Law Firms Less Willing to Promote Women to Equity Partner

By Melissa J. Anderson (New York City)

According to a new report by The National Law Journal, despite years of hard work on behalf of some law firms to attract and retain female lawyers through networking and mentoring initiatives, the percentage of female partners at the US’s largest law firms is still only 18.8%. When it comes to equity partnerships, women are an even smaller minority: 15.1%.

But, even considering the small numbers, as Vivia Chen points out for the Journal, that’s still an improvement. She writes:

“That’s progress since 2003, when NLJ affiliate The American Lawyer compiled similar data, though the pace of change has been slow and tenuous. The overall percentage of women in equity and nonequity partner positions then was 16 percent. As for equity partners, the National Association of Women Lawyers said in a 2011 report that women have been ‘fixed’ at 15 percent of the equity slots for the past 20 years.”

Nevertheless, an increase of two or three percentage points for women in partnership roles hardly yields a number even close to representative of the number of women in the profession – and that’s not just true today, but has been true for many years.

In fact, Catalyst data published this month shows that for over two decades, the percentage of women enrolled in law school has hovered between 40% and 50%, a significantly higher percentage than that of women in any partnership role, let alone equity partnership roles. Why do we see such a striking disparity? The answers aren’t easy – and point to a vicious cycle keeping women out of leadership.

Equity Partnership

The Journal’s report is based on an analysis of its NLJ 250 Survey, which compares the largest firms in the US by the size of their workforces. According to the report, the largest firms on the list tend to have more female equity partners than smaller ones. And firms in which partners pull in the most money also tend to have more female equity partners. Chen writes, “Of 18 firms with profits per partner exceeding $2 million, 11 have equity partnerships that include more than 15 percent women. Three in that group have more than 20 percent: Paul Weiss ($3.095 million); Willkie Farr ($2.145 million); and Davis Polk ($2.3 million).”

As the Wall Street Journal’s Chelsea Phipps explains, “Equity partners are part owners of their firm and share in its profits, while non-equity partners are salaried, without an ownership stake and they do not share in the firm’s profits.”

The National Law Journal’s Sara Randazzo writes that challenges in building a book of business may be holding women back from equity partnership, quoting one lawyer who suggests that – in addition to women being less comfortable pitching business – male lawyers frequently get more favorable introductions and assignments.

This is similar to findings in the National Association of Women Lawyers’ extensive survey by Barbara M. Flom and Stephanie A. Sharf published last year. They write:

“Another possible inference from the data is that the firm’s top rainmakers, who are almost all men, are more apt to protect a ‘bookless’ male colleague than a female colleague. In addition, the general correspondence between the percentage of women having $500,000 book of business and their proportionate share of equity partner positions might be read to suggest that the lack of rainmaking credit explains why women continue to represent such a small proportion of a firm’s equity partnership.”

Flom and Sharf’s insight reflects the need for greater sponsorship of junior female lawyers by senior female and male rainmakers. Currently, it seems, male lawyers are taking an interest in male associates, and are less likely to offer lucrative introductions and plum assignments to the women they haven’t gotten to know as well.

Multi-Tier System

The Journal’s other key finding is consistent with the NAWL report. Women tend to do better when there is only one partnership track at a firm.

In firms with equity and non-equity partnership tracks, women are disproportionately represented in non-equity roles. “According to our research, women make up 17.6 percent of the equity partners in single-tier firms, but only 14.7 percent in those with two tiers,” Chen writes.

The NAWL report adds the layer that women make up a hugely disproportionate amount (80%) of “fixed-income equity partners,” or partners who are considered “equity” but do not share in the profits of the firm. This enables firms to count these women as equity partners, but these women’s profits do not count toward the “profits per partner” calculations that law firms like to tout.

Since women tend to have slimmer books of business than men (for then reasons outlined above) the “profits per partner” numbers are boosted, and so are partnership diversity stats, Flom and Sharf say.

Finally, this same practice prevents women from being as likely to eventually reach top-tier equity partnership levels. “Consistent with the problem of women generating and receiving credit for business, lawyers who are fixed-income equity partners may not be viewed as generating sufficient business to warrant full equity status, or as having sufficient portable business to threaten a lateral move.”

The practice is a Catch-22, in which women don’t receive credit for generating business because they’re not in a top tier equity partnership level, yet they can’t get into this top tier, because they’re not receiving credit for the business they’re generating. The final result is a scarcity of top-level female lawyers, which influences the career prospects of junior female lawyers as well.

“To the detriment of private firms, today’s scarcity of senior-level women lawyers is likely to result in a continuing scarcity of senior law firm members in the years to come unless firms proactively and aggressively change their policies and practices for retaining and promoting women lawyers,” NAWL explains.