find the latest legal job
Part Time Risk & Compliance Officer
Category: Other | Location: Brisbane QLD 4000
· Brisbane City · Flexible Part Time Hours
View details
Infrastructure Lawyer/SA
Category: Construction Law | Location: Sydney CBD, Inner West & Eastern Suburbs Sydney NSW
· Global elite law firm · Dedicated Infrastructure team
View details
Property Lawyer
Category: Property Law | Location: All Melbourne VIC
· 12 Month Contract · Diverse Work
View details
In-House Legal Counsel (Mid to Senior)| Regulated Markets (Energy and Gas)
Category: Generalists - In House | Location: Melbourne CBD & Inner Suburbs Melbourne VIC
· Full PD on Request · Exciting High Impact Role
View details
Family Lawyer
Category: Family Law | Location: Eastern Suburbs Melbourne VIC
· Boutique Firm · Great Reputation
View details
KPMG split an “overreaction”: PwC Legal

KPMG split an “overreaction”: PwC Legal

PRICEWATERHOUSE-COOPERS has condemned the move of multidisciplinary rival KPMG to cease providing legal services as “an overreaction” to audit-independence concerns.Australia’s first…

PRICEWATERHOUSE-COOPERS has condemned the move of multidisciplinary rival KPMG to cease providing legal services as “an overreaction” to audit-independence concerns.

Australia’s first MDP law firm, KPMG Legal, last week announced it would stop trading under the banner of the Big Four Accountant pursuant to a directive from global partners.

KLegal, the multi-jurisdictional network that houses all of KPMG’s in-house law firms, will be disbanded, with members now examining the merits of establishing an alliance completely separate from the accounting firm.

“The announcement reflects changed market conditions, including the US Sarbanes-Oxley Act, which restrict the provision of non-audit services to audit clients, particulary legal services,” a worldwide statement read.

Once the decision became public, speculation immediately focused on the intentions of other Big Four operators: PwC, Ernst & Young and Deloitte — all of whom maintain legal branches.

While the latter two failed to respond to Lawyers Weekly enquiries, PwC tax and legal chief Paul Koenig was quick to hose down predictions of a domino effect at his end.

Confirming that PwC Legal would not follow KPMG’s lead, Koenig suggested that his rival had perhaps jumped the gun.

“Completely separating legal services is an overreaction, we think, and there’s no intention to do that here,” Koenig said. “It’s not in our best interests and we don’t feel we need to make that change.”

Koenig revealed that a meeting of all PwC’s Australian-based tax and legal partners, held earlier this month, had considered the ongoing ramifications of Sarbanes-Oxley and reached a “broad consensus” that structural change was not necessary.

Asked to explain why PwC was confident of negotiating the generic independence concerns that prompted KPMG’s actions, Koenig said his firm was more self-sufficient and did not necessarily rely on referrals from other practices to survive.

“Clearly SEC rules and independence concerns impact on everyone in some way, but here in Australia there is no need to put any greater distance between [lawyers and PwC generally] than already exists.”

“We are a much more substantial law firm, with 300 staff, and have a very substantial existing client base.”

Australian lawyers at KPMG confessed they expected the split to eventually take place, but were caught off-guard by the expediency with which global directors acted to sever the legal arm.

Ever since 2002’s disintegration of accounting giant Andsersen, which felt the brunt of Enron’s spectacular collapse, KPMG Legal staunchly maintained remedial conflict provisions formulated in the US would not impact upon Australian MDP interests.

“The timing was a bit out of the blue,” said head partner Jeff Goss. “We originally thought this scenario would come up within the next calendar year. You could say [the decision] leapt up on us.

“We anticipated that certain national practices could maintain close ties and but that option has now been taken away.”

As part of the split, KPMG Legal will undergo a name change and formal separation is expected to be achieved by the end of the year. Goss said a “best friends” arrangement would be established with audit, tax and accounting arms of the wider firm.

No freeze would be placed on hires, he added, during the process.

“If we get the model right, we’re seeing this as a significant opportunity for growth,” Goss said.

Echoing Goss’s sentiments were remarks from a number of sources with KPMG legal, many of whom said they were “relieved” by the news.

One lawyer described the split as a “breath of fresh air”, adding that Sarbanes Oxley provisions meant time consuming conflict searches had become an odious fact of life at the firm. As a result, it had been difficult for KPMG Legal to attract the best talent.

Another insider said KPMG Legal had been disappointed at partner growth in recent times, with the legal arm accommodating fewer senior lawyers than anticipated.

Commenting on the difficulties inherent in Sarbanes-Oxley, Goss concluded: “To comply it takes time to conduct a global search and ensure there is no conflict with audit services. Waiting for an answer has practical implications that were always going to lead to these inevitable circumstances.”

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

KPMG split an “overreaction”: PwC Legal
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Violence
Nov 17 2017
It's time for politicians to commit to eradicating domestic violence
The national shame of domestic violence cannot be left unaddressed, writes Christine Smyth. ...
Nov 16 2017
From lawyer in law firm to senior governance professional
Promoted by Governance Institute of Australia As a law graduate, Kate Griffiths never imagined...
marriage equality
Nov 16 2017
Legislation the next hurdle for marriage equality
Lawyers have underscored the importance of ensuring same-sex marriage legislation does not limit ant...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...