Gender Pay Disparity In the Legal Profession: Trends and Developments

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1 Gender Pay Disparity In the Legal Profession: Trends and Developments

2 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

3 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.

4 Current Population Survey Data What is Missing? Legal occupations Women earn 62.8% pay earned by men Lawyers Women earn 83.2% of pay earned by men Judges, Judicial Clerks, Paralegals, Other Legal Support Insufficient data to run separately Paralegals & Miscellaneous Legal Support no data for men

5 Changes in the Pay Equity Landscape The Legal Landscape Is Changing Rapidly The Wage Gap is being addressed in numerous ways Agency Action Shareholder Proposals Salary History Bans Advocacy Action State Law Changes Political Pressure

6 Importance of Starting Salary Decisions Starting salary is typically the most important pay decision Start Low/Stay Low phenomenon

7 Long-Term Effect of Starting Pay Year Female Hire $ Female Merit Increase Male Hire $ Male Merit Increase Difference 1996 $40, % $47, % $ (7,000.00) 1997 $41, % $48, % $ (7,045.00) 1998 $43, % $50, % $ (7,083.58) 1999 $44, % $52, % $ (7,115.18) 2000 $46, % $53, % $ (7,139.24) 2001 $48, % $55, % $ (7,155.14) 2002 $50, % $57, % $ (7,162.24) 2003 $52, % $59, % $ (7,159.85) 2004 $54, % $61, % $ (7,147.26) 2005 $56, % $64, % $ (7,123.70) 2006 $59, % $66, % $ (7,088.37) 2007 $61, % $68, % $ (7,040.41) 2008 $64, % $71, % $ (6,978.94) 2009 $66, % $73, % $ (6,902.99) 2010 $69, % $76, % $ (6,811.58) 2011 $72, % $78, % $ (6,703.65) 2012 $74, % $81, % $ (6,578.09) 2013 $77, % $84, % $ (6,433.73) 2014 $81, % $87, % $ (6,269.33) 2015 $84, % $90, % $ (6,083.59) 2016 $87, % $93, % $ (5,875.15) Total $(143,897.05)

8 Recent Litigation Legal Industry 700+ Firm Lawsuit brought by equity partner Settled in mid-august Firm Class action suit brought by nonequity partner Settled in May Firm Class action brought by junior associate Sent for arbitration in June Firm Lawsuit brought by equity partner Settled in March Firm Class action brought by nonequity shareholder Filed in May ,400+ Firm Class action brought by equity partner Filed in June 2018

9 Pay Equity Considerations In the Legal Industry Law Firms Individual timekeeper statistics Credit Allocation system Subjective Factors, such as Good Firm citizen Reputation Quality of Work Mentoring Roles Leadership Roles 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.

10 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