It is well known that women partners are paid less than their male counterparts—average female equity partner comp is 78% of that of men, per the 2018 Major, Lindsey & Africa (MLA) Partner Compensation Survey.
It’s also well known that typical practice metrics of women partners are lower than those of men—for example, and again from the 2018 MLA survey, average originations, billing rates, and billed hours of women equity partners are 63%, 95%, and 97%, respectively, of those of men. To assess gender equity in comp, we have to ask whether these differences in practice metrics account fully for the relative under compensation of women.
Analysis: Tenure Affects Compensation Differences
To this end, I looked at 4,266 partner compensation data points from the biennial MLA Partner Compensation Survey datasets of 2012 through 2018. Junior and senior partners (less and more than 10 years as a partner, respectively) were examined separately in each survey year using a “multiple regression” analysis.
This technique relates the comp of individual partners to a set of underlying variables for each partner and determines the weightings of the variables that in aggregate provide the best fit to the data for all partners.
The variables used include both practice metrics (originations, billable hours, and billing rate) and category variables (male vs. female; open vs. closed comp system, i.e. do partners see what each other earn; and, lateral hire vs. home grown). The results differ by tenure:
- Junior partners: The all-else-equal effect of being female ranges from minus-2% to plus-1% across the survey years, indicating there is no meaningful gender-based difference in comp.
- Senior partners: the all-else-equal effect of being female accounted for a 6% discount in compensation in each of the last three survey years.
It’s perhaps surprising that the female discount is evident for senior but not for junior partners. One possible explanation: younger women are being treated more equitably than preceding generations because younger partners are breaking down the gender differences within firms, between firms and clients, and societally?
The results of the analysis are at odds with what both women and men believe. Fully 70% of women believe women partners are paid less than men for equivalent contributions, and 94% of these women believe the discount is greater than 10%. In contrast, only 9% of male partners believe there is any gap at all.
How can the data and the separate perspectives of women and men be so at odds? One part of the answer may have to do with how originations, a major driver of comp, are recorded. If men are garnering more credit than women for the same role in originating work, a distinct possibility given gender differences in how people seek recognition, then the analysis would understate the under-compensation of women.
Another piece may have to do with how humans respond to paucity of information. Firm management has discussed the possibility of a gender pay gap with partners at less than a quarter of firms, thus leaving a vacuum of information. When so widespread a concern goes unaddressed so broadly, its presumed scale magnifies.
The prospects for the gender gap among senior partners closing without deliberate intervention are not especially strong. The strongest growth in comp over the survey years has been in the senior male partner cohort: average comp of senior men has risen by $320K, compared with an increase of $130K for junior men and of $160K and $100K for junior and senior women, respectively.
The growth of comp for senior men is above that explained by practice metrics alone. If comp growth of senior men continues above that attributable to their practice growth, then not only will the comp gap with senior women persist but, also, today’s gender parity among junior partners will be made more fragile.
I suspect that many partners will read this and dismiss it as not pertaining to them or to their firm. I’d encourage consideration of two counter points. First: it’s pretty clear the industry has a bias; your firm is in the industry; thus, you would do well to protect yourself against evidencing such a bias. Second, perceptions are facts. If a supermajority of women partners believes there is an issue then, de facto, there is an issue.
What Are the Action Implications?
Let’s start with individual partners, particularly senior partners. They can encourage the group of partners with whom they work the most to develop their own protocol for sharing origination credit through, for example, establishing norms of percentages for finders and executors, standardizing a third-party review of allocations, and setting up pre-defined ramp-downs of allocations to partners who originally forged the client relationship but now are little involved.
Senior partners, both men and women, can counsel women partners they perceive as demurring on securing their fair allocation of credit on how they can do otherwise. Where they see gender discrepancies, they can encourage women to raise their billing rates and to record all their hours.
There are action implications too for leadership teams. The classic firm-level action is to add more women to management and compensation committees. This is good internal PR, is unlikely to do harm, but may not do much to address the possibility of bias directly—research shows that when women constitute about 20% of a decision-making body (the typical percent female of a law firm partnership), they speak only about 60% as much as men, are perceived as more quiescent and less effective, are more likely to be interrupted, and are less likely to advocate strongly for their positions. (See, for example, The Silent Sex: Gender, Deliberations and Institutions, by Christopher F. Karpowitz and Tali Mendelberg).
Thus, it’s useful to supplement such steps. Looking hard at the male vs. female numbers through the whole process can be valuable, perhaps performing a multiple regression analysis as described here. Also, it would focus attention meaningfully if comp committees published to all partners certain summary metrics, e.g. average originations, billed hours, billing rates, and compensation for women and men partners in different tenure ranges.
In advance of each year’s cycle, comp committees could sit down with a group of senior women partners to review the prior year’s distribution, looking to identify areas for particular attention going forward. Peer working groups for women partners (of all tenures) on how to ensure they are raising their rates, recording their hours, and securing accurate origination credit can also be of help, but only if they are sustained over time as the benefits of one-off interventions evanesce rapidly.
A closing thought: if yours is a firm that has no gender bias in comp, then there is a huge opportunity for you in hiring senior women partners away from other firms. Pursuing this aggressively will benefit the dynamism of your firm in the medium term, and the gender equity of the profession in the long term.
Hugh A. Simons is formerly a senior partner and executive committee member at the Boston Consulting Group and chief operating officer and policy committee member at Ropes & Gray. Early-retired, he now writes about the business of law as a hobby and does some consulting for old friends. A fuller paper on this topic, “The Gender Pay Gap: Feelings, Facts, And Implications—The lay-of-the-land, and a roadmap for firm leaders, comp committees, and partners,” is available on MLAGlobal.com.