“That’s another fine mess you’ve gotten me into!” – Oliver Hardy
A lot has been written in the past few weeks on Dentons* decision to no longer publish ‘meaningless‘ (their word, not mine) annual Profits Per Equity Partner (PEP) figures, the latest of which “Partners divided on reliability of PEP and need for transparency” was published on the legalweek.com website last Friday.
While I have a level of sympathy with Dentons argument – and the reality is that PEP figures really are meaningless to all but those who work in the firm, at the same time I do feel that the makings of this situation are those of the law firms themselves.
To expand, in the days prior to LLP status, law firms avoided the press – both legal and non-legal – like the plague. Then publications such as Martindale-Hubbell, Chambers and Asia Pacific Legal 500 started to gain traction and firms started to disclose the business/deals they had undertaken in the past 12 months in the hopes of getting good listings/rankings. In most cases this was done without firms asking their clients if they put any credit in these rankings and their feedback on the benefits of such a strategy.
As we now know, not too many clients pay too much attention to these listings and most lawyer rankings serve little purpose than massaging the egos of the lawyers themselves. Nevertheless, the flood gates had been opened and it was little stretch to start disclosing annual financial information to the legal press who sent surveys around each year – after all, most of this information now had to be disclosed as part of the trade-off for LLP status.
But the fact remains that most annual surveys went above and beyond the requirements law firms needed to comply with and, in nearly all cases, firms willingly disclosed this information. To my mind this makes the situation that Dentons finds itself in – effectively a public spat in the global legal press – largely of their own doing.
Which begs the question: why are law firms in Australia, who – unless incorporated – don’t have the LLP disclosure requirements of firms based in the UK and USA, so willing to disclose financial information – that mostly remains confidential within their own firms – to outsiders?
* Should add that this post is not aimed at Dentons specifically. My comments would apply equally regardless of the firm involved.