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Corporate Counsel Connect collection

June 2014 edition

Inequality everywhere: Can corporate counsel help bridge the gap in billing disparity between male & female outside counsel?

Karen Deuschle, Corporate Counsel Connect Editorial

Silvia HodgesEquality and justice are bedrocks of the U.S. legal system, but one doesn't have to look far to find injustices among law practitioners themselves. The new study released by Sky Analytics shows a gap on the most basic level, male versus female, when it comes to a subject near and dear to most lawyer attorneys' hearts: billing rates. Corporate Counsel Connect spoke with the author behind the study, Dr. Silvia Hodges Silverstein, to discuss the findings, any surprises, and the role corporate counsel can take in helping the profession work towards equality.

But why?

"We see pay inequality everywhere," explains Silvia, "including our own industry. Female lawyers make significantly less than her male colleagues." How much less? "The ABA pegs women's pay at 89% of men's compensation," shares Silvia.

The question Silvia and her team wanted to answer was "but why?" "We were wondering whether it was her career choices that caused her to earn less money. Was she not striving hard enough to want to make partner? Not ‘leaning in' enough?" Silvia queries. Sky Analytics, a leading legal spend analytics software firm, started tracking diversity measurements several years ago at the request of corporate clients interested in encouraging diversity in their law firm partners. With $3.4 billion dollars of legal spend data to mine for information, they had an excellent quantitative base to start from.

Disadvantaged from day one

"It is known in the market that the pay gap starts right out of law school and continues as women advance in their careers," states Silvia, but "what surprised us was that difference in hourly billing rates also starts early in their careers." The data shows that even in large, international firms that the average hourly billed rate of a female associate ($377) is $27 less per hour than her male colleague's rate ($404).

As time goes on, women are not able to make up this gap. "We found that with additional years of experience his hourly rates go up, but not so much on hers. Male lawyers get rewarded for the additional years, while her hourly rates rise only moderately, if at all," shares Silvia. This difference can be found in all firms, but in particular large (500-999 attorneys) and very large firms (1000+ attorneys). The exception is very small, mostly local firms, where neither sex see a significant rise in rates over the years.

This is all despite the fact that women work 24 minutes more per day and match men on efficiency per matter, working virtually the identical number of hours per matter. When asked why this severe difference remains over the years, she speculates, "Hourly rates are often tied to a lawyer's status in the firm and depend on whether she heads a practice area or sits on the firm's executive committee. I have heard people explaining it also by attributing it to the ways law firms evaluate, reward, and promote partners."

Different opportunities

As part of the legal spend data that was being tracked, Silvia was able to access which tasks were primarily "male" and "female." This helps explain some of the pay differences. "We found that he and she do not perform the same work," Silvia explains. "Female jobs" include tasks typically thought of as entry level, such as word processing, fact investigation, depositions, and "other;" while "male jobs" were analysis/strategy, discovery/on-site inspections, operations, and hosting costs. Comments Silvia, "So firms should be aware of how they staff matters. Do they give women the same opportunities as men?"

Women also tend to be staffed on smaller matters. States Silvia, "Seven percent of large matters are staffed with female-heavy teams, that is, with more than 50 percent of team members are women. However, women make up more than 50 percent of timekeepers on 81 percent of small cases." While large matters aren't necessarily the bet-the-company type works, and small matters are not necessarily unimportant, this is again a place where firms need to mind the make-up of their teams. Asks Silvia, "Are women given the same exposure to important matters as men?"

"In addition, her time gets discounted substantially more often than his," explains Silvia. While male associates bill through 74% of the time and male partners will through 69% of the time, female partners only have 63% of their invoices flow through without discounts. Silvia simply states, "The legal industry needs to look at this." When queried what can be done to reverse this trend, Silvia feels it may lay in the law firm itself to offer "better internal mentors who help young females to focus on what's important to the client. These mentors also need to stand up for them, defending their work as important, so that it doesn't get discounted so fast."

What corporate counsel can do

What can corporate legal departments do to chip away at this inequality? The in-house profession's response to the lack of racial and ethnic minorities in the profession offers a blue print. Corporate legal departments successfully led the charge in advocating for the promotion and retention of minority attorneys at law firms; accordingly, they are well situated to help address and remedy the billing rate inequality experienced by female attorneys they retain as outside counsel. "Corporations vote with their money," states Silvia. If diversity and equality is important for your organization, look for firms who have a significant number of female partners and females in the executive committees. "Choose those firms who treat women well," says Silvia.

Watching your legal spend data should give you a great view into if your law firms treat all their employees equally. "Legal spend management data today gives both law firms and legal departments the ability to look at data, analyze it, draw conclusions, and use it for decision-making," says Silvia. By taking the time to understand the data behind your legal spend, she explains, "you can help shape people's behavior, and thus everybody's future."

View the Sky Analytics Gender Billing Study

What do you think? Do you see this inequality in your law firms? What about corporate counsel – what are the pay disparities there? Tweet us at @Westlaw_GC or contact us via e-mail to share.

About Silvia and Sky Analytics

As Vice President, Strategic Market Development, Dr. Silvia Hodges Silverstein helps corporate counsel employ the power of data to control legal spend and become more efficient. She uses research to generate novel insights and practical recommendations for clients. A former in-house counsel, she has the unique opportunity to connect research experience in the legal industry with her in-house knowledge. She earned her Ph.D. at Nottingham Law School (UK) and holds a master's degree in business from Universität Bayreuth (Germany) and Warwick Business School (UK) as well as an undergraduate degree in economics from Universität Bayreuth (Germany). She is a fellow of the College of Law Practice Management.

Sky Analytics is the leader in legal spend management software. They analyze corporate legal invoices to give companies greater transparency into their legal spend and to benchmark their rates and matters against their peers. Their legal spend management platform is the only one that does not require a lengthy implementation or e-billing integration.

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