So, KPMG Is a Law Firm Now

Posted on by Going Concern News Desk
scales of justice on a desk

Welcome to the era of US accounting firms practicing law.

KPMG’s request to Arizona to open a law practice there has been granted and they set right to bragging about it in a press release yesterday:

Today, KPMG LLP, the U.S. audit, tax, and advisory firm, launched KPMG Law US, a subsidiary of KPMG LLP, marking a milestone as the first law firm owned by a Big Four firm to serve the US market.

The legal services market is experiencing rapid growth and transformation. Many businesses aim to transform their legal operations to gain a competitive advantage. KPMG Law US combines the technological capabilities of KPMG with legal services to address the evolving needs of legal departments, backed by the firm’s trusted legacy of delivering solutions when they matter most.

KPMG Law US plans to deliver a focused set of technology-enabled legal services powered by artificial intelligence and KPMG Digital Gateway, building upon the firm’s established Legal Business Services practice. The new law firm will collaborate with the KPMG global network of law firms already operating in more than 80 jurisdictions. Together, KPMG Law US and KPMG will provide legal managed services, legal operations consulting, and advanced legal technology innovation, to help clients gain efficiencies and empower their legal teams to concentrate on strategic priorities.

You’ve got to admire the gumption here. They saw an opportunity to grab a previously untapped source of billable hours and went for it.

The opportunity came about in 2020 when the Arizona Supreme Court voted to “allow for more innovation and to make legal services more affordable while still protecting the public” (according to them in this PDF) by way of allowing non-lawyer ownership in law firms through Alternative Business Structures (ABSs). Hey, remember when the AICPA pushed for that for accounting firms like 30 years ago?

KPMG Law US will operate as an independently managed subsidiary of KPMG and maintain strategic alignment with the KPMG Tax practice, said the firm.

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Our source also indicated that TF — currently running second in the Accountant of the Decade vote — is:

…making general statements about the firm as a whole in regards to outsourcing. We were told that if we were getting outsourced there would be “advanced warning” or that they would try to move people around without letting them go, etc.

“Advanced warning” like a flare gun? Church bells? A lighthouse? The people need something more specific, TF.
It sounds both internal IT and advisory IT professionals are getting the pleasure of the pep talk so if you were there (or going this afternoon, rumor is there’s two meetings), send us your thoughts and discuss.

Comp Watch ’11: KPMG Kicking Around the Idea of Loyalty Bonuses for Senior Associates

We’re still waiting to hear what the Next Level is but this should tide you over in the meantime.

I’m a second-year audit senior associate at KPMG in the New York Office. This past Wednesday there was a round-table discussion with about a dozen seniors to discuss compensation. I’ve been looking on Going Concern to see what has turned up, and since I’ve yet to see anything i figured I would send along what was discussed…

The meeting was run be a couple of our heads of compensation, and they were certain to tell us that in no way has this been approved by leadership, but as long as feedback from the round-table sessions is positive, they think it has a good chance of happening. They asked us about how the above and beyond award [Ed. note: aka utilization bonuses] was received, to which everyone responded negatively, and they unveiled their plan for future bonus compensation to reward loyalty for the firm. They said that this plan would be in addition to any raises and variable comp that the firm already has, so this would act as a reward for loyalty to the firm. I will highlight the details below.

-This plan is applicable for senior associates
– In December everyone makes an election that they classified as immediate, one-year, and two-year. The immediate pays $1,000, the 1-year pays $4,000, and the 2-year pays $8,000. This election would be made each December by senior associates. One example they gave of a first-year senior associate entering this bonus program was as follows:

December 2011: two-year election – pays $8,000 in May 2014
December 2012: two-year election – pays $8,000 in May 2015
December 2013: one-year election – pays $4,000 in May 2016

They were selling us on the fact that you would be paid out $20,000 in the span of twelve months, which of course sounds pretty great. One thing to keep in mind is that the terminology “immediate”, “one-year”, and “two-year” isn’t completely accurate. In reality it is more like one, two, or three busy seasons. Some of the particulars are that once you make an election you’re stuck with it, so if you take the immediate payout and happen to stay another few years, you are less loyal than someone who knew ahead of time. Also, if you leave the firm before you reach your payment date you obviously get nothing.

The plan was generally well received in the meeting, but didn’t get good reviews at all when I told some of my co-workers about it. I am curious to see how others feel about it. We all seemed to agree that it didn’t seem worth it to take the $1,000 payout because after taxes you’d barely notice it, and that it would take real guts to take the $8,000 payout, because as a first-year senior associate the length of your deferral is longer than your employment at the firm to date, so you never really know if you’ll still be there to collect.

Say what you will about the KPMG, they are trying to get creative with the bonus structure. Whether or not it takes with Klynveldians is another matter entirely but you can get started by commenting with your reactions below.