K&L Gates LLP posted its comprehensive financial information on its website, a move that K&L’s chairman described in an internal e-mail as a bid for transparency and law firm consultants said is unusual.
Among the disclosures, the firm’s revenue dropped slightly to a little more than $1.06 billion from the previous year, the firm had no outstanding bank debt and it ended 2012 with more than $220 million in cash, according to the statement posted yesterday on the website.
Chairman Peter Kalis, whose Pittsburgh-based firm has more than 2000 attorneys, addressed the disclosures in an e-mail to the firm’s lawyers obtained by Bloomberg News.
“Although our firm’s financial performance is fully transparent to our partners, we wish to extend that transparency to all of our lawyers, including associates, and to include categories of information that industry publications have ignored,” Kalis said in the e-mail.
Kalis didn’t immediately respond to a reporter’s e-mail seeking comment on the internal e-mail. Earlier, when asked by Bloomberg News about the posting on the website, Kalis referred to the implosion of Dewey & LeBoeuf LLP, the New York law firm that once had 1,300 lawyers before seeking bankruptcy in May.
“Our industry and profession were shamed by Dewey,” Kalis said in an e-mail. “This is our modest attempt to fight back and lead by example.”
In the firm-wide e-mail, Kalis said that information such as “debt loads, unfunded retirement obligations, undercapitalization, illiquidity and the like” are often not made public even though these “indicia go right to the heart of institutional stability.”
The firm opened offices in Milan and Seoul last year and merged with the Australian firm Middletons Lawyers in January, according to its website statement. The firm said its “annual retirement obligation expense” as a percentage of revenue is 0.3 percent.
Net income per partner was reported as $899,960 for “fully participating equity partners” and $636,920 for all partners. The highest-paid partners make 7.9 times as much as first-year partners, according to the statement,
Ward Bower, a principal with Altman Weil Inc., a consulting firm specializing in the legal profession, said he was surprised at the amount of information released.
“I would suspect that anyone in a big law firm has been asked questions by clients, potential lateral hires and potential merger partners about what these numbers look like,” he said yesterday in a phone interview. “There’s a sense of a Dewey hangover that continues even into 2013.”
Peter Zeughauser, another law firm consultant, said with most firms treating balance sheets as confidential information, sharing “is usually done more discreetly,” typically with a non-disclosure agreement. Zeughauser said in a phone interview that he doubts many other firms will follow the lead of K&L Gates.
Bower said K&L Gates may be comfortable with heightened disclosure because that is already a fact of law firm life for British firms.
“The big London firms, as part of British law, must file financial statements, including both income statement and balance sheet,” he said. “K&L Gates, with a pretty good size office in London, is probably more comfortable than a typical American firm would be.”
The firm’s website statement was reported earlier on the Wall Street Journal’s Law Blog.