5 Ways to Improve Financial Transparency in Your Law Firm

Expertise in law, reputation and experience are some of the main things that legal firms pay attention to. However, success isn’t entirely determined by these things. It’s also about finances, management and processes.

A law firm with healthy finances can achieve success in the long run, experience success and sustain steady growth. But just like any other type of business, challenges may still occur. And while unexpected, some of these challenges are caused by a lack of transparency.

Here are five simple ways to boost financial transparency in your company and make the most out of it.

Cultivate Accountability

Financial transparency goes in more directions.

For example, according to Dimov Audit Services, regular audits can enhance credibility among potential investors and even customers. But then, financial transparency also boosts accountability if you share financial information with your team.

When everyone in your team understands the financial goal of your company, chances are they’ll be able to adjust their goals as well. They’ll obviously manage to align efforts in order to boost the success of the company.

Now, accountability could mean more things. For example, you can share some key performance indicators, which will drive your people to track their performance against them.

To cultivate accountability, review financial elements on a regular basis with your team. You can do it three or four times a year. Regular reviews ensure that everyone stays updated on the company’s progress and challenges. In the long run, you’ll make your team understand the position of the company.

Incorporate Some Financial Education

Financial transparency is easier to achieve when everyone in your team understands what’s going on.

Just because you share different metrics and goals on a regular basis, they won’t lead you anywhere if your team members don’t understand what you’re talking about. Instead, you’ll end up hosting some of the most boring meetings ever.

To cultivate financial transparency, you’ll need to incorporate some sort of financial education as well. There are certain concepts, things or even words that some of your employees may not understand. Besides, they may feel embarrassed to ask what something means, which could create gaps in their understanding and involvement.

Basic financial education can help your people understand the metrics you provide. They’ll be able to understand your goals, where the firm stands and the kind of impact their roles have on achieving those objectives.

It doesn’t mean you have to pay for sophisticated financial education courses. Just get occasional meetings once or twice a month and get someone to help your staff understand a few basics. In the long run, such things could help them in other aspects of life too, so they’ll appreciate it.

Focus on High-Level Metrics

When sharing financial metrics, try to focus on high-level elements. It’s one thing to say that the company had a decent profit last year and another different thing to say that your law firm had a business revenue of $200,000 last year.

The idea is to provide numbers and not just any type of numbers, but high-level metrics.

Sure, you don’t need to include every single detail, as most people won’t bother to go through everything anyway. Instead, focus on providing details on the profitability, but also the growth.

Since some people only look at profits, it’s worth underlining the expense management too, as well as what processes you have in place to reduce these things. And if you do well, you might as well consider a small bonus whenever you hold such meetings.

In the long run, this level of transparency will help your team members feel better connected to the company. They’ll see themselves as active participants in its journey rather than passive observers.

Be Open About Challenges

While discussing finances openly can certainly help your employees too, it’s important to make sure they’re not misled. In other words, don’t always talk about revenue, profits and goals, but also about the challenges you may have to go through.

The financial performance of your firm isn’t all pink, so you need to address issues and negative elements as well. Being open about these things underlines the fact that people also need to work hard in order to maintain some standards or reach some goals.

Discussing negative things also provides some context regarding your future decisions, regardless of the changes you want to implement.

Besides, you might be able to get some new perspectives from employees, as they’ll be encouraged to input their opinions and ideas as well.

Incentive Performance

Once again, financial transparency isn’t all about discussing the good sides and the bad sides. Sure, you’ll give your employees some insights into what’s going on, but that’s not everything. With time, these things will become boring because most people will put themselves before the company.

Based on the performance of a law firm, you can also consider rewards and bonuses. Don’t give them out randomly, but connect them to the financial performance of the firm. This way, your team members will actually have some reasons to care about what’s going on financially.

Since effort is incentivized, it makes perfect sense for your people to work harder as well. They’ll be more connected to your finances in order to reach the same goals. And, of course, this could only be achieved with thorough financial transparency over the entire firm.