By Sara Merken

Jan 3 (Reuters) - Accounting giant KPMG is moving to launch a new legal services business in the United States, taking advantage of relaxed law firm ownership rules in Arizona.

KPMG Law US, a subsidiary of KPMG US, applied to the Arizona Supreme Court to operate as an alternative business structure under a state program that allows non-lawyers to co-own law firms, a KPMG US spokesperson told Reuters.

A committee will discuss KPMG US Law's bid at a Jan. 14 meeting, according to the court's website. The court will decide on approval if the committee recommends licensure.

The Arizona subsidiary would draw on KPMG's network and technology to provide compliance and contract-related services and other outsourced legal work in the United States, the company said.

Arizona in 2020 became the first U.S. state to scrap rules barring non-lawyers from having an economic interest in law firms, allowing them to co-own businesses that provide legal services with court approval.

The KPMG venture appears to be the first by the world's four biggest accountancy firms, which include EY, Deloitte and PricewaterhouseCoopers, to practice law in the United States. KPMG Law US would be unique in both the legal and consulting markets, the spokesperson said.

Spokespeople for EY, Deloitte and PricewaterhouseCoopers did not immediately respond to requests for comment.

The Big Four have grown U.S. legal consulting and managed services offerings to compete with law firms and other legal industry providers. But most states allow only lawyers to practice law, own law firms and share legal fees.

Some other countries allow professional services firms to practice law. KPMG Law globally has more than 3,750 professionals in member firms in more than 80 jurisdictions, according to its website.

Legal teams "face substantial and wide-ranging process challenges that can benefit from legal expertise and technology at scale," the KPMG US spokesperson said in a statement, adding that its work would complement services of traditional law firms.

The Arizona court has approved more than 100 alternative legal business structures since 2021. They include legal services and staffing companies such as LegalZoom, Rocket Lawyer, Elevate and Axiom, as well as personal injury and mass tort law firms partially owned by non-lawyers.

Marquita Brazil, who manages the Arizona program, in a statement said the KPMG subsidiary would "further our mission of providing affordable and efficient legal services to the residents of Arizona."

The Utah Supreme Court authorized a pilot program in 2020 that allows nontraditional legal businesses to operate under eased rules with oversight. Similar pilot initiatives have recently been approved or advanced in Washington and Indiana.

Supporters argue that loosening barriers for entrepreneurs and others to hold a stake in legal services can make legal advice more affordable, spur innovation and expand access to justice.

Critics counter that the changes could lead to abuses if providers are not fully bound by professional ethics rules that licensed lawyers must obey.

KPMG Law US "will be governed by the same high ethical standards that apply to other law firms" and is committed to quality and ethics in legal services, the spokesperson said.

(Reporting by Sara Merken)

((Sara.Merken@thomsonreuters.com;))