Rumours have been carved in stone and Middletons have trumpeted their acquisition of the MDP legal arm, claiming the six new KPMG Legal partners and their teams bring “high level experience to the firm”.

Amidst the fallout, PwC Legal claimed the MDP framework still worked well for them, and argued the firm saw enormous opportunities “for going to market as the only legal firm affiliated with a large professional services firm”.

Middletons attracted six partners and more than 30 staff from KPMG Legal in Sydney, the move taking effect from 5 April this year. This follows the KPMG International decision to cease providing core legal services as part of its commitment to comply with the stringent audit-independence rules in the US, and increasingly around the world.

Managing partner of KPMG Legal Jeff Goss told Lawyers Weekly they had been trying to find a firm that could take on the legal team since November last year, and “we hit it off with Middletons”.

“We felt Middletons fitted with our strategy. We looked five years forward and the team at Middletons had been able to create a great firm and we felt we could add benefit to that,” Goss said.

A number of other firms had approached KPMG Legal, but Goss refused to give details of any bidding war that had taken place, and remained tight lipped about which firms had approached the MDP.

The six new partners at Middletons left one partner behind, Chris McArdle, who said he was happy in his new position as partner at Colin Biggers and Paisley. He said he had been committed to KPMG and “they were committed to [the legal team]”. “But overseas events made that impossible and it was beyond our control,” he added.

There was no way around the fate of KPMG Legal, McArdle explained, because the firm was prevented from performing a full range of tasks for clients. “There were an increasing number of people we couldn’t act against or for, which is, after all, the point of a law firm.”

Pressed as to whether KPMG Legal had carved the fate of all MDPs, McArdle said “those that survive will have to avoid an extremely broad net. The plan for MDPs was to be able to do more work, but in reality the opposite is the case. But no one knew this — we can all be wise after the event”.

However, chairman of PwC Legal Mike Daniel claimed that, for his firm, audit independence issues were not a concern. Excited about the recent appointment of Kevin O’Rouke as the firm’s new CEO, effective from 1 April, Daniel said this represented a period of growth for the MDP. While KPMG made a decision on an international level about audit independence, he said, “PwC looked at it on a country by country basis”.

“In Australia we made the decision that there is a good fit between legal services and the professional services of PwC, particularly in tax but also in other areas, where PwC provides services to non-audit clients,” Daniel claimed. “We have a different strategy and it is an arrangement that works well for us.”

For Middletons, the new appointments fulfilled a need to be larger in Sydney in selected areas. CEO John Chisholm told Lawyers Weekly the firm had been “looking at opportunities for some time”. The firm had some corporate experience in the Sydney office, “but needed more”.