KPMG merges Euro legal arms

KPMG, the global accounting, tax and consulting firm, is threatening more vigorous competition in the European legal services sector by uniting its continental law practices under a single, co-ordinated management structure.

The move is expected to thrust the KPMG legal arm further into the market for cross-border corporate, tax, and commercial law advice, allowing it to capitalise on the heightened business activity in countries using the Euro.

Colin Sharman, chairman of KPMG International, says: “We see legal as a separate core service, and we have to have a structure that will accommodate it.

“We expect relationships between the legal practices to be strengthened via a new management structure.”

The strengthening of KPMG's European legal services is part of the firm's worldwide drive toward a more integrated structure, in a way similar to that already seen with other “big five” rivals Arthur Andersen and Ernst & Young.

KPMG took a major step forward in this strategy last week when it announced a plan to combine all its member firms in North and South America, as well as the national practices in Europe, into several key “global operating regions”.

In the European legal strategy, KPMG's lawyers on the continent are now working out how to best achieve the closer integration.

Jean-Francois Blouet, a partner in KPMG's French law and tax firm Fidal and head of KPMG's European Tax Centre, says: “We are all currently looking at the details and what the impact on the market will be.

“We have teams working on different aspects of this and are talking with our colleagues across Europe.”

Fidal, with its 1,100 staff, is France's biggest single firm and is a major influence in the development of the integrated structure.

Its senior partner, Jean-Louis Paul, is in charge of KPMG legal services worldwide and will continue to head the new structure.

Blouet estimates it could take three months to unify the legal arm.

The job of pulling together the various partnerships and incorporated businesses of the KPMG empire to form the two giant businesses – KPMG Americas and the Europe, Middle East and Africa (EMA) practice – is a complex one.

Stephenson Harwood, KPMG's key UK legal adviser and once tipped to become KPMG's UK legal arm, is understood to be co-ordinating advice on non-US aspects, with a team led by partner Geoff Woolf.

Importantly for KPMG's UK legal strategy, some City lawyers think the massive restructuring will delay the firm's plan to link up with a UK City firm by at least a year.

“As they haven't got their act together on the legal front yet, this could set things back another 12 months,” says one senior partner.

But Sharman rejects this view. “I don't think it will have a major impact,” he says.

“We can do more than one thing at once.”

KPMG's announcement about the global restructuring was rushed forward last week by the news that Arthur Andersen had poached KPMG's entire Canadian practice.