Recently, the legal industry media included a story on the success of a law firm in building trust with its clients. The story described how the international law firm had determined that publishing financial statements about its condition and performance would enhance the trust clients placed in the law firm. Interesting story, I mused, so I clicked. Lo and behold, the law firm was the institution from which I walked away from the practice of law in 2006.
The law firm’s website features videos of its chairman describing their perspective and values. The key element that jumped out at me was transparency. Though the law firm is a private legal entity with no obligation to publish its financial performance, the firm had determined that creating the transparency of sharing its financial performance would improve client loyalty and satisfaction.
But why does transparency enhance loyalty? How does disclosure improve trust? As my new book explains in detail, our evaluations of any entity or thing—a hammer, a law firm, a website, or a digital information asset—requires criteria with which to conduct the evaluation. Those criteria are the rules we have organized against which to evaluate the target. When a target conforms to our rules, we reach an affirmative conclusion of trust. When the target does not conform, then several baskets of alternative strategies and criteria come into play.
So, behind the law firm’s disclosures was a more important awareness that large corporations—the key clients of any international law firm—have been building their own rules with which to more vigorously assess the trustworthiness of a law firm into which they may invest their corporate future. These rules include new criteria for evaluating the financial condition of the law firm, just as the corporations may also evaluate the financial condition of any other strategic business partner.
The law firm, by being among the first to publish and share its financial information, was actually pushing forward the timetable by which existing and future clients may place financial condition among their criteria for evaluating law firms. By doing so, the law firm was actually raising the bar, and gently creating greater trust in the firm by its clients.
What is the simple lesson of this anecdote? Transparency matters. Across our organized systems of law, and our organized systems of rules by which digital assets connect, transparency (or the lack of transparency) is often the basis of some of the great battles. But transparency eventually always wins—our instinct is to ask questions about the target we are being asked to trust. If the answers are not there, due to a lack of transparency, we turn to the options that offer the answers. Transparency inherently attracts customer loyalty. Transparency is what enables trust evaluations to be made.