Law Firm Boldly Reports Its Full Financials Online

The international law firm K&L Gates took the very unusual—if not unprecedented—step
of posting its complete 2012 financial information to its website this week. The firm,
which operates across Asia, Europe, and the US, has more than 200 lawyers and lobbyists
in its Washington office, located at the corner of 16th and K Streets, Northwest.

You can peruse K&L Gates’s full financial report
here

but here are some highlights:

• Total 2012 revenue was $1.06 billion, a slight drop from 2011. Of that amount, nearly
  $925 million was generated by the firm’s US offices.
• The firm reports having zero bank debt.
• The average equity partner took home $899,960.
• The ratio of the highest paid equity partner to the lowest paid was 7.9:1.

Peter Kalis, the chairman of K&L Gates, told the
Wall Street Journal that by disclosing his firm’s financials, he hoped to boost transparency within the
legal profession. Law firms are under no obligation to report their financials, since
they are not publicly held companies. However,
The American Lawyer magazine completes surveys of the 200 highest-earning firms each year, in which firms voluntarily disclose pieces of their
financial performance, such as gross revenue and profits per partner.

But the information posted by K&L Gates is far more detailed and comprehensive than
what’s included in
The American Lawyer’s surveys. While the surveys are certainly the most complete financial rankings of
law firms available to the public, compiling the information involves some guesswork.
(Full disclosure: I used to work for the
American Lawyer chain of publications, and helped gather information for two rounds of their surveys.
Some firms, such as Washington-based Wiley Rein and Williams & Connolly, simply refused
to hand over financial details. In cases like these, we reporters relied on conversations
with sources within the firms and typical annual growth calculations to estimate the
amounts ultimately included in the surveys.) And even if they willingly supply their
financial data, it’s possible for firms to manipulate the numbers they report to
The American Lawyer—something the now defunct Dewey & LeBoeuf succeeded in doing in 2010 and 2011.

Has K&L Gates started a trend of total transparency in the legal industry? Not likely.
“I think partnerships generally value keeping private information private,” wrote

Carter Phillips, chairman of Sidley Austin, another international law firm, in an e-mail to
Washingtonian. “There is no compelling reason to release this information and absent such a reason
it is hard to see why others would follow suit.”

Marisa M. Kashino

Senior Editor

Marisa M. Kashino joined Washingtonian in 2009 as a staff writer, and became a senior editor in 2014. She oversees the magazine’s real estate and home design coverage, and writes long-form feature stories. She was a 2020 Livingston Award finalist for her two-part investigation into a possible wrongful conviction stemming from a murder in rural Virginia.