The UK practice of KPMG has been awarded an ‘Alternative Business Structure’, providing it with the right to significantly expand its offerings in the legal landscape. With the move KPMG follows the footsteps of rival PwC, it has however opted for a different strategy.
For decades the legal market has been dominated by legal services providers and law firms, yet since 2007, non-lawyers are given the possibility to own or invest in law firms. Under the so-called ‘Alternative Business Structure’, which falls under the Legal Services Act, firms from outside the legal industry can subject to regulatory approval* enter the market. Since the new regime began on 6 October 2011 roughly 60 entities have been licenced, which may not seem like many – but the approval process is lengthy and there are dozens of applications making their way through.
For players in the professional services market, interest in expanding into the law field has over the past years risen, driven by increasing demand for multi-disciplinary business and legal services and the strategy to find new growing segments on the back of the slow-growing Assurance market, traditionally the backbone of large players such as the Big 4, Baker Tilly, BDO and Grant Thornton. At a global level the gradual market-entry into law has been seen for a while – in several countries Big 4 players have either expanded their Legal practice, erected a stand-alone Legal unit or intensified partnerships with external legal specialists. Deloitte for example bundled its legal services into ‘Deloitte Legal, PwC followed the move with the establishment of ‘PwC Legal’ , while EY has chosen for ‘EY Law’.
UK legal market
In the UK, KPMG is now the second of the Big 4 to have been awarded the ABS licence, after PwC took the same route earlier this year. The strategy of both firms however differs considerably. PwC has established a separate legal entity within the firm, with around 200 fee-earners, which provides both legal-only and multi-disciplinary services. KPMG on the other hand choses to purely focus itself on the latter, explains KPMG UK Chairman Simon Collins: “We are taking a focused approach: our key market differentiator is that we will only offer legal services which are fully integrated with other areas where we already provide advice. We have absolutely no plans to develop any kind of standalone legal practice.”
KPMG’s legal team currently consists of 50 lawyers and legal specialists, including four partners**. With the ABS licence in place, the practice will extend its portfolio from the traditional fields of tax litigation and pensions to (new) areas such as employment matters, mergers & acquisitions advisory and real estate. Based on the growth potential , the firm envisages significantly growing its law business, which currently generates between £9 to £10 million. “Our future ambitions are to build on the solid foundations of this proven strategy, developing our ‘bench strength and capability’ in further areas which are complementary to and integrated with our existing business,” says Gary Harley, partner responsible for the roll out of KPMG’s expanded legal services business under the ABS.
* Approval is granted by either the Solicitors Regulation Authority (SRA) or the Council for Licensed Conveyancers.
** Amanda Brown (leads the tax litigation practice), David White (leads the corporate and commercial team), Punam Birly (leads the employment and immigration group) and Nick Roome (heads the legal services business in the North).