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Article

The Wage Gap Puzzle in the Legal Profession: Why Women Lawyers Still Earn Less Than Men & What Can Be Done About It

iStock_000001988124XSmall_1_.jpgby Anna T. Collins, Esq. (Portland, Maine)

When President Obama signed the Lilly Ledbetter Fair Pay Act on January 29, 2009, critics declared the new law a pain for employers and a boon for trial lawyers. Now that it is easier for plaintiffs to file wage claims when they earn less than their counterparts, the naysayers exclaim, trial lawyers will take advantage of the new law by filing frivolous claims. Ironically, lawyers may not be merely the busy enforcers of this new law. What if they are the plaintiffs? The wage gap, after all, remains a curious reality in the legal profession.

The reality is striking at all levels of the legal profession, but especially at the equity partner level. After a 2008 survey, the National Association of Women Lawyers found that on average, women earn $7,000 less in annual pay than men at the associate level, $14,000 less if they are of-counsel, $23,000 less at the non-equity partner level, and $87,000 less if they are equity partners. In essence, women lawyers find themselves with an even shorter end of the stick as they advance further in their careers.

Paying attention to the wage gaps for lawyers is useful because of the unique nature of the profession. First, the legal profession has experienced increased female participation for the last 30 years. Before 1970, few women entered the profession. Today, women make up more than 40% of law school enrollment and represent about a quarter of the legal profession. In addition, employers are well aware that the advanced training women receive in law school is in no way different from that received by men. Due to such transparency, gender discrimination should be minimal – at least theoretically.

Yet, stories of inequitable wages are prevalent. Laurie Smith,* a lawyer with over a decade of experience, recalls how a male lawyer was made partner in her firm a few years ago while she found herself being assigned less valuable cases following the birth of her second child. Both associates had an equivalent level of experience, but Laurie noticed a decline in meaningful assignments shortly after the birth of her first child. As she found herself working more efficiently than her male colleague, her productivity actually became less valuable to the firm due to her decreased billable hours. By the time Laurie was pregnant with her second child, the firm had bolstered the male attorney’s experience with more client interaction and responsibility.

Through it all, Laurie had never requested the less valuable assignments or exclusion from key networking pportunities. Somehow, she says, “the writing was on the wall” that she was not a valuable part of the team. When her male colleague was made partner, Laurie decided to make a lateral move to another firm, where she started anew. While she has no idea how much more her male colleague earned, she realizes that the lateral move placed her at a financial disadvantage in comparison to her former male colleague, who is now partner.

Laurie’s experience follows a pattern recognized by Stacy Miller Azcarate, a former attorney and founder of the legal recruiting firm Miller Sabino & Lee, Inc. in San Francisco. Stacy believes the lockstep pay structure for associates found in large firms makes the wage gap narrow early on in lawyers’ careers. When asked to explain the $7,000 wage gap at the associate level despite the lockstep pay, Stacy points to discretionary bonus policies as a possible culprit.

The gap becomes easier to see, Stacy believes, once women associates have been practicing for about 5-6 years or more and if additional obligations outside the office come into play. Sometime after that point, women are more likely to find themselves with increased care-giving responsibilities either due to child bearing or other family considerations. “In our society,” Stacy explains “the bulk of family obligations unfortunately still fall primarily on the shoulders of women.” As women work reduced hours or take time off, the wage gap becomes more palpable. Interestingly, determining the cause of the wage gap becomes more difficult outside the lockstep associate compensation system especially if a firm has a closed senior compensation policy and discretionary bonuses, which many firms do. “This is where things get a bit fuzzy” Stacy says. After all, some believe women like Laurie are unfairly squeezed into less valuable roles. Yet others argue women’s personal choices are the issue and the wage gap is a “feminist myth.”

Myth or no myth, some believe the reality of what women lawyers are experiencing must be recognized. Pat Gillette, an employment law expert and partner at Orrick in San Francisco, believes two issues are at play. First, studies show that women negotiate differently from men and this may be a disadvantage for some women as they end up with smaller books of business in comparison to their male colleagues. “Women need to learn,” Pat shares “how to let go of their tendency to say that money is not important to them.” Pat believes women lawyers end up bargaining against themselves, accepting less valuable assignments and responsibilities based on false assumptions that the firm will recognize their unique skills.

Pat also believes the structure of law firms is part of the picture. The majority of law firms determine compensation based upon a formula related to business generation. At the partner level, Pat insists, the wage gap is thus more about women’s smaller books of business. The solution according to Pat is further education of women and re-structuring of compensation systems. “It’s time,” Pat explains “that we change how we think about billable hours, partners, and lockstep pay.”

As founder of the Opt-In Project, a nationwide initiative focused on changing the structure of law firms to increase the retention and advancement of women in the workplace, Pat has become a catalyst of such change. Even in her own firm, she is working with the others in her firm to develop programs that give women more opportunities to succeed. “Women tend to do their work more efficiently,” Pat explains “so a system that recognizes the quality of their work rather than whether they bill more than anyone else makes more sense.”

While education of women and structural changes within law firms is likely to address part of the wage gap, a big puzzle remains. Research shows a persisting large gap between men and women law school graduates’ salaries, both before and after controlling for sex differences in human capital. In other words, if one controls for work hours, labor force interruptions, and part-time work experiences, the wage gap remains. In fact, sex differences in labor supply (work hours, years worked, part-time work experience, labor force interruptions), account for only about half of the male/female lawyer earnings gap.

Pat Gillette believes the remaining gap may be due in part to “men’s unconscious bias of wanting to be with people that look like them.” She also believes some men feel uncomfortable mentoring younger women, which may require extensive out-of-office travel or interaction. “They worry how that looks,” she explains. In addition, Pat believes there is still a bit of a “1950s mentality” that women will be less committed to the legal profession if they are married and have children. “So, some men decide it’s a waste of time to mentor those women,” she explains “why waste time, they think, if she won’t come back or stick around.”

Ed Poll, a former attorney and law firm management consultant who runs LawBiz, based in Venice, California, confirms that men in power believe there is a “lack of certainty that women will stay with the firm or profession because of family desires/needs.” He adds that men believe that women who return to the profession after family-related absences are no longer at the same level as their original colleagues. Lastly, “men are viewed as the more active rainmakers.”

The good news is that Pat and Ed both agree that change is in the air. Ed believes that “persistence and continued shedding of light on the issue” will narrow the gap over time. Pat similarly believes that a generational shift is occurring, as women lawyers are becoming more educated about the wage gap and as firms become more aware that their compensation schemes are being scrutinized.

Pat actually believes that the shifting economy will inspire a more collaborative leadership style in firms as clients demand more value for their buck. This will increase the value of efficiency over billable hours, strongly motivating the necessary structural changes that will eventually put women on top.

While Ed agrees that women will find themselves in more positions of power over time, he remains skeptical. “I find it interesting,” he shares “that the newly powerful women don’t alter the system all that much. Just because they’re women doesn’t make them more willing to change the dynamics of the law firm practice.” Perhaps this is why education, such as that provided by Pat’s Opt-In Project, is likely to be the key to the puzzle.

*The name of the woman attorney who spoke in regards to this article has been changed.