ALM Intelligence, in collaboration with Calibrate Legal Inc., released a treasure trove of data this week on the careers of marketing professionals in the legal industry. The data, which is based on responses from more than 870 legal marketing and business development professionals, sheds light on issues related to compensation, career paths, and the level of contentment for professionals ranging from the very top of marketing and business development departments to the lower levels.
While the data can provide insight into a range of topics, the area that immediately stood out was the difference in compensation between men and women. The reason this stood out originates from the fact that the marketing and business development is one of the few areas within the legal industry where women outnumber men, especially in leadership roles. In fact, nearly 80 percent of the professionals in legal marketing departments are women. Seventy four percent of directors in marketing and business development departments are women and 69 percent of department heads are women. This stands in stark contrast to the low percentage of female senior lawyers at most law firms (see figure below).
Given the prevalence of women in legal marketing departments and their success in leading these functions at some of the largest firms, the hope was that the data would reveal a ray of sunshine in the legal diversity landscape. Perhaps women in marketing and business development roles earned the same (or more) as their male peers? Perhaps the data on legal marketing professionals could even provide evidence on how other parts of the law firm could perform better at reaching parity between men and women.
A Review of the Data
Alas, the data on compensation in marketing and business development roles did not reveal parity between men and women in terms of total compensation. Women in department leading roles earn less than their male counterparts, even after controlling for the size of firm (see figure below). At the largest firms, the gap between average compensation between men and women’s pay is over $100,000. What could explain such large differences?
The obvious question to ask when analyzing a finding of this kind is to question the role implicit bias or gender discrimination may have played in the pay gap. It is difficult to answer this question. Isolating the impact of bias or discrimination in pay is notoriously difficult. To do so rigorously requires significant detail on the past career and current responsibilities of each person in the survey. It also requires extremely large data sets. Doing this kind of analysis in a small field, such a legal marketing, would be difficult. That said, there is still much to learn from this data.
First, it is important to remember that not all department leading roles are created equal. The data shows that total compensation for “1st Chair” roles (i.e. department heads) ranges from $45,000 (for a firm of 25 lawyers) to over $1 million. Even within the Am Law 200, pay varies widely with the lowest 1st Chair earning $125,000.
The data shows there are a wide range of variables that can affect a department head’s pay. The size of the firm is by the far the most important. The average pay for a department head at a firm of 1,000 lawyers is over 3 times higher than at a firm with 100 lawyers. Profitability is also important. Firms with higher profit per lawyer and profit per equity partner tend to pay their marketing and business development professionals significantly more. While women work at all variety of law firms, they are disproportionality represented at smaller and less profitable firms. This is likely explaining some portion of the gender pay gap.
Another source of pay disparity is found in the differing career paths of men and women in the legal marketing profession. Department leading men have spent the same percentage of their career in marketing as women, suggesting both have similar levels of experience. Men have, however, spent far less time in legal marketing than their female counter parts (see figure below). It is possible this experience, outside of the law, has given men skills which law firm’s value. This, if true, could explain another portion of the pay gap between men and women.
Another key data point to consider is the fact that men, on average, have spent far less time at their current firm and in their current role than their female peers (see figure above). There is significant evidence, across a wide range of industries that professionals who change jobs more frequently tend to earn higher salaries. The explanation for this trend is fairly straightforward. Annual pay increases at most firms are modest, ranging from 2% to 5% on average. Increases in pay due to lateral or upward moves, connected to a job change, however can be significantly larger. The result is that professionals who hit the job market more frequently tend to be rewarded with more pay. Professionals who are loyal to their company on the other hand, earn less.
The lessons for legal marketing professionals from this data are fairly clear. More varied careers, with experience across multiple industries and multiple firms, seems to be valued by employers. The data also suggests legal marketing professionals should choose their firms carefully. Employers at larger, more profitable firms tend to pay more. A stint at one of these firms will yield marketing and business development professionals’ higher pay. It may also provide them with valuable skills which they may not be able to acquire at a smaller or mid-sized firm.
The takeaways for law firm leaders from this data are also clear. Women appear to be earning less than their male counterparts. This finding should give law firm leaders pause. Firms need to examine their compensation systems to ensure discrimination and bias are not impacting pay.
One of the known culprits in the gender pay gap within marketing and business development departments appears to be related to the tendency of women to change jobs on a less frequent basis. Law firm leaders should assess if paying job-hoppers more incentivizes the right behavior.
There is some value to hiring individuals with more varied experience. In the rapidly changing legal industry it may make sense to incentivize staff to change jobs more often so best practices can be spread more quickly throughout the industry. The caveat to this, however, is that it only makes sense if the firm leadership is open to executing on industry best practices. Constant job switching probably hinders this.
In a survey conducted earlier this year by ALM Legal Intelligence on the state of Marketing and Business Development functions within law firms, “Internal Politics” was cited as one of the biggest barriers to revenue growth for law firms. While this finding may be obvious to anyone who has worked in a law firm, it raises an important point. In partnerships, such as those found in law firms, new ideas cannot be implemented without selling them first. Success in law firm business services roles, such as marketing and business development, requires an understanding of the nuances of the partnership. Those who have worked in law firms know that relationships are the key to success. It is critical for department leaders to form strong relationships with both leaders and influencers within the firm. Incentivizing department leaders to be constantly keeping an eye on the job market will hinder these goals. Firms should find ways to incentive department leaders, and other key roles, to stay and grow with the firm.