Most of you know that there is a gender pay gap for lawyers in our country. Simply speaking, women lawyers fall significantly behind men in terms of compensation, especially in large law firms. In Big Law, the gender pay gap widens as lawyers climb the experience ladder, and women lawyers continue to struggle to get full credit for their work or suffer setbacks for having children. These issues, and what to do about them, were explored recently in a Bloomberg Law article, and the information, especially the historical data, are worthy of your attention.
And that is true whether you are a male or female lawyer. Women have a vested interest that is obvious. Men have an interest because losing the talent of women due to issues of inequity will impact them as well.
Although men and women start off on equal footing in terms of compensation, the gap begins to widen at the partner level where women make up only 22% of equity partners and earn only 78% of what men make. These figures are supported by surveys conducted by the National Association of Women Lawyers, and the figures have not changed much in the last decade.
The challenge is what to do about it. As pointed out in the article, people who make compensation and related decisions at firms think they are being fair, and most of them want to be fair. But the statistics tell a different story.
All kinds of unfair assumptions are made about women lawyers. It is assumed that they will have children, and it is assumed that they will no longer want to work once they have children. And it is assumed that if they have children and keep on working, they will not be as serious about their professional lives. As a result, those women start to get fewer opportunities in terms of cases and face time with important clients.
Annual reviews, which determine both salary and bonuses, are another problem. Those reviews start with self evaluations, something women historically do not excel at. Women are typically not comfortable bragging about their accomplishments or misrepresenting their expertise, and that puts them at a disadvantage in the review process. If firms are going to value big personalities as much as work product, many women will not be able to compete.
But it is origination credit where the rubber hits the road. It is the biggest factor in determining compensation and promotions at most law firms, and it derives from being given the opportunities that will lead to having responsibilities for clients. If the work is for institutional clients, and a senior lawyer holds the origination, origination credit for both junior male and female lawyers can be a long time in coming. And significant origination credit is how a lawyer gets through the gate to equity partner, and that is where the money is.
Today, however, there is some sign of change in the air. That change is coming from clients, who want assurances of pay equity among their lawyers. And the number one new question from clients has to do with origination credit. That is progress, but if women are not among those at the firm making decisions on compensation and promotion matters, real change may be elusive. And because women lag far behind men in terms of firm management and leadership positions, there is arguably inherent bias on compensation committees.
It is clear that significant and lasting change needs to come from within. Law firms need to recognize that their processes have not been transparent to date, and they need to do something about it. Lack of transparency and taboos about discussing compensation render junior lawyers powerless.
Specifically, as the article discusses, law firms need to start auditing compensation decisions and looking for outliers. Formulas need to include more than just billable hours and receivables, and variables in billing rates need to become part of the evaluation. And law firms must be on the lookout for biases like those that favor “big law firm personalities” that hold women back. Not just women as a group, but individual women.
What is fair is fair. But it is complicated.