This year, for the first time, businesses in the U.K.—including a number of U.S.-based and global law firms—must disclose pay disparities between their male and female employees. Some law firms are even releasing details about the pay gap among their U.K. partners, going above and beyond the regulatory requirements in the name of transparency and social progress.
But anyone expecting that spirit of transparency to cross the Atlantic, in the form of firmwide or U.S. pay gap disclosures, may be in for a long wait.
Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, all businesses with 250 employees or more in the U.K. are required to report the difference in pay between men and women whose jobs are based in the country. Their deadline to do so is April 4.
Dozens of law firms are covered by the law, and a few have gone beyond the minimum requirement of reporting the gap between pay and bonuses for male and female staff by disclosing the earnings gap between male and female partners.
Focus on Partners
Firms that have reported partner data include Reed Smith, Norton Rose Fulbright, Dentons, Eversheds Sutherland and Clifford Chance. Linklaters, which had published its data earlier than most, added partner information to its initial report, and Allen & Overy reportedly plans to do the same. Several other U.K. firms have also disclosed partner pay gaps.
Why provide partnership data if it isn’t required? It’s a matter of principle, several firms suggested.
“Although it is not a statutory requirement to report on partner data, we wanted to be open and transparent with our people,” Farmida Bi, chair-elect of Norton Rose Fulbright, said in a statement. “This transparency will help us to continue our work in improving diversity across the business.”
Reed Smith noted in its report that the U.K. requirements actually preclude law firms and other businesses from including partners or shareholders as employees.
“Whilst we understand the rationale for that, we are conscious that our partners make up a significant portion of our population and that our commitment to gender equality applies to all levels of seniority within the firm,” Reed Smith said. “It was therefore important to the firm that as part of this exercise we looked too at the pay and bonus gap within our partner population.”
Industry watchers agreed that firms have to confront their compensation numbers in order to achieve equity at the employee and partner levels.
“The transparency is needed in order to have firms understand the extent of the challenges they have in their own organization,” said law firm consultant Lauren Stiller Rikleen of the Rikleen Institute for Strategic Leadership. “If you don’t know, you can’t fix it. That’s the bottom line.”
Pittsburgh legal recruiter Maura McAnney of McAnney, Esposito & Kraybill Associates said the reports, while focused on income, underscore the need for a broader approach to parity.
“Law firms tend to look at issues of compensation from purely a numbers standpoint,” McAnney said. “But has the time come to look at it from an opportunity standpoint?”
“If there is opportunity equality, then the math will work itself out,” she said.
Likewise, Diversity Lab founder and CEO Caren Ulrich Stacy said the long-term issue law firms face is identifying the factors that create a pay gap to begin with, and analyzing the numbers is just one step.
“Our research shows that one of the primary reasons is a lack of fair and equitable access to influential power players who control the allocation of high-level work and origination credit,” Stacy said in an email. “Another reason emerging from the research is that women are spending significantly more time than their male counterparts on ‘office housework’ that is not rewarded financially by the firm and doesn’t contribute to women’s career advancement.”
Norton Rose noted in its report that women make up 75 percent of its lowest-paid quartile, largely in secretarial or administrative positions, widening the overall pay gap for U.K. employees. And bonuses awarded to women were smaller, the firm said, in part because 91 percent of the firm’s part-time employees are women.
White & Case’s report made a similar acknowledgement that the work its female employees tend to do—and a shortage of women in leadership roles—affects their average pay and bonuses. “Progress in this area is an important opportunity for us to decrease our gender pay gap,” the firm said.
Several firms, alongside the numbers, described committees, programs and policies they have put in place to provide women with equal opportunities for leadership positions and the larger paychecks they can bring.
No Rush in the United States
The American Lawyer contacted half-a-dozen U.S.-based or global firms that have reported pay gap information in the U.K. While some had touted their decision to surpass their disclosure requirements in the U.K., none signaled any willingness to provide the same data for their U.S. offices, or firmwide.
The firms either said they had no plans report pay disparities beyond their U.K. obligations, declined to comment or never responded.
A source at one law firm, who spoke on the condition of anonymity, said the firm was considering analyzing data from offices outside the U.K., but making that commitment would require a lot of advance planning given the pay differences in various countries and regions. Compiling the data would require extensive resources, the source said.
That’s not to say law firms are ignoring that information in the U.S.
“Several law firms in the U.S. are in the midst of running a pay gap analysis and taking action on the findings,” Stacy said. “Not because the government made them, but because they know it’s the fair and smart thing to do to keep their talented lawyers and their clients who care deeply about diversity in the profession.”
Rikleen said pay gap reporting is needed in the U.S. legal industry. Voluntary surveys provide some data, but are unlikely to attract participation by the firms that most need to make a change, she said.
“If firms could see the reaction to the information is measured and thoughtful … perhaps they would be more willing to learn the lessons from their United Kingdom counterparts and do something similar here,” Rikleen said.
With the April 4 deadline looming, pay gap information for U.K. businesses and offices from every industry has been making headlines, with investment banks emerging as one of the worst offenders.
Among law firms, the magnitude of the disparity varies, not just depending on the firm, but depending on how each firm interprets the data.
For instance, DLA Piper has a dismal mean bonus gap of 53.6 percent in the U.K.—meaning the average male employee’s bonus is 53.6 higher than the average female employee’s bonus. But male and female staff came out even when measured by median bonuses. That’s because a large proportion of business services employees receive an equal bonus at the end of the year, the firm explained in its report.
And firms’ bonus gaps often told a more dire story for women than base pay—except for female equity partners at Norton Rose, whose average bonus was actually higher than for male partners.
The amount of information offered varied among Am Law 100 firms and global firms with a large U.S. presence, as did the size of the reported pay gaps. Several firms explained in their reports that having a pay gap between genders does not mean a firm is guilty of pay inequality, or compensating men and women differently for the same tasks.
(Unless otherwise noted, all summaries below refer to the mean figures, and pay gaps are in favor of men.)
Reed Smith reported a U.K. gender pay gap of 14.8 percent for employees, and a mean bonus gap of 27.1 percent. At the partner level, Reed Smith has a mean gender pay gap of 0.8 percent and a mean bonus gap of 21.5 percent.
Norton Rose reported a pay gap of 17 percent and a bonus gap of 36 percent among all employees. Female associates actually made 0.5 percent more than their male counterparts in pay, while male associates get 5 percent more in bonuses. Among all other employees, the gap was larger—male staff made 25.5 percent more in pay and 56 percent more in bonuses.
Norton Rose also included U.K. partner data in its report. Average base pay is 19 percent higher for male partners at Norton Rose, while women partners on average got 38 percent more in bonuses, the firm said.
At White & Case, male employees make 24 percent more than women on average, and 45 percent more in bonuses.
And at DLA Piper, the mean U.K. pay gaps showed average employee pay is 17.8 percent more for men than women, and men got 53.6 percent more in bonuses on average.
Dentons published a mean pay gap of 22 percent for employees and a 52 percent mean bonus gap. The firm also reported a mean partner pay gap of 23 percent, which “includes fixed and variable payments.”
Eversheds Sutherland said male employees make 23 percent more than women on average, with a mean bonus gap of 42.8 percent. Male lawyer employees there made 4.8 percent more than women, and 18.2 percent more in bonuses. The firm showed that among equity partners, women actually earned more by 10.3 percent. (The firm does not have bonuses for equity partners.) And average fixed-share partner pay was 4.5 percent more among men, with a 10 percent difference in bonuses.
At Clifford Chance, male employee pay is 20.3 percent higher and male staff bonuses are 53.2 percent higher. The firm also reported a partner pay gap of 27.3 percent. Lumping partners and staff together, the firm reported a 66.3 percent gap in pay. Clifford Chance said it included partner data in order to “accelerate change,” ALM publication LegalWeek reported.
Linklaters’ pay gap for employees is 23.2 percent, with an average bonus gap of 58 percent. When including partners, Linklaters said, its overall gender pay gap is just over 60 percent, but looking at partners alone, the gap is only 2.2 percent.
Allen & Overy reported a staff pay gap of 19.8 percent, and a 42.1 percent bonus gap.
Freshfields Bruckhaus Deringer reported a mean pay gap of 13.9 percent, and a 41 percent bonus gap.