Trimble: Transparency key to successful law firm management

In my travels over the past year I have had the opportunity to spend time with lawyers from all corners of the country and from firms large and small. We have discussed their efforts to engage in succession planning; their attempts to hire and retain millennial lawyers; their failures in trying to hire and retain diverse lawyers; their concerns (and complaints) about compensation, and; their shock when rising star lawyers have left their firms without warning. Many firms are beginning to realize that succession and long-term survival may be in jeopardy because they have no successors, and they don’t fully understand why. The issue may be lack of transparency in leadership and management.

I have spoken to young lawyers who have no idea how to attain partnership in their firms, and worse yet, have no idea why they should even want to be a partner. I have counseled young partners, male and female, on how to negotiate for compensation and have been surprised to learn they have no financial information about their own productivity. Indeed, few of these young partners knew how overhead was calculated in their firm or where they fit into the firm’s budget. They had no meaningful knowledge as to how their salaries were determined or how bonuses might be calculated. If their firm had a partnership agreement, they had never seen it.

It should not be surprising for you to hear that many lawyers believe their firms are operated with secrecy and that their firms have reaped large profits from their efforts. Some harbor jealousy over the concern, right or wrong, that others were being treated more favorably. Those who have left their firms were uniform in the statement that they left so they could have some degree of control over their income and their future. For the most part, they felt they had left a closed management style and had come to a transparent one, and they felt really good about their moves.

It is a well-worn adage that lawyers abhor change. While the business world has changed dramatically and continues to change, many law firms have not. Partner agreements have not been reviewed and updated; compensation decisions remain closely guarded and closed to all but a small inner circle; partnership tracks are undefined; partnership is inconsistently granted, and; decisions are made and issued without input from those who will be impacted.

There is simply no question that the firms that will survive and thrive are the ones that will adopt modern business practices. If there is any aspect of management that will be demanded by the rising generation, it will be transparency.

In his Forbes article, “5 Powerful Things Happen When A Leader Is Transparent,” business strategist Glenn Llopis writes, “Trust and transparency have become popular workplace demands as employees seek to be aware of what is real and true.” Llopis advocates for the fact that transparent leaders will have greater employee engagement and less turnover, as employees feel they are part of a collaborative effort and not mere cogs in a wheel.

So, to my friends who are running law firms … are you transparent? Do your partners know the firm’s per-attorney overhead? Do associates know the hours they have worked and the amount that has been collected for their efforts? Do younger lawyers know how to attain partnership, and do they know enough about the benefits (short-term and long-term) to want to be partners? Do younger partners see succession planning and a pathway to client relationships and leadership in the firm? Do you share enough financial information for lawyers at all levels to understand their compensation and to be incentivized to work for higher rewards?

If the answer to these questions is “No,” then you may need to evaluate your future, because you may not have a future. If it is not too late, you may wish to take a hard look at how you operate and change things while you can.

Transparency is challenging. It means you will likely have to explain your decisions. You may have to let your lawyers negotiate with you for better rewards. You may have to justify what you have done or not done, and you will be required to build and earn trust. However, if you take the time to shed light on how you operate, and you do it in a trustworthy manner, your firm will be able to hire and retain young lawyers and laterals and you will have a happier and more settled workplace. Your law firm will have a more certain future.

Change takes time, and it can be tough to sell, but the benefits of transparency will be many. There is no time like today to be transparent. #WillYouBeThere?•

• John C. Trimble (@indytrims) is a senior partner at the Indianapolis firm of Lewis Wagner LLP. He is a self-described bar association “junkie” who admits that he spends an inordinate amount of time on law practice management, judicial independence and legal profession issues. Opinions expressed are those of the author.