KPMG Says Big Four US Moves Would Displace Some Law Firm Service

A top KPMG executive predicts US corporations will increasingly turn to accounting’s Big Four for legal work because they have better technology to handle matters including huge data sets and multiple contracts.

The massive accounting firms’ harnessing of technology will push companies to direct large-scale legal work to them, said Stuart Bedford, KPMG’s global head of legal services, in an interview. The firms can harmonize thousands of legal contracts as part of post-merger integration or help re-orient supply chains in an uncertain tariff environment under President Donald Trump, he said.

“With the quality of the technology, you can point at those sorts of problems to do large-scale data extraction from unstructured documents,” Bedford said. “Increasingly it means it will move to the Big Four or law company environment.”

KPMG is readying itself to become the first of the Big Four to launch a legal services venture in the US through an application it has pending before the Arizona Supreme Court. Arizona is experimenting with guidelines that differ from most states by allowing non-attorneys to operate law firms. The state’s alternative business structure program aims to broaden access to legal services for consumers.

Arizona’s alternative business structure committee last month recommended that the high court approve a license for KPMG to launch a US law firm. The court on Jan. 28 requested more information on KPMG’s application, declining for the time being to approve it.

KPMG seeks to provide services to multinational corporations that largely complement the work of traditional law firms, although there are some potential areas of “displacement,” considering how KPMG interfaces with law firms in other global legal markets, Bedford said.

Attractive Market

Assuming KPMG wins approval to practice in Arizona, Bedford didn’t predict exactly when rivals Deloitte, PwC, and EY would follow its lead into the US legal market. Still, largest legal market is difficult to pass up.

“The US has the largest pool of multinational companies with regulatory and supply chain issues that are, if not more, affected by the events taking place right now,” Bedford said.

He pointed to UBS Group AG’s $3.2 billion acquisition of Credit Suisse Group AG. The banks turned to “usual suspects” such as Davis Polk & Wardwell, Freshfields Bruckhaus Deringer, Cleary Gottlieb Steen & Hamilton, and Sullivan & Cromwell to close the deal and interface with local regulators. But to align the operating agreements across the merging parties, “you wouldn’t go to a Freshfields or a Davis Polk, necessarily,” he said.

David Wilkins, who serves as the director of the Center on the Legal Profession at Harvard Law School, called the relationship between the Big Four and Big Law firms “coopetition,” or cooperative competition.

“Mergers have gotten more complicated as companies have gotten bigger, and all the legal work is done by the top law firms, like Wachtell or Linklaters,” Wilkins said. “But when it came to post-merger integration, the Big Four have the scale that allows them to offer something that the law firms cannot.”

Lower Costs

Bedford is a former partner at Linklaters, who joined KPMG in 2023. He said clients would sometimes give large scale legal work to traditional law firms, who would charge exorbitant fees for the services of junior lawyers. Clients who are “budget-wise,” he said, are increasingly looking to reduce their costs by giving that work to Big Four accounting services such as his own.

“There is a point where actually what we offer is a better product than is actually offered for that type of work by Big Law,” he said.

Another advantage: freedom from the capital constraints that come with the law firm partnership model. While law firms owe profits to their partners each year or else risk losing their biggest rainmakers, large consulting firms can re-invest their profits into a more sophisticated tech stack, Bedford said.

A law firm’s capital structure “restricts their ability to do the right thing on technology,” he said.

There will continue to be a role for law firms in client legal services when it comes to the specialization required to close the highest-value M&A deals, Bedford said, anticipating many areas of working “harmoniously” with law firms.

He pointed to a large M&A deal involving a unnamed KPMG client. A Big Law firm handled the transaction’s closing, while KPMG tackled “complicated reorganization” issues involving complex tax advice.