since due diligence, deal structuring, and post-close integration all draw on financial and legal judgment at the same time. Estate planning works the same way, blending tax strategy with the legal documents that actually carry it out. Complex tax work often does too, particularly where a position depends as much on legal interpretation as it does on the numbers. Firms that already coordinate closely with outside counsel on this kind of work are arguably practicing a version of the multidisciplinary model today, just without shared ownership sitting underneath it.

We hear a consistent view when this comes up in conversations with attorneys. Most expect PE investment in law firms to arrive broadly, one way or another, regardless of how any single state’s legislature votes this year. Fewer of them are enthusiastic about it. Plenty of the same attorneys who see this as inevitable are genuinely unsure whether outside capital is good for the legal profession over the long run, and that tension, expecting something while doubting its merits, is worth sitting with rather than resolving too quickly in either direction.

What This Means Now

For most mid-market firms, this is still a story about optionality rather than urgency. Building a multidisciplinary platform like this takes capital, compliance infrastructure, and leadership bandwidth that few firms outside the largest platforms currently have, which is why this remains mostly a Big Four and PE-backed story for now. What has genuinely changed since launch is the confidence behind the idea. Firms do not build dedicated executive roles around experiments they might abandon, and regulators do not license 150 entities by accident.

Our advice for firm leaders watching this unfold from the outside comes down to a few practical steps. None of them require a final decision about your own strategy yet, just deliberate attention instead of passive awareness.

• Watch this issue closely. The regulatory map is still moving in both directions, and where your state lands will shape what actually applies to you.
• Build strong relationships with law firms now, before a shared structure becomes the only reason to have one.
• Get to know the mid-market law firms in your area, not just the handful of national names making headlines.
• Think through how a competitor adopting this kind of structure could affect your own client relationships and positioning.
• Most importantly, have a growth plan of your own. Watching a trend closely is not a substitute for a strategy.

The firms best positioned when the regulatory map eventually settles will be the ones thinking now about what this kind of expansion would actually require. The ones scrambling to react once a second Big Four firm follows KPMG’s lead will be negotiating from behind.

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

Hollinden helps accounting and advisory firm leadership teams navigate strategy and structure decisions like this one before reacting to industry headlines.