For the most part, women leaders in Indiana’s legal profession are not surprised that female attorneys earn less than their male counterparts. What does shock them is how much less they are making.
The 2016 Partner Compensation Survey by Major Lindsey & Africa found that, on average, male partners at law firms across the country earn $949,000 in compensation as compared to the $659,000 female partners earn on average. This creates a compensation gap of 44 percent.
“I’m not surprised there is a gap but I am surprised it is still that significant,” said Melissa Proffitt, managing partner of the Ice Miller LLP Indianapolis office.
The survey does not examine the causes for the disparity but attorneys speculated the gap may be linked to women bringing in less business or not getting credit for the business they bring; not getting the opportunities to handle higher-level work and more sophisticated clients; not promoting themselves; stepping off the partnership track to have children; or, perhaps, plain bias, whether intentional or unintentional, on the part of the firm.
However, attorneys noted firms are changing. The culture and mindset are adjusting, although slowly, to recruit and retain the best and brightest regardless of race, gender and ethnicity.
Firms that do not address the compensation gap are endangering their existence. As the baby-boom generation begins to retire, law offices will need lawyers to continue handling clients and managing the firm. But even now, law firms could lose business if they cannot meet the demands of corporate clients to be more diverse and inclusive.
Still, as Proffitt noted, the survey results are frustrating, especially since women have been lawyers for decades. They comprise close to 50 percent of law school classes and they are no longer just a few in the profession.
The report shows female partners were paid, on average, 30 percent less than male partners in 2016. The percentage is much the same as the 32 percent difference in 2012, but an increase from the 24 percent gap in the 2010 survey.
These results are similar to the findings of surveys from the National Association of Women Lawyers. In a direct comparison in 2015 of similarly situated female and male equity partners at the 200 largest U.S. firms, women earned a median 80 percent of what men made. Three years earlier, the same survey reported women were earning 89 percent.
“This kind of spread is inexcusable at this point in time,” Proffitt said.
Reviewing the MLA survey, Laurel Bellows, founding principal of the Bellows Law Group in Chicago, said some things, like rainmakers, may have skewed the results. Yet, having fought inequality in the legal profession for much of her career, including as chair of the American Bar Association’s Commission on Women and as president of the ABA, she is also frustrated by the compensation gap.
“I’m generally willing to be fair about this, but I’m tired of having conversations about inequality in pay and opportunity,” Bellows said.
Building a book of business
Many are noting the compensation disparity may be fueled by women bringing in less business to their firms. Compensation is based, in part, on originations. While women posted a 40 percent gain in originations according to the survey, they were still logging only 50 percent of what male partners reported.
At Teays River Investment LLC in Zionsville, associate general counsel Liz Larner said the origination disparity might be traced to women not getting equal opportunities. Women lawyers are not being invited to pitch to potential corporate clients. An old-school mentality may be forcing some women to build their book of business from scratch.
An initiative from the ABA Commission on Women is seeking to make sure women have chances to solicit business. The Power of the Purse program encourages general counsel to set expectations for their outside law firms that women lawyers be included.
Larner said she already tells her firms she wants a diverse group of attorneys working on her projects, but she conceded complying can be difficult. Outside firms may not have a deep pool of female and minority attorneys because often corporations will recruit these lawyers to work for their in-house legal departments.
Moreover, calculating who gets credit for new business can be difficult, especially if the client has been with the firm for years. The so-called first-touch system, where the attorney who connected first with the client gets credit for all future business, is losing favor.
Bingham Greenebaum Doll LLP uses a system that divides the origination, according to partner Sue Beesley. Basically, credit will be given to the attorney who originally brought the client in as well as to the lawyer who got new business from that same client. An objective review of the attorney’s billable hours, receipts and originations, among other things, are calculated to arrive at earnings total.
Beesley credits this methodology, in addition to having an executive committee rather than one or two partners reviewing performance, with creating a better compensation system. She noted when she believed she was not being adequately compensated, she compiled data, analyzed it and made a presentation to the leadership. Without using hard numbers, she doubts she would have been successful.
Ice Miller uses a subjective system for calculating compensation. Proffitt explained each year each partner is asked to evaluate colleagues, discussing their work and contributions. That feedback and other financial information is used to determine compensation and give annual feedback interviews to each partner.
Ice Miller has an “open compensation” system so partners know what each other makes. The method is transparent and greatly trusted by the partners, Proffitt said.
Looking at the survey results, Beesley believes the compensation gap may be linked to women simply being outnumbered. In general, there are fewer women partners and they are younger, so they would not be at the same level of work as male partners.
Beesley, who began practicing in 1980, pointed out that for a long time, women attorneys who had children would often have to step off the partner track. Law firms were not accommodating to working mothers, so women left firms and sometimes the legal profession.
Losing that talent forced firms to change. She noted her own firm recently adopted a policy that, in part, allows associates who work alternative schedules, such as women caring for young children, to remain on the partner track.
John Trimble, partner at Lewis Wagner LLP, and Ron Nye, managing partner of Major Lindsey & Africa’s Chicago office, both said law firms are helping diverse attorneys attain success. Firms are making sure young lawyers have opportunities as well as mentors to help them build their practices.
Nye said while the pace of change is not as fast as many would like, the hope is that by the next survey, the compensation gap will be much smaller.
Heather Wilson, member in charge of Frost Brown Todd LLC’s Indianapolis office, emphasized that female attorneys can help bring change by becoming more active in their firms. Women should seek out positions on executive and compensation committees and enlist men and women as mentors.
She pointed to her own experience. When she began as an associate at Locke Reynolds, she did not even consider moving into management until other attorneys encouraged her to take on leadership roles.
Now she is fostering women leaders in her firm by having members of the women’s initiative committee meet with the executive committee to discuss issues. But she is careful not to exclude men and, as an example, has placed two males on the women’s committee. She noted a team effort is needed to tackle disparity in law firms.
“I’m a big believer that in order to solve this problem, it can’t just be women solving it,” Wilson said. “Women have to get men interested in this issue.”•