The National Association of Women Lawyers in the U.S. has been tracking how women do in American law firms for the past 7 years, and their newest report was just released. Here it is.
Here’s some findings:
Women comprise only about 15% of equity partners and 26% of non-equity partners, even though 46% of law firm associates are women.
Among equity partners, women make about 89% of men.
The gap in medium compensation of male and female equity partners cannot be explained by differences in billable hours, total hours, or books of business.
Women are vastly underrepresented on the powerful governance committees that make key firm decisions: they hold only 20% of the positions on those committees. Only 4% of law firms have female managing partners.
Seventy percent of in-house counsel jobs are held by women.
These stats are comparable to some of the things we know about women in Canadian law firms. The best work on the subject in Canada is done by Fiona Kay of Queens University. I recommend her work if you are interested in the subject. Her studies confirm a persistent earnings gap of women and men law partners, and provides explanations of why that might be. Here is one of her survey pieces.
Responses to Gender Issues in Private Practice
The usual response to gender pay and committee gap at Canadian law firms is either to do nothing, or to ‘study’ the problem. Governments leave the issue to the governing law bodies to deal with, or not deal with, as the case may be. Many people in the legal profession feel that there is in fact no problem at all, and that women earn less, are partners less, and sit on management committees less because they contribute less to the firm, are less committed, and less willing to work the hours necessary to excel in law firm culture. However, the fact that virtually every provincial law society in Canada is studying the ‘problem’ of how women are treated in private practice suggests that the governing bodies do not accept that explanation.
The responses by law societies represent the weakest form of ‘self-regulation’. The mechanisms are unaccountable, lack any arms-length monitoring systems or any sanctions. Law firms are usually asked to attend meetings, to share stories, and sometimes even to compile statistics. But because there is not real commitment to change at the management level of law firms, where power resides, law societies have promised to keep all that information a big secret. The public doesn’t learn what is happening, and more importantly, women lawyers and law students aren’t able to access relevant information about how women are treated at different firms, information which could influence their career choices. What can we really expect these sorts of insular self-governance systems to achieve?
For example, the latest initiative by the Law Society of Upper Canada is called the Retention of Women initiative and Justicia Project. These initiatives are very good at producing glossly reports, holding lots of meetings, and allowing law firms to brag how they support the retention of women project. The Justicia Project website claims boldly:
Each of the participating Ontario firms have signed written commitments to achieve ambitious goals in four core areas: tracking gender demographics, flexible work arrangements, networking and business development and mentoring and leadership skills development for women.
This is all very nice. I love the ‘written commitment’ part. Reminds me of the old Charlie Brown scene in which Lucy tricks Charlie into trying to kick the football, again, by giving him a ‘signed document’ that says she will not pull the ball away this time. It’s written and signed, therefore, it must be the case.
I study governance and regulatory theory in my academic job. The issue of women partner’s compensation and absence on key management committees is a complex governance challenge, because there are a lot of factors that play into the phenominum, some legitimate, some less so. In these situations, a good starting point is to encourage institutional learning, and to deploy market forces and risk to steer behaviour corrections.
This is a Situation Crying Out for Mandatory Information Disclosure
How could this be done? By requiring public disclosure of key gender relevant information. I suggested this back in 2008, when the Retention of Women program started. Unbelievably, no one listened to me (Although, I did recieve a call from another provincial law society, which was interested in the idea). To recap, the proposal is to require all law firms with say more than 20 lawyers to collect, and then publish on a Law Society managed website the following information:
1. The gender composition of major management committees, including the Management Committee and Compensation Committee.
2. A breakdown of compensation levels by percentile by gender for associates and partners.
Can anyone truly claim that this information is not relevant to women lawyers in their job search? Yet the ‘market’ does not produce it. This is a classsic situation calling for mandatory information disclosure to address market information asymetries. A top female law student or associate won’t likely want to work for a firm where women can’t succeed, so she will apply to firms that look the best in these statistics. A mandatory information disclosure rule is market-correcting (for all you neo-cons out there). Plus, by requiring firms to collect this information, the rule would cause institutional learning–firms will need to learn how women fair compared to men, and compared to the situation at other competing firms. Firms where women fair the worst will no doubt be concerned for their image and we can expect them to take steps to ‘perform’ better in next year’s publication.
It’s a fairly simple rule. In fact, the Retention of Women initative sort of requires this already, only participation is voluntary and the numbers are kept secret. Why? Put those numbers out into the market, and let women choose which firms they want to work for. Pull back the curtains, and let all those women who control the distribution of work to law firms decide if they want to send their files to law firms where women meet less of glass ceiling. Then we might start to see law firms pay attention to gender, since failing to do so could mean losing work and losing top female lawyers. Plus, its a rule/law that would cost firms nothing to implement, since it is information that is readily available that would just need formating.
Of course, what stops a proposal like this from being introduced is resistance from the law firms themselves. That means a disclosure rule would need to be introduced against the wishes of the most powerful actors in the field. It’s in these situations that the limitations of allowing professions to govern themselves become apparent.
Do you think that mandatory information disclosure targeting gender in law firms would alter the behaviour of female lawyers, customers of legal services, and law firms? Why or why not?
Is my proposal silly and unlikely to achieve anything? Why or why not?