Gender Pay Disparity In the Legal Profession: Trends and - - PowerPoint PPT Presentation

Gender Pay Disparity In the Legal Profession: Trends and Developments

Pay Equity - Overview

The Wage Gap – Defined Changes In the Pay Equity Landscape Starting Salary Bans Tougher State Laws Pay Equity Implications in the Legal Industry Law Firm Compensation

• Median Wage Gap
• Pay Gap v. Adjusted Pay Gap
• Overview
• Importance of Starting Pay
• Jurisdictional Issues
• Comparison Groups
• Explanatory Variables
• Recent Litigation Against Law Firms
• Impact of Pay Equity Trends in the Legal Industry
• Current State
• Best Practices

The “Wage Gap” Defined

Gender Pay Gap: ratio of female-to-male median or average (depending on the source) yearly earnings among full-time, year-round workers.

• Women earned 82% of the median usual weekly

earnings of male (FT salary workers. Source BLS Report 8/2018)

There are two distinct numbers regarding the pay gap:

• Unadjusted pay gap.
• Adjusted pay gap. Takes into account certain differences

that are key to understanding pay including hours worked, occupation, education and job experience.

Current Population Survey Data – What is Missing?

• Women earn 62.8% pay earned by men

Legal occupations

• Women earn 83.2% of pay earned by men

Lawyers

• Insufficient data to run separately
• Paralegals & Miscellaneous Legal Support – no data for

men

Judges, Judicial Clerks, Paralegals, Other Legal Support

Changes in the Pay Equity Landscape

Advocacy Action Political Pressure State Law Changes Salary History Bans Agency Action Shareholder Proposals

The Legal Landscape Is Changing Rapidly The “Wage Gap” is being addressed in numerous ways

Importance of Starting Salary Decisions

Starting salary is typically the most important pay decision

• “Start Low/Stay Low”

phenomenon

Long-Term Effect of Starting Pay

Year Female Hire $ Female Merit Increase Male Hire $ Male Merit Increase Difference 1996 $40,000.00 4.00% $47,000.00 3.50% $ (7,000.00) 1997 $41,600.00 4.00% $48,645.00 3.50% $ (7,045.00) 1998 $43,264.00 4.00% $50,347.58 3.50% $ (7,083.58) 1999 $44,994.56 4.00% $52,109.74 3.50% $ (7,115.18) 2000 $46,794.34 4.00% $53,933.58 3.50% $ (7,139.24) 2001 $48,666.12 4.00% $55,821.26 3.50% $ (7,155.14) 2002 $50,612.76 4.00% $57,775.00 3.50% $ (7,162.24) 2003 $52,637.27 4.00% $59,797.13 3.50% $ (7,159.85) 2004 $54,742.76 4.00% $61,890.02 3.50% $ (7,147.26) 2005 $56,932.47 4.00% $64,056.18 3.50% $ (7,123.70) 2006 $59,209.77 4.00% $66,298.14 3.50% $ (7,088.37) 2007 $61,578.16 4.00% $68,618.58 3.50% $ (7,040.41) 2008 $64,041.29 4.00% $71,020.23 3.50% $ (6,978.94) 2009 $66,602.94 4.00% $73,505.93 3.50% $ (6,902.99) 2010 $69,267.06 4.00% $76,078.64 3.50% $ (6,811.58) 2011 $72,037.74 4.00% $78,741.40 3.50% $ (6,703.65) 2012 $74,919.25 4.00% $81,497.34 3.50% $ (6,578.09) 2013 $77,916.02 4.00% $84,349.75 3.50% $ (6,433.73) 2014 $81,032.66 4.00% $87,301.99 3.50% $ (6,269.33) 2015 $84,273.97 4.00% $90,357.56 3.50% $ (6,083.59) 2016 $87,644.93 4.00% $93,520.08 3.50% $ (5,875.15) Total $(143,897.05)

Recent Litigation – Legal Industry

700+ Firm Lawsuit brought by equity partner Settled in mid-August 2018 375+ Firm Class action suit brought by non- equity partner Settled in May 2017 300+ Firm Class action brought by junior associate Sent for arbitration in June 2018 400+ Firm Lawsuit brought by equity partner Settled in March 2018 800+ Firm Class action brought by non- equity shareholder Filed in May 2018 2,400+ Firm Class action brought by equity partner Filed in June 2018

Pay Equity Considerations In the Legal Industry

• Individual timekeeper

statistics

• Credit Allocation system
• Subjective Factors, such as
• Good Firm citizen
• Reputation
• Quality of Work
• Mentoring Roles
• Leadership Roles

Law Firms In-House

• Often tied to prior

compensation

• Similar to “traditional”

compensation structures (salary bands, career level)

• Less variability in pay as

compared to law firms

• Especially in bonus
• Different drivers.

Overview of ABA Study and Recommendations

2013 Study: Closing the Gap – Road Map for Achieving Gender Pay Equity in Law Firm Partner Compensation, Lauren Stiller Rikleen

• 1. Build Transparency Into the Compensation Process
• 2. Include a Critical Mass of Diverse Members on Compensation Committee
• 3. Develop Systems to Promote Fair and Accurate Allocation of Billing and

Origination Credit

• 4. Require Diversity in Pitch Teams and Related Business Development Efforts and

ensure Diverse Lawyers are part of the Client Team

• 5. Reward Behaviors that Promote Institutional Sustainability
• 6. Implement Formal Client Succession Protocols
• 7. Measure and Report Results
• 8. Develop a Process to Resolve Allocation Disputes Promptly and Fairly
• 9. Implement Training for All Involved in the Evaluation and Compensation

Process

• 10. Engage the Client’s Role in Gender Equity
• 11. Implement System to Ensure Equitable Compensation for Partners on Reduced

Hours Schedule

• 12. Maximize the Effectiveness of Affinity Groups