Pay Inequality in BigLaw Firms

Wage Gap in the Legal Field

The legal field is supposed to be predicated on justice, equality, and law abiding. While the legal industry should set the standard for respecting laws and providing fair treatment for employees and clients, this is not always the case.  Reports regarding cases in which law firms neglect to follow federal and state laws or allow discriminatory behavior to occur in the workplace tend to surprise many people. One area that law firms are particularly deficient in is that of pay equality. Studies as well as an abundance of recent court cases have shown that firms, particularly those in the BigLaw classification, consistently neglect to compensate their female employees equally in comparison to their male counterparts.

According to a survey conducted in 2016, male partners on average earned salaries that were 44% higher than those of female partners. The average salary of male partners in 2016 was $949,000, while females earned $656,000. Further, an article in the ABA journal states that women make up only 15% of the total amount of equity partners in law firms nationwide, meaning that 85% of these equity partners are men. This gap is typically not explainable by a difference in education or experience, and has also widened as the number of female equity partners has barely increased in recent years. A report produced by the American Bar Association contends that because compensation drives behavior, fair and equitable payment practices bear incredible importance to the success of a firm. An employee’s compensation influences their sense of self worth and how valuable they feel to their employer and therefore discriminatory pay practices are inherently damaging to both employees and their workplace. As part of an effort to increase transparency and lessen the gap in salaries, the United Kingdom has adopted a law that forces all employers with a certain amount of employees to publicly release the differences in pay between men and women. As many of the large law firms in the United Kingdom also have strong presences in the United States, the data that has been released can be used to infer the extent of these issues in our country as well. DLA Piper, for example, reported that men at the company earn 17.8% more than women on average. Norton Rose reported a similar percentage. Weil Gotshal & Manges, on the other hand, even when they removed those in secretarial roles, reported an average gender pay gap of 24.95%.

There are several possible explanatory reasons for why females are paid significantly less than their male counterparts in this field. For one, they are often billed at lower rates than men. Women are also more likely to practice in less lucrative areas of law, such as employment law and family law, while areas such as banking law and commercial litigation tend to be male dominated. However, these explanations do not account for the entire difference in pay that female attorneys experience. A primary reason behind the gap is that women struggle to gain access to powerful leaders in a firm who control the determination of things like allocation of work, compensation rates and origination credit. Other barriers to pay equity include biased expectations and behaviors, both implicit and explicit, as well as complex systems of origination, and a lack of transparency in the compensation system.

Alongside these emerging statistics, a string of lawsuits filed by former partners of BigLaw firms against their employers has served to reveal the extent to which women across the country are experiencing gender discrimination, particularly regarding their pay. Several of the largest, most well known law firms who supposedly champion justice and equality have been confronted with formal complaints against their own inequity and unlawful policies.

LeClairRyan (January 2016)

 One of the first major gender discrimination lawsuits filed against a BigLaw firm by a partner was the case of Michele Burke Craddock v. LeClairRyan. Craddock claimed that she had experienced systemic pay discrimination based on her gender while employed as a partner of the firm LeClairRyan. According to Craddock, she worked the same hours and generated as much or more revenue in comparison to the firm’s top male attorneys, yet was paid half of what they received. The compensation decisions that led to the inequity occurred in private, non disclosed deals by a committee made up of entirely men that always favored male attorneys. Firm executives consistently assigned greater undue origination credit and work referrals to male partners while neglecting female partners on the basis of sex. To defend their compensation decisions, the firm made claims such as that male attorneys’ needed to support their families, but the committee never provided the same support to female breadwinners. Ms. Craddock was the only female business litigation shareholder in her office, and only 19% of the firm’s shareholders were female. Unfortunately, this case ended in a non disclosed arbitration settlement due to an arbitration agreement contained in an unsigned employment contract.

Sedgwick (July 2016)

Sedgwick was once one of the most well known firms in the United States, but has dissolved this year because of an inability to compete with larger firms in the country. In 2016, it joined the group of firms facing gender discrimination lawsuits when non-equity partner Tracy Ribeiro sued for unequal pay practices. Despite producing the third-highest amount of revenue for the firm, Ribeiro consistently was overlooked for equity partnership. Instead, the firm promoted several male attorneys to equity partnership who had produced less than 10% of Ribeiro’s revenues. She claims that this is because the firm maintains a male-dominated culture that excludes women from leadership positions. According to Ribeiro’s complaint, no women serve on the firm’s compensation committee that makes salary and promotion recommendations, and that the all-male executive committee maintains a closed compensation system and makes decisions based on discriminatory characteristics. To add insult to injury, after Ribeiro complained about the discrimination occurring against women in the firm, another firm partner allegedly suggested to a room of 60 partners that the firm dock Ribeiro’s pay to teach her “how to behave”. Such outrageous behavior should be unheard of in the legal field, but occurs all too often among the BigLaw firms. Ribeiro’s lawsuit was settled confidentially following her complaints.

Chadbourne & Parke (August 2016)

 One of the most well known gender discrimination lawsuits against a BigLaw firm is the case of Campbell v. Chadbourne & Parke, filed in 2016. It gained prominence as a result of the high settlement sum that the firm must now pay to three former female employees who had been impacted by Chadbourne’s discriminatory practices. According to an article in Bloomberg Businessweek, during her employment at Chadbourne & Parke, Kerrie Campbell was paid significantly less than her male counterparts. On average, partners at the firm were paid $1 million per year, but Campbell was paid nearly a third of that sum while male partners who had produced similar revenue to Campbell were paid close to or exceeding the average. In order to justify the difference in pay, firms such as Chadbourne claim that they take into account subjective factors such as teamwork and how helpful a partner is to their coworkers. In this way, firms can explain the disparity in vague terms to avoid admitting their practices are discriminatory. After Campbell complained about this unlawful treatment, she was essentially forced to resign to avoid impending termination. These discriminatory actions landed Chadbourne with a $3 million settlement bill in March 2018. This settlement awarded Campbell $1 million, with two additional female employees earning $250,000 and $750,000, and the last $1 million went to attorneys fees. The sizable price tag of this case should serve to teach BigLaw firms to quickly reform their discriminatory compensation practices, or else be prepared to pay up.

Proskauer Rose, LLP (May 2017)

One beneficial impact of the emergence of gender discrimination lawsuits is their ability to encourage other victims to step forward to address their mistreatment. One such victim, though choosing to proceed anonymously, filed a complaint in May 2017 against the well known Proskauer Rose law firm. According to an article in Above the Law, ‘Jane Doe’ claimed that the compensation she received while employed as a partner at Proskauer Rose was significantly lower than that of her male counterparts. For example, in 2016, the firm agreed to pay a new male partner 65% more than Doe, even though his originations were only 63% of Doe’s; and this was not an isolated occurrence. Though ranked 6th in the firm for billable hours and 18th in originations, she was still only the 32nd highest paid partner. She additionally stated that the firm’s highest paid male partners earn more than double that of the highest paid female partners. When Doe complained about the pay disparity, Proskauer Rose retaliated against her by reprimanding her for complaining, restricting her from interacting with clients and coworkers, and barring her from firm meetings and retreats. This retaliatory treatment has led Jane Doe to file anonymously in fear of further retaliation. The lawsuit was dropped in August, 2018, for undisclosed reasons.

Steptoe & Johnson, LLP (June 2017)

Not long after Jane Doe filed her complaint against Proskauer Rose, attorney Ji-In Houck filed a similar suit against the firm Steptoe & Johnson. Since her original hire date in 2013, Houck had been improperly compensated, first as a contract attorney (while she completed the work of a Steptoe partner) and second on the basis of gender discrimination. While male attorneys who passed the bar the same year as Houck earned $165,000 per year on average, Houck was only paid $85,000 for completing the same level of work. Her complaints of the unequal compensation fell on deaf ears, and she rarely received responses to her requests for appropriate pay adjustments. According to her complaint, only 19% of the partners at Steptoe are women, which is lower than the national average, and these female attorneys are typically paid less than their male counterparts. Furthermore, Steptoe’s managing partners are all men, and the compensation committee which decides how much each attorney earns is made up of a majority of men. This type of male dominated leadership is all too common among BigLaw firms, and is a central contributor to their unlawful compensation practices. Houck dropped her case shortly after the Supreme Court decision on the cases NLRB v. Murphy Oil USAEpic Systems v. Lewisand Ernst & Young v. Morris were released in May, 2018. Their decision upholds the legality of arbitration agreements in class action suits, ensuring that Houck would have to settle her case in arbitration with Steptoe & Johnson.

Ogletree Deakins (January 2018)

A more recent case in the string of lawsuits addressing the gender pay gap in the legal field could be worth nearly $300 million according to an article published in Bloomberg in January. Earlier this year, attorney Dawn Knepper filed a complaint against the firm Ogletree Deakins claiming that she had been unlawfully compensated in comparison to her male counterparts since she first started at the firm. For example, her original salary was $100,000 less than a male partner who had similar seniority and fewer billable hours and originations. Similar to Steptoe and Johnson, Ogletree’s leadership is male dominated and systematically marginalizes women, demonstrated by the fact that 80% of its equity partners are men. Following the pattern of the above referenced firms, according to Knepper’s Complaint, Ogletree’s compensation committee, board of directors, and firm officers are all predominantly male. Furthermore, women are consistently overlooked for leadership positions, such that while 58% of associates are women, they only make up 32% of its shareholders. Aside from her compensation, Knepper was also denied business opportunities, opportunities to attend conferences and to speak at seminars on the basis of her gender and her complaint of pay discrimination. This further demonstrates the discriminatory practices and systemic gender disparity that exists in law firms like Ogletree. While Ogletree frequently represents victims of gender discrimination in cases of unequal pay, they very rarely practice what they preach in following lawful equal pay policies within their own firm. As Knepper’s case is relatively recent, it has yet to reach its settlement phase.

How the Legal Field can Address this Issue

 After witnessing the damaging consequences of compensation discrimination, the legal field is left wondering how to address this issue in order to avoid lawsuits while ensuring greater gender equality. A task force in conjunction with the American Bar Association released a “Road Map” to help law firms address the gender pay gap in their own institutions. They recommend several practices that will help to put a stop to the harmful compensation trends, such as recommendations that firms (1) increase transparency in their compensation process, (2) require diverse members of the committees that control this process, (3) develop fair systems to determine billing and origination credit, (4) reward behavior that promotes equity and sustainability, (5) measure and report their gender pay gap, and (6) institute task forces to ensure issues like this do not persist. If you feel that you’ve fallen victim to pay discrimination as a partner or employee of a law firm, it is also important to contact an experienced attorney, as addressing the unlawful pay practices in court is essential in forcing law firms to change their discriminatory practices. It will be a long road towards equity for some of these BigLaw firms, but as the ABA Road Map states, “Justice not only includes what we seek for our clients, but it also includes equal access to opportunities to succeed in our own workplaces”.