Mapping Center Answer:

You cannot have the background of the legend be transparent. This is because a legend is a graphic element and we do not support transparency for graphics elements -- we only support transparency for geographic features. However, if you could tell me what you are trying to do, I can probably tell you a work around. For example, it would be useful to have transparency in an elevation legend that lays over a hillshade – we wrote a blog entry on this a while ago:

Creating a legend for hypsometrically tinted shaded relief

If this isn’t want you need to do, then just let us know and we will tell you if we have figured out a work around.