From Numbers to Legal Advice: How Your Accounting Firm Can Add a Law Practice
KPMG’s move to launch an independent law firm in the U.S. marks a significant shift in how multidisciplinary firms are structured. It reflects a global trend where accounting firms are expanding into legal services to offer more comprehensive solutions to clients. This strategy has long been applied in Europe and Australia, but regulatory barriers in jurisdictions like the U.S. have prevented such moves—until now.
For CIBA members looking to launch a subsidiary law firm in South Africa, there are several strategic, legal, and operational factors to consider. Below, we explore how small accounting firms can follow a similar path while adhering to South African regulations.
Lessons from KPMG’s Approach
KPMG’s strategy highlights three major insights:
Legal and Accounting Synergies: Businesses require both accounting and legal services in areas like tax law, compliance, contract review, and financial structuring.
Independent but Integrated Model: KPMG separated the law firm structurally while maintaining strong operational and technological synergies with the main firm.
Technology as a Differentiator: KPMG leverages AI and automation to drive efficiency in legal service delivery.
How This Applies to Small CIBA Member Firms
A small accounting practice can follow a similar structure by launching an independent but affiliated legal entity.
The key value proposition is to offer integrated services for clients, especially SMEs, that need both financial and legal advisory services.
Regulatory compliance must be prioritised to avoid conflicts between accounting and legal practice restrictions.
Feasibility & Strategic Considerations
Market Research & Demand Analysis
Assess client needs, the demand for legal services within your existing client base, particularly in:
Tax Law
Corporate & Commercial Law
Labour & Employment Law
Regulatory Compliance
Estate Planning & Trusts
Industry Gaps: Identify what legal services SMEs struggle with and where an accounting-integrated law firm could add the most value.
2. Regulatory Compliance & Restrictions
Legal Practice Act, 2014: Understand the restrictions on law firm ownership, particularly if accountants can own a stake in a law firm.
Legal Practice Council (LPC): Consult with them to determine licensing and operational restrictions.
Conflict of Interest Rules: Ensure compliance with professional independence rules to maintain ethical and legal integrity.
3. Business Model & Integration
Full Subsidiary vs. Partnership
Decide whether the law firm will:
Operate as a separate legal entity but wholly owned by the accounting firm.
Function as a joint venture or partnership with an existing law firm.
Utilize a referral model, where the accounting firm outsources legal work but maintains an exclusive partnership.
Scope of Services
Define whether the law firm will:
Provide limited legal services (e.g., tax, corporate law).
Expand into a full-service firm over time.
4. Legal & Structural Setup
Entity Formation
Register the law firm as a Private Company (Pty) Ltd or Incorporated Company (Inc).
Ensure LPC registration and compliance.
Compliance & Professional Ethics
Draft operating agreements between the law firm and the accounting firm to:
Outline independence and compliance.
Define referral structures and revenue-sharing models.
Align with CIBA’s professional standards to avoid conflicts.
Professional Indemnity & Risk Management
Obtain legal professional indemnity insurance separate from accounting insurance.
Set up risk management protocols to prevent legal malpractice claims.
4. Operational & Staffing Considerations
Hiring Qualified Legal Professionals
Recruit admitted attorneys who meet LPC requirements.
Consider partnerships with existing law firms before hiring full-time lawyers.
Hire dual-qualified professionals (e.g., attorneys with tax or forensic accounting expertise).
Branding & Market Positioning
Decide whether to co-brand the law firm with the accounting firm or create a separate identity.
Position the law firm as a specialist provider for business owners, SMEs, and finance professionals.
Technology & Practice Management
Implement case management software for efficiency.
Use secure document management systems to protect client confidentiality.
5. Go-To-Market Strategy & Growth
Initial Client Acquisition
Leverage existing accounting clients who require legal services.
Offer bundled services (e.g., tax & legal advisory).
Strategic Partnerships
Collaborate with CIBA for credibility and referrals.
Engage with chambers of commerce and industry bodies to attract SME clients.
Long-Term Expansion
Develop sector-specific expertise (e.g., farming, healthcare, real estate).
Expand legal services as business demand grows.
6. Alternative Strategies for Accounting Firms
If direct law firm ownership is not feasible, consider these alternative approaches:
Partnering with Alternative Legal Service Providers (ALSPs)
Work with ALSPs that provide specialized business legal services.
Benefits:
No direct regulatory burden of running a law firm.
Cost-effective access to legal expertise.
Virtual Law Firm Model
Operate a remote legal advisory service using digital platforms.
Reduce overheads and increase scalability.
Membership in Multidisciplinary Networks
Join professional networks to collaborate with law firms.
Benefit from shared resources and referrals.
7. Conclusion & Key Takeaways
KPMG’s expansion into legal services showcases a growing trend where accounting firms integrate legal advisory.
CIBA member firms can follow a similar path by:
Setting up a legal subsidiary.
Partnering with existing law firms.
Offering specialized legal services to SMEs and businesses.
Regulatory compliance and ethical considerations are critical.
Technology integration can differentiate a small law firm from traditional competitors.
Final Thought
A CIBA accounting firm launching a law firm can significantly enhance its service offering, creating a one-stop-shop for business advisory—just like KPMG. However, compliance, risk management, and a clear market strategy are crucial for success.
