KLegal and McGrigors partners split over relationship with KPMG

A rift has emerged between legacy KLegal partners and the McGrigor Donald partnership as they gear up to decide on their future relationship with KPMG.

It is understood that an annual partners' meeting scheduled for the end of this month will formalise a decision about whether the firm should further align itself to the KLegal international network or to KPMG.

The McGrigors partners are understood to favour distancing themselves from KPMG. As well as working more closely with the international firms, they are keen to pursue a US deal, but prospective merger partners have been difficult to attract because of the multidisciplinary partnership (MDP) model.

By contrast, legacy KLegal partners, the bulk of whom still work extremely closely with the accountant, are keen to maintain the KPMG relationship.

There has been growing discontent among KLegal partners with the firm's post-Enron strategy. In July, founding partner James Hodgson resigned because he was frustrated over the Scottish partners' lack of commitment to the MDP model.

With KLegal's management now dominated by McGrigors, sources close to the firm say that further distancing from KPMG is likely.

However, it is understood that around 20 per cent of turnover in the last financial year was produced by KPMG referrals and from working with the accountant. A far lower contribution was made by international referrals.