April 28, 2010
Research Study Reports on Compensation Challenges Faced by Women Partners in Large Law Firms
WASHINGTON – Earlier today, Veta Richardson, Executive Director of the Minority Corporate Counsel Association, Inc. (MCCA), and Cynthia Calvert, Co-Director of the Project for Attorney Retention (PAR), discussed the findings of their new study titled: “A Survey of Women Partners on Law Firm Compensation” (Women Partners’ Compensation Survey). The results were unveiled by PAR and MCCA at the first Regional Summit for Women In-House Counsel convened in Philadelphia by Commission on Women in the Profession of the American Bar Association (Commission) and the Association of Corporate Counsel – Delaware Valley Chapter.
This first-of-its kind survey examined women partners’ experiences and perspectives regarding their law firms’ compensation processes and practices through survey data collected from almost 700 women law firm partners. More than two thirds of the survey respondents were women partners from law firms with more than 250 attorneys. The geographical footprint of the respondents’ law firms ranged from regional U.S. only (29%), to national U.S. (26%) to international firms (45%).
The research objectives were:
- Illuminate what women partners have to say about compensation practices at their law firms and how these practices impact their advancement and compensation rates.
- Identify the challenges women partners are facing with compensation and inheriting clients.
- Develop recommendations for “best practices” to overcome these challenges.
The findings reveal that more than 92% of respondents reported that revenue generation is the key factor for promotion to equity partner, especially in the forms of:
- Billable amounts collected (98%)
- Billable hours worked (94%)
- New client origination (91%)
- Client cross-selling or client matter expansion (81%)
- “Billing partner” status (68%)
- Work binding client to firm (63%).
The survey results also indicate a combination of subjective and objective assessment factors influence compensation at the majority of firms. Most firms have a “point or levels” system and revenue generation is a key factor to move up in points or levels. Most firms annually re-evaluate the points/levels allocation among partners. However, compensation decisions are most influenced by the following sectors of firm leadership:
- Management or Executive Committees
- Compensation Committees
- Managing Partner, Chairman or President
Women were severely underrepresented in each of these groups. In compensation committees alone, few white women were members and minority women were largely absent from these key committees and positions. When surveyed as to how someone gets a seat on the compensation committee, respondents reported several methods, but the surprising news is that a good number of women had no idea how such positions are doled out:
- Elected by partnership (29%)
- Appointed by Chairman, Managing Partner or Equivalent (28%)
- Combination of elected and appointed (14%)
- Did not know how one gets a seat (7%)
Approximately half of the respondents said that at their firms the “originator“ is always paid on work he/she or others bill to the client that he/she opened. However, more than half (55%) of respondents reported being occasionally or frequently denied their fair share of origination points. When origination points are disputed, there is no clear, objective way that such disputes are settled. It was reported that these disputes are resolved between the partners in most firms, but at some the Compensation Committee decides. And at some firms, one cannot appeal compensation decisions; the partner with the dispute must simply live with the decision. Some alarming news was the high percentage of women (almost 30%) who reported having been subjected to intimidation, threats or bullying to back down from origination point disagreements with their male partners. An even higher percentage of women partners (39%) reported being dissatisfied with how such disputes are resolved at their firms.
Aside from having to fight for a fair share of origination credit or points, another compensation challenge faced by women partners is who gets to choose who inherits key clients when partners retire. In this case as well, women partners have found themselves shut out and in most firms, it did not appear that corporate clients were given much say about who succeeds a retiring partner to become their new key engagement partner. In fact, when queried as to how the successor is chosen, respondents reported:
- The current/retiring partner selects his/her successor to the clients (30%)
- There is no consistent approach (32%)
- Don’t know how the new engagement partner is chosen (16%)
- Firm management chooses the new engagement partner (6%)
- There is no objective selection process (2%)
- The clients choose the next engagement partner (2%)
All these challenges affect partners’ compensation, and PAR, MCCA and the Commission are working to develop recommended “best practices” for the law firms and corporate clients to empower women partners to get their fair share of compensation for work done for corporate clients.
Founded in 1997, the Minority Corporate Counsel Association advocates for the expanded hiring, promotion, and retention of minority attorneys in corporate legal departments and the law firms that serve them. MCCA furthers its mission by publishing research on achieving diversity and best practices in the legal profession, honoring innovative diversity programs with its Employer of Choice and Thomas L. Sager awards, and assisting diverse law students through the Lloyd M. Johnson, Jr. Scholarship Program. MCCA’s diversity work has been recognized with awards from the National Minority Business Council, Inc., the U.S. Equal Employment Opportunity Commission, the National Gay and Lesbian Law Association, and the Association of Corporate Counsel. MCCA is headquartered in Washington, D.C. For more information, go to mcca.com
The Project for Attorney Retention, a nonprofit organization that studies the advancement of women lawyers and work/life issues for all lawyers, is an initiative of the Center for Work Life Law at the University of California Hastings College of the Law (formerly the Program on Gender, Work and Family at American University College of Law). Founded in 2000, PAR is headquartered at UC Hastings College of Law. Its co-directors are Joan C. Williams, distinguished professor of law at Hastings, and Cynthia Thomas Calvert, a former law firm litigation partner.
ABA Commission on Women in the Profession
The Commission was created in August 1987 to assess the status of women in the legal profession, identify barriers to advancement and recommend to the ABA action to address problems identified. Based in Chicago, the commission is comprised of 12 members appointed by the ABA President. Its mission is to secure the full and equal participation of women in the ABA, the legal profession, and the justice system. For more information, go the Commission’s website http://www.abanet.org/women/.