Gender Pay Gap and Changing Organizational Structures

gender pay gapAnother Women’s History Month has passed with little fanfare and no significant milestones to celebrate. Certainly not when it comes to the gender pay gap. In March, in honor of Women’s History Month, the Census Bureau released new wage data. Once again, among full-time, year-round civilian workers across all occupations, women were reported as earning 78.8 cents to every dollar earned by men.

Gender Pay Gap Varies by Occupations

The new data, compiled by the 2013 American Community Survey, organized the 2010 census data by occupation, including the legal occupations. Here, a startling number reflects the pay gap between men and women: 52.6 percent. You read that correctly, women in the legal profession only earn 52.6 cents to the 2013-adjusted dollar of men. This was the most significant gender gap of all occupations surveyed.
Looking deeper into the line item, however, I noticed that the “legal occupations” category included not only lawyers, but also judges, magistrates, law clerks and support staff. Is the legal profession truly only halfway to pay equality? Further analysis is needed beyond this cryptic data.

There is no shortage of studies documenting the pay gap between male and female lawyers. This includes yearly studies since 2006 of the AmLaw 200 conducted by the NAWL Foundation, the national longitudinal After the JD studies by the American Bar Foundation, the American Bar Association’s Gender Equity Task Force and numerous state studies.

An especially informative paper is Navigating the Gap: Reflections on 20 Years Researching Gender Disparities in the Legal Profession, in which professors Joyce Sterling and Nancy Reichman explain their work following a 1994 study of the Denver legal community that showed that, even controlling for the amount of time practicing law, women earned 59 cents to the dollar earned by men working full-time.

In conducting a subsequent 2000 survey, Sterling and Reichman expected to see at least some narrowing of the gender gap in earnings. Instead, although the overall gap had improved by one percent since 1994 (women earned 60 cents to the men’s dollar) they “were surprised to discover that the gap had, in fact, increased in some sectors of legal practice and the gap increased for women with more years of experience.” And Colorado lawyers were not unique in reporting this gap.

Gender Pay Gap And New Partnership Structures

A fascinating thread in the Gordian knot of the lawyer gender pay gap, and the related retention and promotion problems, is the fact that law firm structures have changed over the years of these longitudinal studies. This makes “apples to apples” comparisons difficult. The new structures also make it more difficult to navigate the rungs of the ladder for advancement.

Back in the 1980s, when I started practicing law, most of the law firms followed the one-tier structure of “associates” and “partners” based on the “Cravath model.” The criterion for promotion to partner was generally clear: tenure. According to the annual NAWL Surveys, one-tier firms consistently have more female equity partners. In the 2014 Survey, the one-tier partnership firms reported 22% women equity partners and the two-tier firms reported 17% of its equity partners as women.

Researchers note the correlation between women becoming more numerous in the profession, and the introduction of tiers of partnership. The requirements for advancing to equity- from non-equity or income partner are more nebulous than pure tenure. Then more complexities emerged including “of counsel,” “staff attorney,” and “contract attorney” positions, which usually involve no prospect of advancement.

According to NAWL’s 2011 Survey of AmLaw 200 Firms, another type of hybrid partner status emerged, the “income equity partner.” This type of partner makes a capital contribution to the firm but does not have the same voting rights as equity partners and receives most of her compensation in the form of a fixed annual salary and/or a performance bonus.

In a related phenomenon affecting how equity partnerships increasingly are formed, the NAWL studies note that many firms now rely more heavily on lateral partner hiring rather than promoting from within. And firms hire more male lateral partners than female, meaning that the gender is likely to stay predominantly male.

Structuring Decision-Making by Gender

Along with the various new firm structures has come new structures of decision-making. Rather than decisions about promotion and compensation being decided by a partnership vote, they are often delegated to committees. The committees tend to determine that the profits should be shared with the biggest producers regardless of tenure and experience.

However, NAWL and other studies show that when two or more women are included in decision-making committees determining compensation, the typical compensation for female equity partners is roughly comparable to that of male equity partners.

Some of the takeaways from the research must include a recognition that, as Sterling and Reichman note in their article, “it’s the structures of legal practice and not just the attitude of practitioners that create bias.” Perhaps research should focus on the organizational and management structure of law practices rather than on the defensiveness-inducing biases of individual lawyers.

Transparency, Unfortunately, Remains Elusive

And we need good data. Unfortunately, in the 2014 NAWL study, the authors noted that the “large majority of firms will not report data about compensation of their men and women lawyers—and we believe that is because the gender pay gap found in so many past studies continues to be substantial.” We certainly can’t change what we can’t observe. Transparency would be helpful.

The existence of bias and divisiveness in our profession is concerning to us at the Illinois Supreme Court Commission on Professionalism. Our mandate includes promoting increased diversity and inclusion. To this end, the Commission recently has established a committee of commissioners to develop and implement diversity initiatives. It is an important undertaking, and we look forward to working on solutions.

 

 

The Commission’s intern Jessica Saltiel contributed to this post.

Share this:

Jayne Reardon
As a prior trial lawyer, Jayne leads lawyers to embrace the transformative possibilities of future law practice. As a prior disciplinary counsel, Jayne is passionate about promoting the core values of the legal profession. She is a graduate of the University of Michigan Law School and the University of Notre Dame. Jayne lives in Park Ridge, Illinois with her husband and those of her four children who are not otherwise living in college towns and beyond.
Jayne Reardon

Leave a Reply

Your email address will not be published. Required fields are marked *