A client of mine, a man who runs two auto body shops in town, asked me last spring whether he could just have KPMG handle his contract dispute. He had read something on his phone. He is not a stupid man. He deals with insurers all day, he negotiates with parts suppliers, and he had absorbed the basic idea faster than half the lawyers I know: the accounting firm that audits his books can now, in one state, own a company that practices law.
I told him no, not for his matter, because his fight was in our state and KPMG’s license is an Arizona thing. Then I sat with the question for a while. Because he had put his finger on the exact spot where this whole five-year experiment starts to itch.
Arizona blew up the old rule. Utah built a padded room and started letting new business models play inside it. Both started around the same time, both are now old enough to have real data attached to them, and both got a jolt of attention in 2025 when the first Big Four accounting firm got its license. So let me walk through what actually happened, who actually showed up, and what it means for those of us who bill from an office above a nail salon rather than from a tower with our name on the granite.
what Arizona actually did in 2021
On August 27, 2020, the Arizona Supreme Court signed off on a set of changes that took effect January 1, 2021. The headline move was the deletion of Ethical Rule 5.4. That is the rule, in one form or another, in almost every American jurisdiction, that says a lawyer cannot share fees with a nonlawyer and cannot let a nonlawyer own a piece of a law firm or direct a lawyer’s professional judgment.
Arizona did not water it down. Arizona took it out and threw it away.
In its place the court created the Alternative Business Structure, the ABS. An ABS is an entity that can provide legal services and can be owned, in whole or in part, by people who never went to law school. To get licensed, the entity has to name a Compliance Lawyer, submit to a character-and-fitness style review of its owners, and answer to a new committee inside the court system. The court also rolled out a separate track that year for Legal Paraprofessionals, a licensed tier of nonlawyers who can appear in court on limited matters, which is a related but distinct reform and one I have opinions about too.
Here is the part that matters for the temperature of the debate. Arizona did not frame this as a favor to law firms. It framed it as an access-to-justice problem. The Task Force on the Delivery of Legal Services said, in plain terms, that most people with a legal problem get no lawyer at all, that the profession’s own rules were part of why, and that the profession had run out of credibility to keep defending the status quo on public-protection grounds alone. Whether you buy that or not, it is the frame the court adopted, and it changes the burden of proof. In Arizona the person defending Rule 5.4 now has to explain what the rule protects, not the other way around.
By 2025 the state had licensed north of a hundred ABS entities. Not a hundred KPMGs. Most of them are unglamorous: personal injury shops that wanted an owner who was also the marketing chief, small firms with a spouse doing the books who now has an equity stake without anyone pretending she does not, document companies, a few tech outfits. Rocket Lawyer was in early. LegalZoom, the online forms company that spent a decade getting sued for unauthorized practice, got itself inside the tent rather than fighting from outside it.
the Utah version, and the numbers nobody wants to read
Utah went a different way. Instead of deleting the rule, the Utah Supreme Court in August 2020 stood up a regulatory sandbox, a supervised space run by a new Office of Legal Services Innovation. The idea is that a new kind of provider, including one with nonlawyer ownership or nonlawyer service delivery, can apply to operate inside the sandbox under close watch, with the arrangement approved for a term and reviewed against actual outcomes. It was set up as a pilot, originally seven years, later extended.
The reason the Utah model is worth your time is that Utah did the thing lawyers always demand and then ignore. It collected data. The Office publishes activity reports. It tracks the entities operating, the number of legal services delivered, and, above all, consumer complaints.
The complaint numbers are the whole ballgame. For years, the argument against nonlawyer ownership has rested on a prediction: let the money people in and clients will get hurt, judgment will get sold, the profit motive will chew through the duty of loyalty. That is a testable claim. Utah tested it.
Across tens of thousands of services delivered inside the sandbox, the rate of complaints alleging consumer harm has stayed very low, a small fraction of one percent in the Office’s reporting. Most complaints that did come in were the ordinary grievances any legal operation generates, not some new species of profit-driven abuse. The Office has removed or declined entities. The machinery works. And the parade of horribles has not shown up.
Now, I am a skeptic by trade, so let me say what a fair skeptic says. A few years is not forever. Sandbox entities know they are being watched, and people behave when they are being watched. The volumes are still modest next to a state’s whole legal market. You cannot prove a negative from a pilot. All true. But the burden ran the other way for a hundred years. The people who said the sky would fall got a controlled experiment, and the sky has, so far, declined to fall. That is not nothing. That is data beating a slogan, and the slogan had a long, comfortable run.
who actually walked through the door
For four years the answer to “who is using this” was underwhelming, and that was fine. Then KPMG happened.
In 2025 KPMG Law US received approval to operate as an Arizona ABS. That made it the first of the Big Four accounting firms authorized to deliver legal services in the United States. Reuters covered it. Every legal trade outlet covered it. The reason it landed like a brick is that the Big Four already do this everywhere else. In the UK, in continental Europe, across Asia, KPMG and Deloitte and the rest run enormous legal arms staffed by thousands of lawyers. The United States was the holdout, kept out by Rule 5.4 and the general American conviction that law is not a business the way accounting is a business.
KPMG’s pitch is not that it wants to handle a fender-bender in Tucson. Its pitch is technology and scale for corporate work: contract review, compliance, managed legal services, the high-volume repeatable stuff that big companies would rather buy the way they buy an audit. Combine a law license with the firm’s existing consulting muscle and its money for automation, and you have a competitor aimed squarely at the middle and lower tiers of corporate legal work.
Read that sentence again if you are a solo. It is aimed at the corporate middle. It is not aimed at you.
That distinction is the one thing the coverage kept losing. The people most frightened of KPMG entering law are, in my experience, not the solos. They are the mid-tier commercial firms who suddenly have a rival with a war chest and a client list built from audit relationships. When your accountant already sees every number in your business and can now sell you the legal work attached to those numbers, the cross-sell writes itself. That is a real threat to a certain kind of firm. It is not obviously a threat to the lawyer down the road who does wills, guardianships, and the occasional DUI.
the ethics fight, and what it is really about
The American Bar Association has planted its flag firmly against all of this. In 2022 the ABA House of Delegates passed a resolution reaffirming its opposition to nonlawyer ownership of law firms and to fee-sharing with nonlawyers, restating the core of Model Rule 5.4. The organized bar’s position, in short: professional independence is not for sale, and letting outside owners into the room compromises it no matter how you dress it up.
State by state, the resistance has held in most places. California is the cautionary tale. Its bar spent years studying a sandbox and a paraprofessional program, and in 2022 the legislature effectively killed the funding, with lawmakers making clear they did not want the State Bar spending money to explore nonlawyer ownership. Florida’s Supreme Court, after its own bar committee floated a pilot, declined to open the door in 2022. Other states convened task forces that produced thick reports and then quietly did nothing.
So the honest map, five years in, is two states that acted, Arizona and Utah, a couple that dabbled and retreated, and a large majority that watched and kept Rule 5.4 exactly where it was.
The ethics argument deserves to be taken seriously rather than mocked, because it is not stupid. The fear is concrete. An owner whose only interest is return on capital will, the argument goes, lean on the lawyers to settle when they should fight, to churn when they should stop, to cut the ten-minute call that is not billable but is the right thing to do. The lawyer’s duty is to the client. The investor’s duty is to the fund. Put them in the same entity and one of those duties eventually loses.
I feel the weight of that. I also notice that the profession made the same argument about advertising, and it turned out to be mostly a moat dressed as a principle. It was the Arizona bar, of all places, that tried to discipline two lawyers for running a newspaper ad, and the Supreme Court told them no in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), holding that a blanket ban on lawyer advertising violated the First Amendment. Before that, in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), the Court held that the bar’s minimum fee schedules were price-fixing that the antitrust laws reached. Every time, the bar said the sky would fall, that the profession’s dignity and the client’s protection were on the line. Every time, what was actually on the line was a comfortable arrangement that kept prices up and competition down.
The antitrust exposure has not gone away, either. After North Carolina State Board of Dental Examiners v. FTC, 574 U.S. 494 (2015), a professional board dominated by active market participants that restrains competition can lose its immunity unless it is actively supervised by the state. A state supreme court regulating lawyers has better cover than a dental board. But a bar association fighting to keep competitors out of the market, on protectionist reasoning it cannot back with data, is standing on ground that has gotten softer over the last fifty years, not firmer.
And the courts have been skeptical of the reformers too, to be fair. When Jacoby and Meyers tried to attack New York’s ban on nonlawyer investment as unconstitutional, they lost in Jacoby & Meyers Law Offices v. Presiding Justices, 852 F.3d 178 (2d Cir. 2017), the court finding no protected right to take outside equity. The forms companies that pushed the edges of unauthorized practice got slapped, as LegalZoom did in Janson v. LegalZoom.com, Inc., 802 F. Supp. 2d 1053 (W.D. Mo. 2011). So the deregulation path was never a straight shot through the courts. It came through the front door of state supreme courts choosing to rewrite their own rules, which is exactly how Arizona and Utah did it.
what it means for my kind of practice
Let me speak for the seventy percent, the lawyers who never touched BigLaw, who will never have a client that KPMG wants, whose whole professional life is a shingle, a paralegal or two, a merchant-services fee, and a calendar full of people having the worst week of their year.
The first thing I want to say is that the panic is aimed at the wrong target. When I talk to other solos about ABS, the reaction is a gut fear that Walmart is going to open a law counter and put us out of business. That is not what the data shows and it is not what the entrants are doing. The corporate players want corporate volume work. The consumer-facing players, the LegalZooms of the world, were already eating the bottom of our market a decade ago, selling the fifty-dollar will and the LLC formation to people who were never going to hire me anyway. ABS did not create that competitor. ABS just gave it a way to stop pretending it was not practicing law.
The second thing, and this is the one nobody at the bar association wants to hand a solo, is that the reform can cut in our favor if we are honest about our own math.
Think about how a small firm actually dies. It rarely dies from a competitor. It dies from undercapitalization. You cannot afford the case-management software the big shop uses. You cannot afford to front costs on a good contingency file, so you turn it away or settle it early and cheap. You cannot afford to hire before the revenue arrives, so you personally are the bottleneck on every matter, and the practice cannot grow past the number of hours you can stay awake. You are, functionally, a business that is not allowed to raise capital, competing against businesses that are.
Rule 5.4 is the reason a solo cannot take a passive investment from her own brother-in-law to buy a better intake system without tiptoeing around fee-sharing rules. It is the reason a two-lawyer firm cannot give real equity to the office manager who has run the place for fifteen years and is the actual reason clients stay. In an ABS world, those things become normal transactions instead of ethics traps. That is not the Walmart scenario. That is oxygen for the small operator who is cash-poor and time-poor and stuck.
I have watched a couple of Arizona personal injury solos take outside money to fund case costs and marketing under an ABS, and grow in a way the old rules would have strangled. That is the quiet, boring, un-newsworthy version of this reform, and it is the version that actually touches people like me.
Now the blunt part. It cuts both ways and I am not going to pretend otherwise.
Cheap, automated, well-capitalized providers are going to keep hollowing out the standardized end of what we do. The uncontested divorce, the simple will, the standard LLC, the demand letter. If your practice is built on volume commodity work priced just above what a well-run tech company can charge, the machine is coming for that revenue whether it is owned by lawyers or by a hedge fund, and the ownership rule will not save you. Rule 5.4 was never a wall around your commodity work. It was a wall around who could own the company selling it.
What does not automate is the judgment, the relationship, the reading of a room, the client who needs to be talked out of a stupid decision, the local knowledge that this particular judge hates that particular argument. KPMG does not have that. LegalZoom does not have that. The value of the small local lawyer was always the human part, and the reforms, if anything, push us toward pricing and organizing our practices around that part instead of around the paperwork a computer can now spit out.
where I actually come down
I want to be careful here, because it would be easy to end on a warm note about innovation and access and everybody winning, and I do not believe in warm notes.
Here is what I believe after five years of watching this. The organized bar’s defense of Rule 5.4 is mostly protectionism that has forgotten it is protectionism. It got caught doing the same thing on advertising and on fee schedules, and it lost both times, and it has not learned the lesson. The access-to-justice crisis is real, the current system produces oceans of unrepresented people, and a profession that fights every experiment while offering no fix of its own is going to keep losing credibility and, eventually, control of its own rules to legislatures and courts that run out of patience.
And yet the people who want me to celebrate KPMG getting a law license are asking too much. A Big Four firm entering law is not access to justice. It is capital chasing the most profitable slice of corporate work, and dressing it in the language of the poor single mother who cannot find a lawyer. Those are two completely different projects, and the reform lumped them together, and the lumping is a problem. Arizona opened the door for both the passive investor who lets a struggling solo buy better software and the multinational that wants to own the profession’s high ground. Same rule change. Very different consequences.
My honest position is that the small-firm bar should have been leading this fight instead of hiding behind the ABA’s skirts, because the reform, structured right, is a lifeline for the undercapitalized solo and a threat mostly to the mid-tier firms who were already going to consolidate anyway. We let the big-firm establishment define the terms, so now the whole debate is framed as us-versus-Walmart, when the deal on the table could just as easily have been us finally being allowed to run our practices like the small businesses they have always been.
So when my auto-body client asked if KPMG could take his case, the real answer was not no. The real answer was: not yet, not here, and probably never for a matter your size, because you are not who they are built for. But the fact that he asked at all means the wall came down while most of the profession was still insisting it was load-bearing. It was not load-bearing. It was a fence. And the lawyers who figure out how to farm the newly open field, rather than mourning the fence, are the ones who will still have a practice in ten years.