Last summer, I wrote two pieces about the lack of gender equality in the profession generally and big law in particular. These were based on an ABA Survey, which summarized several recent trends of the profession in such areas as diversity, women, legal education, technology, and more. It was not a pretty picture. (My first piece summarized the findings, the second responded to some criticisms of my interpretations of the Survey’s findings).

 

A recent Survey by Burford Capital conducted by Ari Kaplan Advisors, confirms the startling gap between men and women law firm compensation, especially at the partner level. This gap translates pretty directly into a lack of power of women within the law firm. And a lack of power translates into an inability to change the conditions that cause it.

 

Here are some important statistics cited by Burford in the preface to its Survey:

 

*93% of law firms say their most highly compensated partner is male. [i]

 

*Most firms have no women among the top 10 most highly compensated partners.[ii]

 

*Male partner out-earn female partners by 53%, 80% of female partners report lower average compensation.[iii]

 

*80% of equity partners in large law firms are male.[iv]

 

Why, after all these years, where so many associates going to work for law firms for so many years, do we still see such disparity at the partner level?

 

So why is this? Why, after all these years, where so many associates going to work for law firms for so many years, do we still see such disparity at the partner level?

 

Compensation in law firms depends heavily on the origination of business. Most big firms track origination credits scrupulously, as they should. Law firms make money by individual lawyers bringing in business and clients. So, the more business a lawyer brings in, the more valuable he or she is. This translates pretty directly to compensation. In most firms, those with the biggest origination credits get paid the most. And in most law firms, those who get paid the most have the most power. They are most often found on the Management Committees that make the rules.

And while origination may seem straightforward, it’s often not. The award of origination credits is often based on a Byzantine set of firm rules that favors tradition and those with big books of business. Many firms, for example, award origination credit for the life of the originator. So no matter what happens, the person first getting the credit keeps it. Irrespective of whether the originator keeps working on the matter or even has any responsibility for it. And in some firms the award of origination credit includes credit for any future matters coming from the client regardless of the circumstances or who brings it in.

 

Why are origination credits so important to a lawyer?  You get credit for fees paid not only for the work you actually do, but also for some percentage of the work done by others one the file or for the client. If the fees are substantial-say north of $1 million, this can amount to a very large credit.

 

It is a system that favors the status quo and those with big origination credits which is by and large white males. And who makes the rules: the people on the Management Committees. The same people who, by the way, often have the largest origination credits and a vested interest in the status quo.

 

Granted, many firms have subjective systems where a compensation Committee decides compensation. This Committee could conceivably look behind the numbers and compensate others. But the attorney-client relationship is an intimate one. Most comp committees will not nose around into the relationship a partner has with a client. It would be unseemly and intrusive to the client and the partner. Having little other bases to go on, they fall back on the origination credit as the most important factor. And, of course, many members of the comp committees are those with large origination credits.

 

But you might say: women have the same opportunity to get business as men, right? Wrong. The Burford Study cites studies that report 67% of women have experienced a lack of access to business development opportunities because of gender.[v] Other studies cited by Burford show that most women report they are perceived as being less committed than men and that domestic and caregiving commitments create bias against them.

 

So things remain the same: depriving women and minorities of the ability to grab the brass ring. Depriving women and minorities with a chance to change the rules. Placing ceilings on their ability to reach the higher compensation levels afforded men, limiting women’s’ options.

 

But there is a solution. If law firm clients genuinely have an interest in diversity and gender equality among their lawyers, they could demand change. They could demand that origination be awarded differently. They could demand that women and diverse candidates share. This change could shift the balance of power and get better representation for the client.

 

52% of GCs and senior in-house lawyers are entirely unaware of how origination credits are awarded within their law firms. Another 26% say they are sometimes aware; only 17% always take the time to be informed

 

But are they doing it? According to Burford Survey, 52% of GCs and senior in-house lawyers are entirely unaware of how origination credits are awarded within their law firms. Another 26% say they are sometimes aware; only 17% always take the time to be informed. Only 36% of in-house counsel think law firms need to improve how they handle origination credits to enhance gender equality. That’s not terribly surprising. 80% of those surveyed don’t even have a formal policy that their law firms meet any gender-based diversity requirements.

 

But in-house clients will tell you getting involved in origination credits isn’t easy. Firms are very reluctant to have a client nose into their business. They argue with some justification they should be free to run their business as they want based on their own goals and objectives. (Most big firms will proudly proclaim their commitment to diversity, by the way).

 

And if the account is not large enough, a law firm might just terminate the representation altogether if a client gets too nosy. Finally, there is the common problem that firms could say one thing and always do another. This problem could place a woman and diverse lawyer in a ticklish spot. What if the client asks the lawyer if they are getting credit? Do they tell the client they are not getting the credit and jeopardize their career with the firm for blabbing secrets? Most clients really don’t want to get involved in these kinds of issues.

 

Law firms are vendors. Businesses place requirements on their vendors all the time. It’s up to the clients to step to the plate if we want to see equality.

 

Most businesses profess a commitment to diversity. But if they are being genuine, that commitment by itself has not achieved parity. It probably won’t unless the economic balance of power shifts. Clients control the business. They own the business. They can and do make demands about how their business should be staffed. How it should be managed. They can also make demands about how the lawyers working on that business should be rewarded through origination credits. Law firms are vendors. Businesses place requirements on their vendors all the time. It’s up to the clients to step to the plate if we want to see equality.

 

Clients should care about origination awards for a practical reason as well. If a good lawyer is handling matters competently and isn’t correctly rewarded, that lawyer’s desire and interest to work with the client may very well wane over time. Good lawyers have opportunities; a client has a vested interest in making sure the opportunity of doing the client’s work is a good one.

 

Clients hold the power of the purse. If they want diversity, they can demand change. Will they? How committed are we as a profession to gender equality?

 

Photo Attribution:

 

Photo by Kiana Bosman on Unsplash

 

[i] Destiny Peery, 2019 NAWL Annual Survey on the promotion and retention of women in law firms, National Association of Women Lawyers (May2019)

[ii] Ibid.

[iii] Jeffery A. Lowe, 2018 partner compensation survey, Major Lindsey & Africa (December 6, 2018)

[iv] Ibid.

[v] Roberta Lienbenberg and Stephanie Schaaf, Walking out the Door, The Facts, Figures and Future of Experienced Lawyers in Private Practice, ALM Intelligence and the American Bar Association (November 27, 2019)

 

 

Amidst all the reports of downturns in the legal business with firms cutting pay and furloughing staff, there are bright spots.

I recently talked with Kristin Tyler, one of the founders of LAWCLERK, and one of the more astute observers of the innovation and legal tech scene. She had lots of good news about LAWCLERK. She also had some interesting observations of where legal may be going–a subject that seems to be on many pundits’ minds these days. It’s always good to hear, though, from someone actually in the business.

 

 

Continue Reading For Some in the Legal Community, Business Is Good

When I was a young lawyer learning how to try cases, s senior partner would always tell me: start every case by developing a chronology. What he meant was you can always better understand the case and see things you might otherwise miss if you look at the timing of the underlying facts.

 

My mentor’s advice was sound, at least in simple cases. The problem was that, especially in complicated cases, the chronology or timeline–which in those days was always done on paper—quickly became so long and complicated. As the case progressed, it tended to collapse of its own weight. To make it usable, you had to either put everything on the timeline or risk putting too little on it. Either way, you risked making it incomprehensible or irrelevant. Trying to use it in the courtroom (or anyplace else for that matter) was difficult. As a result, I gradually moved away from and forgot about the value of timelines.

 

Continue Reading THE DIGITAL TIMELINE: NOT JUST A TIMELINE

Opus 2, which has been offering a semi-virtual integrated hearing and trial platform internationally, is now poised to also video capability, enabling completely virtual trials and hearings to take place seamlessly.

 

No doubt, the Coronavirus pandemic has changed the face of how lawyers work at least for now. Whether it will permanently probably depends on how long we are locked down. It hinges on the future willingness of lawyers and, more importantly, clients to pay for the expense and time associated with working in a non-virtual manner. Let’s face it, a lot of costs are incurred getting to and from meetings, hearings, and trials. As lawyers, we bill lots of hours waiting around courtrooms.

 

Continue Reading The Future of Courtroom Litigation

Curses, like chickens, come home to roost.” – Susanna Moodie, Life in Canada, 1852

 

Like many of you, I have watched our world and my world change and plunge into chaos. I set a goal this year to write one blog post per week. Coronavirus blew a big hole in that goal.

 

Continue Reading Coronavirus: A Lesson in Technological Competency for Law Firms

As I have mentioned before, one barrier to law firm innovation is the failure of clients to demand it. If a new OpenText survey is any indication, though, that may be changing.

 

OpenText is an enterprise information management (EIM) business. Among other things, it offers a variety of eDiscovery tools to law firms and companies. It recently released the results of a third annual survey directed at the eDiscovery practices of large corporations.

 

Continue Reading OpenText Survey Reveals Clients Are Taking Control

And you still can hear me singing
To the people who don’t listen
To the things that I am saying
Praying someone’s gonna hear
And I guess I’ll die explaining how
The things that they complain about
Are things they could be changing
Hoping someone’s gonna care

Kris Kristofferson, To Beat the Devil

Is the legal world really changing, or are we all still just talking about change?

 

Last week, for the first time in a couple of years, I attended the ABA TechShow in Chicago. It’s one of my favorite legal tech shows. Since its geared more toward smaller firms and solo lawyers, there is less high-power selling like, say at LegalWeek. This creates space for more substantive discussions and learning from vendors. That was certainly the case this year. The show featured multiple substantive tracks, over 2000 attendees, countless exhibitors, a start-up competition, and even a silent disco.

Continue Reading The Legal Innovation Glass: Half Empty Or Half Full?

Level 2 Legal Solutions, which calls itself a legal services company, today announced the formation of new Compliance and Privacy Practice Areas. These practice areas, according to Level 2 Legal, are specifically geared towards corporate counsel and law firm needs.

 

That in and of itself might not necesarily sound like big news, especially since Level 2 Legal has been in this space for a while. But what Level 2 Legal is doing is, in fact, a good lesson in disruption, innovation, and how to compete in today’s changing legal marketplace.

Continue Reading Level 2 Legal: Defining The Business You’re In

Bob Ambrogi and I have a running dispute. He says I was the first one to ask whether it might be malpractice to not use legal data analytics in today’s litigation world. I say he was the first one to ask that very legitimate question.

 

But it really doesn’t matter who first coined the question. Recent results from the third annual Legal Analytics Survey by LexisNexis suggests if the answer is not already yes, it’s getting darn close to it.

Continue Reading Is It Malpractice To Not Use Legal Analytics?

I just returned home after four days in New York City for LegalWeek2020. LegalWeek is one of the biggest and most well-known legal tech conferences more info. While there are other conferences, LegalWeek is more eDiscovery and vendor orientated. CLOC, for example, focuses more on substantive issues surrounding legal ops. ABA’s TechShow is designed to get basic information to a broad audience.

 

LegalWeek is geared more toward larger commercial law firms. It’s the tech show for the AmLaw 200. Yes, there is good substantive programming, but  it’s also the opportunity for tech vendors to sell their wares to big law. Plenty of sales meetings, plenty of parties, plenty of marketing speak. It’s appropriate that’s in held in New York where everything is big, expensive and the hustle is always on.

 

Continue Reading LegalWeek 2020: 5 Impressions of a Lawyer Turned Blogger