What Does Transparency Mean To You?

Kathy Fortin

August 31, 2018

In our consulting work, I hear the issue of transparency raised by senior lawyers and younger lawyers alike. Younger lawyers who have been with a firm as an associate for several years

are interested in how the firm is doing and also want to know how their contributions are viewed. One associate told me, “I don’t have a clue.”

In many instances, a senior lawyer has commented to us: “I have a great group of people and everyone is working very hard, but revenues are low. I know we can do better.” Often a question Arthur or I will raise is “How transparent have you been in letting them know the firm’s goals and reviewing their individual goals?” After a shocked expression, the answer is often, “Not very. Really, not at all.”

Understandably, the idea of sharing the firm’s financial information may be a concern. Yet, the concern should not involve an “all” or “nothing” approach. The ‘Hold everything close to the vest’ approach may come out of the following thinking:

  • I own the firm and no one else needs to know.
  • My staff will ask for more money if they know what we bring in.
  • I will lose staff if they see we are not doing well enough.
  • I will lose control if I share information.

All of these concerns are valid. However, transparency can come in forms other than divulging the most sensitive/private data. Alternatives to releasing data are:

  • Create a revenue projection for each year. Then, set hourly billing rates, hours’ goals, along with revenue goals for every lawyer and paralegal. This is a good way to communicate the firm’s needs while still maintaining some transparency.
  • Communicate what it means for the firm to do well and for everyone to be rewarded, for example, in the form of discretionary bonuses.

Convey the message that everyone is invested in helping the firm do well and provide information how individual performance can help. Transparency translates to accountability. Everyone knows they have a job to do, but have it reinforced that what they do matters and is a win for all.

Ultimately, if the firm has a successful year, everyone will know that what they did contributed towards that success. If the year was not successful, everyone will know the factors and will be urged to do better next year.

The issue of transparency is particularly critical when it comes to lawyers planning for succession. It is basic that those who will take over in the future need to be aware of the financial needs and success of the firm. While detailed financial reports do not have to be provided, discussions of rough numbers (expenses and revenues) are necessary for the younger lawyer to understand what he or she is taking on or buying into. While articles we purchase have price tags, law firms don’t. The state of the firm must be conveyed in constructive terms.

Most employees, like the young associate who told me he didn’t have a clue, they want to know what they can do to help the firm. Creating transparencies offers employees a way to do so.