KPMG’s Arizona Law Firm – A Paradigm Shift in Law Business

John is joined by Christian Athanasoulas, KPMG’s Global Head of International Tax and M&A Tax and U.S. Tax Practice Leader – Services.  They discuss the groundbreaking shift in the U.S. legal industry arising from Arizona’s decision to allow non-lawyers to have ownership interests in law firms.  This move aligns the U.S. with countries like the U.K. and Australia, where non-lawyers have been permitted to own law firms for years.  KPMG has successfully operated legal practices in over 80 countries, but U.S. regulations previously prevented it from offering legal services alongside its consulting, tax, and advisory work.  Arizona’s new rules allow KPMG to offer the non-legal services it typically offers clients together with related legal services performed by the new law firm.  Previously, KPMG’s clients would have to retain law firms with no formal ties to KPMG for those services.  Christian led the effort to establish KPMG Law US, a wholly owned Arizona law firm under the KPMG umbrella.  KPMG Law US is an independent LLC with Arizona-licensed lawyers and a compliance officer to ensure adherence to legal ethics rules.  Although owned by KPMG, the law firm maintains autonomy.  It can assist clients with legal matters such as contract integration and regulatory compliance.  KPMG Law US leverages its parent company’s technological advancements, including AI-driven contract analysis and process automation, to improve efficiency in the provision of legal services.  The new law firm will not engage in litigation.  For matters outside of Arizona, it will co-counsel with lawyers admitted in the appropriate jurisdiction.  While Arizona is currently the only state permitting non-lawyer ownership of law firms, other states are exploring the possibility of passing similar laws.  The creation of KPMG Law US could signal broader changes in the legal profession, potentially reshaping traditional law firm structures.

Podcast Link: Law-disrupted.fm
Host: John B. Quinn
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi

Transcript

LD_CHRISTIAN ATHANASOULAS_KPMG

JOHN QUINN: [00:00:00] This is John Quinn, and this is Law Disrupted. And one of the, uh, foundations of law practice in the U. S., like forever, is that only lawyers could own law firms. Only lawyers could share in fees generated by law firms. You couldn't have non lawyers who had a, uh, ownership interest in a law firm or a practice of law in the U.

S. Now that's not been true in Australia and the UK for some time. There are law firms that have investors that are not lawyers. There's law firms that have. Are actually publicly owned and listed, but in the very recent past, Arizona has, uh, become the first state to authorize non lawyers, non lawyer entities to have ownership interests in law firms, uh, and to share in fees and, uh, maybe the first firm, uh, to do this, uh, to take advantage [00:01:00] of this opportunity is KPMG and we're going to be speaking today with Christian Athanasoulis, us a Who's based in Boston at KPMG, where he is the global head of M& A and international tax.

In the U. S. he's also the tax services leader for KPMG U. S. And he's been working on this project in Arizona for the last three years. He's actually been the sponsor of the project. Um, this is a very interesting, uh, initiative, uh, Christian, and a novel, a novel concept for us in the U. S., the idea that you'd have non lawyers, in this case, uh, KPMG, that has an ownership interest in a law firm.

Can you tell us why? KPMG was interested in doing this. Sure, John. Happy 

CHRISTIAN ATHANASOULAS: to answer that question. So there's really a couple of things at play here. One is KPMG in the US and KPMG globally plays in a number of different areas, advising clients on complex M& A matters, regulatory [00:02:00] matters, and in other areas that are in many instances adjacent.

To certain aspects of 

JOHN QUINN: of legal services And in fact kpmg has been practicing law in jurisdictions around the world for a long time as have the other Yeah, that's 

CHRISTIAN ATHANASOULAS: absolutely right. KPMG has legal practices in more than 80 countries around the globe and those practices have been successful and I'm happy to sort of share with you what we've seen from, uh, from some of those, uh, some of the, the, the work that we've done in those jurisdictions.

But as it relates to the US, our clients said, Hey, related to the work that you're doing to advise me on a complex MNA matter, you know, can you help me navigate some, some legal. Work, uh, that that may be related to post transaction integration or harmonizing a portfolio of contracts that the target entity had and heretofore we've not been able to do that work in the U.

S. But our clients have have shared with us. That's a pain point. It's a place [00:03:00] where they are burdening their their internal resources. And it's a place where a lot of the big guys Law firms haven't played on. And so our view is that we can help our clients address this pain point by bringing process and technology to some of these large scale, what we call legal managed services.

And so that's what we're focusing on, and that's why we've gone down this path. Of seeking and ultimately receiving approval from the state of Arizona. 

JOHN QUINN: So for example, if you had a uh, an engagement That was an m& a engagement where you there were tax issues There might be it and technology issues as well as legal issues.

This would enable you under one roof to provide all those services 

CHRISTIAN ATHANASOULAS: Yeah, that's absolutely right. John the law firm is a Wholly owned entity owned by KPMG law U. S. and the core services that KPMG would typically offer to a client navigating an M& A [00:04:00] transaction could be offered in conjunction with the adjacent legal services that the wholly owned subsidiary, the wholly owned LLC can offer.

JOHN QUINN: So what, what exactly is the structure, uh, of the, of the Arizona law firm and how that relates to big KPMG as a whole? Yeah, 

CHRISTIAN ATHANASOULAS: yeah, yeah. So, so quite simple, quite simply, uh, the Arizona law firm is wholly owned, uh, LLC. It's owned by, by, by KPMG in the U. S. The Arizona law firm has its own management. Because one of the things that's certainly important to the state of Arizona and equally important to KPMG is that we're fully compliant with all of the ethical rules that govern the practice of law and want to ensure that The lawyers who practice law as part of the Arizona entity have the ability to do that without undue influence from KPMG US LLP.

So there's a management team and leadership team at the law firm. There are Arizona [00:05:00] lawyers. There is a compliance officer. Who, um, who, who is responsible for ensuring that all of the appropriate legal ethics rules are, are, are followed and, um, and, and the two entities, the Arizona law firm and the, what I call the mothership KPMG law us, you know, will again, in many instances, work side by side on complex transactions, complex matters, but the law firm will have independence insofar as it relates to the legal ethics rules 

JOHN QUINN: and responsibilities of lawyers.

The name of the law firm I understand is KPMG Law, U. S., is that correct? That's correct. It's kind of a catchy title. Very catchy title. Um, you didn't have to exercise a lot of imagination. 

CHRISTIAN ATHANASOULAS: No, we didn't. 

JOHN QUINN: I mean, so far as you know, have there been any other entities that have taken advantage of this change in Arizona law to establish law firms?

It's a good question, John. 

CHRISTIAN ATHANASOULAS: The Arizona [00:06:00] program went into effect a few years ago. And and there have been a number of organizations that have applied for and receive permission to practice law under this, this alternative regime. We are the largest organization as far as we know, and the only big 4 firm that has has applied for and received.

This, this, this permission from Arizona, but there are other smaller organizations that have, um, been approved to play in spaces and places like trusted states or potentially, um, in, in, in, in sort of mass torts, um, and other places again, we are the largest organization and, and we've got a, a, a bit of a differentiated, Uh, Offering that we're really focused on the intersection of complex business problems with technology and process.

JOHN QUINN: I mean, there's 2 interesting aspects to this, uh, from the standpoint of the [00:07:00] legal profession in the U. S. 1 that we've talked about the fact that you have a law practice that's owned by non lawyers. But second, you have the ability to offer not only legal services, but other services. Uh, which is kind of unusual.

That's, we've had that for a while in many jurisdictions in the U. S. where law firms have had affiliated lobbying firms or PR firms and the like. Uh, but here, uh, you're going to be able to do that at scale given all the services and capabilities that KPMG has. 

CHRISTIAN ATHANASOULAS: Yeah, that's absolutely right. So to take, uh, an M and A example today, KPMG may advise a client on the financial implications of a transaction doing financial due diligence and commercial due diligence, you know, for a tax perspective, we would again provide tax due diligence services as well as help a client.

Structure a deal optimally from a tax perspective and think about its ongoing tax reporting [00:08:00] obligations. And now with this additional capability, we can again, in the context of a large M and a transaction help a company. With certain post transaction integration matter, so it may, it may involve merging a few subsidiaries, um, from the target group into the acquirer group after the transaction.

It may be related to, um, helping a client, uh, rationalize and harmonize contracts. So you may have a situation where an acquirer Pre transaction has a portfolio of a thousand vendor contracts. The target plays in the same industry, has its own population of a thousand vendor contracts. Some of those vendors may overlap.

In some instances, the terms of those, those contracts, it can be anything from office supply paper to things, um, you know, that are very specific to an industry. And the client may say, hey, we want to. Understand where there's overlap between [00:09:00] these, these vendor contracts and how we can harmonize the contracts to have sort of one model going forward and through the use again of technology and process, you know, we can create dashboards that show the client what the portfolio of contracts looks like post transaction where there are differences in key material terms and come up with a playbook for how to rationalize and have one standard model Going forward.

And so those are the types of things that we really want to focus on. And we think there's a compelling market opportunity and need from our clients. 

JOHN QUINN: Well, I mean, as I think, you know, Christian, our Quinn Emmanuel is a litigation only firm. Do we have to worry that KPMG is going to be a competitor and be out there litigating in Arizona or elsewhere?

CHRISTIAN ATHANASOULAS: So, another good question, John. So, our expectation today is certainly not that we are going to play in the litigation space in the U. S. Our expectation is not, is that we're not going to be involved in that the company matters. So, I've mentioned M& [00:10:00] A a couple times here, and again, it's largely been in the context of post transaction, degration, projects, other projects.

Thank you very much. On the back end of an M& A transaction where scale is really important. Are we going to do bet the company, uh, M& A where we are representing an acquired, negotiating an acquisition of a multi billion dollar charter company? That's not the place we want to play. We think that the service is 

JOHN QUINN: That's what you say now, Christian, but it seems like a natural evolution.

The logic of the business model that you described would seem to apply equally to The type that that type of transaction and advising parties to a, to a very large M and a transaction on the front end. Yeah, so we certainly we've got 

CHRISTIAN ATHANASOULAS: a lot of respect and appreciation and we work very closely with a lot of big law firms that just have incredible capabilities in that regard.

We, we, we believe that our competitive advantage is, is really in the technology space as an organization we've invested. Hundreds of millions of [00:11:00] dollars in technology, whether it's a I or other technology. We've recently entered into a an alliance and a license arrangement with a a company called contract pot.

A. I. that has a product called Leah that is used again in the contract in the contracting space from a legal perspective. Um, you know, we've been very much focused on, on process and thinking about delivery models that leverage paraprofessionals, some of whom may sit outside the U. S. When you say process, what are you referring to?

So we're referring to helping clients create playbooks to address complex matters. It could be regulatory matters. We're obviously in a, in a world, not just here in the U. S. But elsewhere where the regulatory environment, regulatory framework changes. Regularly, we do work with clients in life science space, financial services space that are governed by complex regulations to the extent.

There's a regulatory change that that affects the way that they do their business. That affects filings that affects, [00:12:00] um, uh, agreements that they enter into with again, counterparties. We can help them create. Playbooks and processes to manage those sorts of, um, those sort of disruptors in a, in a very quick and efficient way.

JOHN QUINN: I mean, what is the, uh, what does the legal team look like now at, um, your Arizona law firm, KPMG Law, U. S.? I mean, what, what, how many lawyers? What are their, what do they do? What are their practices? Yeah, 

CHRISTIAN ATHANASOULAS: so, so we, we're in our, our, our infancy. We filed our, our application. Back in the summer, the summer of 2024, we got our final approval from the state of Arizona, uh, last month, just a few weeks ago in February of 2025.

Um, we took the application process incredibly seriously, um, had, um. I had built out some, some, some plans, but in terms of actually going out and adding a significant number of lawyers, we wanted to wait until after we [00:13:00] successfully navigated the process. So, so right now, john, we've got a very lean team, but we are actively recruiting in Arizona to build out our capabilities and and we're also going to be very much.

Okay. Reliant on on partnerships and alliances, and that could be with with traditional law firms. It could be with With legal, uh, contractors and, um, and, and staffing companies to, to help complement our, our, our, our, our, our capabilities and we'll, we'll, we'll partner and we'll think about ways where we can, again, leverage the strength and the capabilities that we've got in places like the UK and Germany and around the globe to, to give us additional arms and legs, um, all over the world.

In a way that's consistent with the Arizona and other ethical room. So it's a ethical rule. So it's a relatively small practice today, given we just got the approval, but we're, we're, we're actively recruiting and looking for folks who, [00:14:00] again, not only have, um, great legal skills, um, but who really, uh, understand and, and sort of appreciate what technology can bring to the legal profession today and in the 

JOHN QUINN: years to come.

Do you have a plan? Uh, no. Are a number in mind of how large you'd like the team to be at, uh, your Arizona law firm So we're we're taking it very 

CHRISTIAN ATHANASOULAS: methodically Um, we have seen in the course of the a few weeks since we got our approval and and since uh news of our application Sort of hit the the public, uh right before the holidays in december just incredible Interest from our clients who have said, hey, this seems to fill a gap that that existed in the marketplace would love to think about how we can work together.

So we're taking it really slowly and methodically. We don't want to be all things to all people. Certainly. Um, we want to again, find those those few places that are adjacent to our current office offerings. That are [00:15:00] within our capabilities and and and see where the market takes us. So we're not wedded to to any particular number.

We have again through our. Our colleagues outside the U. S. And through our technology investment, the ability to scale really quickly as the market evolved. But we haven't said we need to get to this number by this point in time. We want to be very much nimble and go where the where the opportunities take us.

JOHN QUINN: Well, you know, if you if if you have any clients that, uh, have dispute or litigation problems were. We're still accepting new engagement. We know where to find you. 

CHRISTIAN ATHANASOULAS: We know where to find you. And it's a good point because I've had a number of senior executives at some of the biggest law firms not just here in the U.

S. but around the globe reach out to me and reach out to some of my colleagues over the course of the last couple of weeks and said hey, this is [00:16:00] really interesting what you're doing and we get it that you don't intend to be a full service law firm and we appreciate it. You know where it is that you want to play and we do think that there are some Adjacencies and some some opportunities for us to collaborate.

We've already got really good Relationships with with big law. We work closely with them in our forensics practice and our cyber practice and elsewhere um, but there has been a lot of interest from big law in in thinking about again, how can we Help each other here and a view that what we're doing is is is good Uh, not just for kpg, but but good for the the industry 

JOHN QUINN: Yeah.

All right. So Arizona, so far as I know, is the only state in the U. S. which has authorized this type of law practice entity, which is owned by non lawyers, I gather Utah has got some type of. Pilot project that they're doing that they're experimenting with. Can your Arizona lawyers practice outside of Arizona?

Can they get admitted pro hack vichy or how do you handle [00:17:00] other jurisdictions where? You know, the local bar rules would not permit a lawyer to practice law to have a practice that's owned by a non lawyer Sure, sure. 

CHRISTIAN ATHANASOULAS: So, um We are very mindful of the regulatory framework and unlike places like the UK and Australia that have liberalized their rules.

We've got to deal with a patchwork of rules across 50 states. Some of the lawyers who are bringing in are admitted in multiple jurisdiction. Multiple jurisdictions, I'm a lawyer by background, admitted in Massachusetts, but we need to be mindful not just of the Arizona rules, but the rules of the other 49 states.

And so the way we're approaching this is again, consistent with how we think a lot of traditional law firms navigate this issue. Very few, if any, big law firms have a physical footprint, In all 50 states, um, but they find ways fully compliant with ethical rules to serve clients where those clients have needs.

So we will have [00:18:00] again an Arizona law firm with Arizona admitted lawyers to the extent that we are engaged or a client wants to engage us to work on a matter that necessitates that we have it. Thank you. Uh, New York, just by way of example, uh, you know, capabilities, what we would do is we would have the client engage with our law firm in Arizona and and the lawyers in Arizona would work, you know, hand in glove.

With a lawyer or lawyers who are admitted in New York and fully compliant with the New York rules to ensure that, um, that that we're, we're, we're doing what we're doing is, is, is appropriate. So, in that case, it may be our Arizona law firm partnering. Subcontracting with a New York law firm. It may be our Arizona, uh, law firm, um, using resources from staffing company.

All in all of the work would be signed off on by the New York lawyer at the staffing company and then done again under the umbrella and [00:19:00] under the authority of the Arizona law firm. So it wouldn't be different than what traditional law does. To to to to to practice again outside their state or states of, um, of residents.

And to your point, we are also very, um, interested to see how the program in Arizona takes hold across the rest of the U. S. here. You're spot on John and that Utah has adopted some rules on a pilot basis and we know that many other states. Bar associations are looking closely at Arizona and thinking about what they should do in response to what Arizona has done and considering changing their model rules as well to allow, uh, firms, law firms to be owned by non lawyers.

And again, I don't want to speak for Arizona, but the driver, as far as we understand it for Arizona and for some of the other states that are [00:20:00] considering similar reforms, yeah. It is really a couple different things. It's, um, it's sparking innovation. The view is that to the extent that you have not, you can have non lawyers own an interest in a law firm and you can bring some of these adjacent skill sets again, whether it's technology or, or, or, or, or business consulting or process, um, that sort of innovation will help the legal profession.

And, and then there's also an element that, um, you know, having. Uh, more, uh, liberal rules as it relates to the practice of law will allow for more. More individuals, more more entities to get access to legal skills that it will again provide greater access to legal capabilities while while promoting and contributing to innovation in this space.

So we're super interested to see what the other states do, but there seems to be some good conversations happening now. 

JOHN QUINN: Yeah, I mean, the legal profession is not exactly known for. People being forward leading [00:21:00] and, and innovation, uh, to me, it's really remarkable that it's taken this long to have this capability and then we have it only really in one state in the U.

S. I got to believe this provides a solution. It's it's it's to me. It's so obvious the value of being able to integrate legal services to have a entity that can invest and own, uh, and offer other services and under one roof. Is is very very obvious by the way, are you going to be investing like injecting, uh equity investments In this law firm or how do you finance it?

Yeah, I mean 

CHRISTIAN ATHANASOULAS: certainly, uh, you know, we the kpmg law us and the broader kpmg family Recognize that this is an important addition to our portfolio to the earlier point. I mentioned we've got legal practices in 80 countries. The biggest legal market in the world by far is is the U. S. So not only will this business [00:22:00] allow us to again serve clients here in the U.

S. But we've got, um, some clients who sit outside the U. S. Who have presence and footprint in the in in in the United States. And this allows the KPMG globally to, to serve them in all corners of the world. So we are investing in this business. We're infusing equity into the law firm to stand it up and to build the capabilities.

And then again, we're just leveraging a lot of the scale that we already have as a global and a US practice. And that's everything from back office functions like HR and technology. The law firm, the Arizona law firm can leverage KPMG. Those investments that we've made over the course of 100 years, um, again, a lot of the investments that we're doing in, in, in, in AI, we've developed a proprietary platform at KPMG called digital gateway that's used in the US and across the globe to, to, um, in the, in client service and that [00:23:00] capability, that platform is available for use by the lawyers in Arizona.

So it's, it's, it's really in large part about leveraging investments that we've already made in this organization and taking advantage of KP and G's size and scale. Well, well, the, 

JOHN QUINN: uh, Arizona law firm be distributing revenue, uh, to KPMG law us. Or will that money sit in the law firm? Yeah. Yeah. So, 

CHRISTIAN ATHANASOULAS: so yeah, the, the, the, the results, the income, uh, that's generated at, at the Arizona law firm, our expectation is, at least in the, the early years, John will be, you know, reinvested in the business.

Um, we're starting small and again, we're gonna go where the market takes us. We're optimistic based on everything we're hearing and seeing that there are a lot of opportunities here and, and, and we would be able to sort of reinvest in again, whether it's additional technology solutions or, or, or additional individuals.

Because again, you can't have even with the best technology, you need really smart lawyers to make sure [00:24:00] that we're doing the right thing the right way. To the extent we ever found ourselves in a position where we were generating the right thing. Sufficient profits and didn't have needs to reinvest in the business, you know, that could certainly be, uh, the cash could be distributed back to the parent KPMG US, but our plan at this point is to continue to invest.

JOHN QUINN: Well, I think this is a very, very, uh, powerful model, uh, having a law firm, uh, coupled with all the investment that KPMG has made in, uh, technology innovation and bringing that to bear. On a law practice and being able to offer that, uh, to clients all under one roof. It's very powerful. I have to believe that this is the future part of the practice of law.

Christian, it's been a real pleasure speaking with you. I'm going to remember that you promised you weren't going to go into litigation. 

CHRISTIAN ATHANASOULAS: I appreciate that, John. I really appreciate 

JOHN QUINN: the opportunity to be here with you today. [00:25:00] very much. We've been speaking with Christian Athanasoulis. Who has been in charge of this really interesting project, uh, establishing a law firm in Arizona, which is owned by.

KPMG. It's an innovation in the model and the practice of law in the United States, a first of its kind on that scale. This is John Quinn. This has been Law Disrupted.

Thank you for listening to Law Disrupted with me, John Quinn. If you enjoyed the show, please subscribe and leave a rating and review on your chosen podcast app. To stay up to date with the latest episodes, you can sign up for email alerts at our website. Law Hype Disrupted dot F M or follow me on X at JBQ Law or at Quinn Emanuel.

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