Gender and Partner Compensation at America's Largest Firms
44 Pages Posted: 20 Apr 2011 Last revised: 8 Feb 2013
Date Written: April 14, 2011
This study compiled the largest research sample on the gender gap in compensation at the 200 largest law firms by combining two large databases to examine the compensation disparities between men and women partners. The analysis elucidates the question of whether the difference is because women are less productive than men partners or because they are women. The Am Law 100 and 200 studies include gross revenue, profits, number of equity and non-equity partners, and the total number of lawyers at each firm. The Vault/MCCA Law Firm Diversity Programs study (Vault/MCCA) includes the gender ratios at each Am Law 200 firm. Our study covers the years 2002 through 2007, inclusive.
We find that the ratio of women equity partners to women non-equity partners is 2.546 compared to a ratio of 4.759 for their men counterparts over the six year period studied. An increase of 1% in the proportion of women partners at a law firm is associated with 1.112% lowering of the overall compensation for all partners at the firm. This disparity in compensation between women and men partners exists even after controlling for the lower compensation of non-equity partners and the greater likelihood for women to remain non-equity partners. Furthermore, women partners are paid less despite the fact that they are not less productive than men partners in generating revenue per lawyer (RPL) for their firms.
The average gross revenue of firms with the highest percentages of women lawyers was approximately $20 million dollars higher than firms with the lowest percentage of women lawyers, but the RPL of these firms dropped by approximately $120,000 per lawyer. The average compensation for the lawyers at a firm goes down as the proportion of women at a firm rises, indicating that women in all positions at a firm are paid less than their male counterparts. Nearly 80% of the Am Law 200 firms now utilize a two-tier structure of equity and non-equity partners. Firms are creating fewer equity partners and more non-equity partners. The development of two-tier partnerships, the lengthening of the time periods to make partner and equity partner, the reduction in the number of equity partners, the creation of new categories of permanent associates and permanent non-equity partners, the expanded number of permanent of counsel, and the demand for increased billable hours, have combined to increase income for a shrinking group of equity partners and to disadvantage women in large law firms.
Our paper examines the gender differences in law firm compensation primarily through an empirical lens. The results have important implications in the area of economic discrimination research. Our statistical analysis concludes that women partners average compensation is less than that of men at the Am Law 200 firms, regardless of whether they are equity partners or non-equity partners. This gender disparity cannot be explained by lower productivity of women partners. It is more appropriately attributed to discriminatory practices under both disparate treatment and disparate impact analyses.
Keywords: women, law firms, discrimination, sex discrimination, gender discrimination, partnership, statistics, corporate, economic inequality, employment, labor, empirical, empirical studies, law & economics, management
JEL Classification: K00, K10, K12, K19, K20, K22, K23, K30, K31, K39, K40, K42, K49
Suggested Citation: Suggested Citation