The Gender Compensation Gap

There is a commonly held myth that the gender gap in partner compensation is due to women billing fewer hours and spending less time on client development due to their greater responsibilities at home. This myth has been exploded in a recent study [PDF] published by The Project For Attorney Retention and sponsored by the ABA Commission for Women in the Profession.

Amongst other findings, the report states that factors that work against women partners include the lack of women on compensation committees where bonuses and compensation criteria are set; the lack of transparency around compensation criteria; the lack of credit for contributing to the firm’s success through mentoring, associate recruitment or training and finally, intimidation around disputes over originating credit. All of these issues are exacerbated by the lack of any appeal mechanism in firms where the decisions of the compensation committee could be questioned or clarified.

A woman partner I know, once told me that when she moved from one national firm to another, she was amazed that the partner brought in to replace her was hired at a compensation level $200,000 higher than the firm had been paying her. When she asked one of her former partners how the firm could justify this when the new partner was the same level of call, brought few clients with him and had almost identical experience in this area of law, she was told this was what he had demanded in order to accept the offer. It was a painful lesson as she had changed law firms to gain an increase in compensation that turned out to be less than her replacement negotiated for her old position.

This story demonstrates another common reason that women (and not just women lawyers) are paid less than men – they fail to negotiate a high enough salary when they start out in practice or when they switch firms. This gap widens in the US from an annual average gap of $2000 between male and female associates to a gender gap of $66,000 at the equity partnership level. When a woman’s starting salary is lower than the equivalent man, she is operating from a lower base and may never catch up.

While women lawyers are as aggressive as their male counterparts when negotiating on behalf of their clients, they are often reluctant to take a firm negotiation stance when acting on their own behalf. In “Women Don’t Ask” by Linda Babcock and Sara Laschever, the authors cite many reasons for this including a reluctance to jeopardize personal relationships. Instead, women ask indirectly or ask for less than what they want in order to foster greater harmony. Women also often assume that by working harder they will be appropriately rewarded without having to ask. Few men make this mistake.

There is also a gender bias working against women who negotiate aggressively on their own behalf. Women may be seen as pushy, overly ambitious or too competitive. This reaction can work against them causing women to look for indirect and less effective ways to achieve compensation parity that will not harm their relationships with their peers.

It is not just in compensation negotiations where women can be reluctant to ask for what they want. Women will protect personal relationships at home by not asking for more help with domestic tasks or at work by not asking for any accommodation that may open them to criticism.

Some years ago when I was practicing in-house as a senior legal executive, I needed greater flexibility around my work arrangements in order to manage both my young children and my increased job responsibilities. I agonized for months about asking the CEO whether I could work from home one day a week as I assumed the answer would be “no” and I would be seen as less committed than my colleagues. He surprised me by immediately saying that if it worked for me, it worked for him. He also said that I should have asked for this sooner. He thought by the tension in my appearance prior to the meeting that I was going to quit and was relieved that I was just seeking greater flexibility around my job.

The lesson in all of this is that women have to ask for what they want and not assume that they will not get it. Law firms need to recognize that one of the reasons for higher female attrition is frustration around the widening compensation gap.

The ultimate power in any organization sits with those who control the purse strings and hand out the rewards. Law firms must include women on the powerful compensation committee (and need more than one token women who may lack sufficient power to change the committee’s decisions.) Similarly, management committees must hear from both their male and female partners about what criteria should be used to determine a partner’s value to the firm. It is only when both female and male partners feel equally valued and rewarded that law firms will keep their best talent regardless of gender.