Biglaw, Small Law Firms

Biglaw Firms Are More Transparent Than Many Smaller Shops

Smaller firms can realize a number of benefits if they are more transparent with associates like many Biglaw firms are with their attorneys. 

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Many Biglaw firms are not as transparent as numerous similarly-sized companies.  As this website has detailed at length in a number of prior articles, partnership compensation is oftentimes a “black box” among top firms, and the machinations of many Biglaw shops are not thoroughly understood.  However, many Biglaw firms are far more transparent than numerous smaller shops, and smaller firms can actually learn some lessons about transparency from Biglaw firms.

When I was an associate in Biglaw, my firm kept associates in the dark about numerous matters.  However, much information about the firm was made public.  For instance, the profits per partner of the firm and other financial information was freely shared.  In addition, there was an associate-partner committee that ensured that associates were apprised of major developments at the firm.

My firm also hosted “State of the Firm” meetings twice a year, during which management would provide associates with vital information about the operations of the firm.  We were not allowed to take notes or record the information, but these meetings included many details about the firm.  At these gatherings, we were all told the revenue and expenses of our firm for the previous six months.  In addition, bonuses were announced at these meetings, and everyone knew how much money they would be paid based on their class year and the number of hours they billed.  Furthermore, these meetings often discussed plans that the firm had to expand or obtain new work.

However, when I worked at smaller shops, management almost never provided important information about the operations of the firm.  Indeed, people were paid vastly different sums of money for somewhat arbitrary reasons, and no one was transparent about compensation.  In addition, there were never any meetings about the finances of the firm or substantive discussions about where management hoped to take the firm in the coming years.

In fact, the only time I became aware of the finances of one of the smaller firms at which I worked was because I was involved in that firm’s application for malpractice insurance.  After reading materials needed to support our firm’s application for insurance, I was shocked to discover that only a few of the firm’s partners were equity partners.  I was also amazed at the amount of revenue that was generated by that shop, and other information that was contained in our application.

In addition, each of the smaller shops at which I worked never had a formalized mechanism through which associates and partners could talk about matters that were relevant to the firm.  Indeed, there was never an associate-partner committee at any of the smaller shops at which I worked.  The partners professed to have an “open door” policy inviting associates to talk about any issues they wanted.  However, it was apparent that partners did not appreciate associates seeking additional information or rocking the boat in any way.

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One of the smaller firms at which I worked did decide to hold one “State of the Firm” meeting similar to the gatherings I had experienced at a larger shop.  However, this meeting was completely devoid of any of the “nuts and bolts” that had been told to us at such meetings in Biglaw.  Indeed, firm management just reiterated the same broad marketing slogans that could be found on our website or our firm’s strategic plan when detailing the path the firm expected to take in the coming years.  The joke at the meeting was that the only useful information we received was the name of the boss’s dog!  When someone tried to find out more information about changes to the transit reimbursement policy, she was met with hostility, even though this was a pretty minor issue.  Everyone knew that they should not ask substantive questions to obtain more information about the operations of the firm.

Smaller firms can realize a number of benefits if they are more transparent with associates like many Biglaw firms are with their attorneys.  Understanding more information about a firm can increase the amount of buy-in associates have towards a shop and can benefit morale immeasurably.  In addition, greater transparency can convince associates to go along with unpopular changes at a firm, since they have a better understanding of why those changes were made.

One time, when I worked at a smaller firm, I traveled with one of the senior partners by subway to pitch our firm to some contacts I had made.  During our subway ride, the partner told me about how hard it was to manage a firm, and that there were various financial risks to operating a shop.  He told me that his name was on the firm’s multimillion-dollar office lease, and that if there was ever any shortage in cash flow, they might have to rely on lines of credits to meet payroll.  This partner memorably told me that he was the last person at the firm to be paid, and if there wasn’t enough money, he might not receive any funds at all.  This conversation moved me, and I never complained about money at that firm again.  After learning this information, I understood the tribulations that the partners endured to operate that shop, and I appreciated being told these details.

In the end, although Biglaw firms still hide certain information, many Biglaw shops are more transparent than you think, especially compared to smaller firms.  And smaller law firms can realize a number of benefits from being more transparent to associates.

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

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