KPMG Taps New US Law Chief to Grow Services as Pushback Mounts

KPMG LLP on Friday named a new US division leader who is tasked with integrating the firm’s growing legal services offerings with its corporate advisory work.

Christian Athanasoulas, a Boston-based leader of the KPMG M&A tax practice who has been with the company for more than 25 years, takes over as head of KPMG US Legal Services. The firm a year ago gained approval to offer legal services in Arizona, making it the first Big Four accounting, tax, and consulting company to operate a US law firm.

KPMG customers in the past complained about service offerings that were “not holistic” across the company’s platform, Athanasoulas said in an interview. That prompted the creation of the new business unit to better connect legal services with other offerings, and “we’ve gotten incredible feedback from our clients.”

The test for Athanasoulas, the first person to hold the new role in the US, will be to show he can successfully grow legal services under mounting pushback against the expansion of law firms owned by non-lawyers. He also faces competition from other non-traditional law operators, as well as lawyer-owned firms that have dominated legal services in the US since the country’s founding.

Athanasoulas said most of the legal work KPMG Law is doing would have been done previously by clients’ in-house legal teams. Much of it comes, for instance, when a newly-merged company has to “clean up” repetitive or outdated vendor contracts or dissolve entities across a global platform, he said.

After a client recently completed a merger or acquisition, KPMG advisory services created a dashboard to look at the integrated contracts, Athanasoulas said. KPMG Law also renegotiated overlapping contracts, he said.

“There are a lot of tasks that are on the plates of our clients, our general counsel clients, that are not glamorous,” Athanasoulas said.

Arizona Rules

The Arizona Supreme Court a year ago granted KPMG a license to operate as an alternative business structure (ABS). The state is allowing such firms owned by non-lawyers to operate in the state in an effort to expand access to low-cost legal services. Professional legal guidelines in most states prohibit non-lawyer ownership, but a handful of US jurisdictions are relaxing those rules.

Christian Athanasoulas

The creation of KPMG Law US, which operates as a wholly-owned subsidiary of the company, follows years of Big Four expansion into legal services in markets such as the UK and Australia. Traditional lawyer-owned law firms are watching the Arizona experiment warily because KPMG has the deep pockets, corporate clientele, and tech investments that could make it a potentially powerful rival.

While KPMG in the past year has established a presence in Arizona, it has also expanded its work beyond the state through co-counseling relationships, referrals, and by subcontracting lawyers, Athanasoulas said. Many of the instances of referrals occur with KPMG lawyers outside of the US, he said. He also said any of KPMG’s more than 3,000 licensed attorneys around the globe can be seconded to work for KPMG Law US’s clients.

There are instances where clients come to KPMG Law with a need that is not “in a place that we want to play,” so the firm will refer them to other providers, he said.

Regulatory Hurdles

Arizona’s state bar is pushing back against operators it says are using the state’s experiment with investor-owned firms as a launchpad to bring services to states with more restrictive regimes.

Earlier this month, the state’s Committee on Alternative Business Structures, the court-directed body that approves ABS licenses, recommended a rule change that would require firms devote at least part of their offerings to serving Arizona businesses and consumers. It also recommended a change that would require firms to provide legal services, not just make referrals.

“The Arizona ABS program is an incredibly dynamic space,” said Natalie Knowlton, the associate director for legal innovation at the Rhode Center at Stanford Law School. “The Arizona Supreme Court has been responsive to the growth of the program and is looking for ways to ensure one of the main aims of the program, which is serving Arizona businesses and citizens, are respected and protected as the national law firm model is expanding.”

The State Bar of Arizona, in a formal comment, pushed back against the rule change, arguing it would give entities with only a tangential connection to Arizona the regulatory justification to prioritize other markets.

“A growing number of practitioners are offering services to set up ABSs for the sole purpose of running a national practice through Arizona licensure without a focus on serving Arizona clients,” the state bar argued. Such entities “may increase the risk of consumer harm.”

The state’s policy-making body for the court system is set to decide next month on the change.

KPMG’s Role

Asked how much of KPMG’s legal services benefit Arizonans, Athanasoulas touted the firm’s community service and pro bono work. He said KPMG’s Arizona-based professionals have devoted 550 community service hours to serve 36 non-profit organizations, and KPMG Law US is co-sponsoring a pro bono initiative with one of the country’s 10 biggest law firms. He said KPMG and the law firm share a client, which has operations in Arizona.

Athanasoulas declined to specify how many Arizona clients the firm currently serves. A company representative said KPMG Law US does have clients in the state though does not disclose numbers in any jurisdiction.

“We are very much committed to complying with both the letter and the spirit of the Arizona regulatory framework,” Athanasoulas said. “We believe that serving national and international clients is very much consistent with the goal of serving Arizona clients, because those experiences allow us to develop the tools and the innovation that’s important for the state of Arizona.”

_{Podcast: Law Firms Look Like Enticing Targets for Outside Investors}