The gender pay gap in the U.S. has been in the spotlight in recent years, and the legal industry has been subject to its fair share of scrutiny for pay disparities.
Indeed, today’s law firm compensation and career path models haven’t changed much since the early days of lawyering. Unfortunately, though, those models don’t fit with the realities of modern practice and unfairly prevent women and lawyers from underrepresented groups from achieving parity at the highest levels.
There are several factors within the legal industry, and specifically within law firms, that exacerbate this problem. For example, law is one of the only industries without clearly defined metrics for advancement and success. Most law firms still follow an apprenticeship model under which junior lawyers learn from senior lawyers who are essentially training their replacements. This leaves an attorney’s success hinging upon someone else giving them work.
Another factor is that current law firm compensation and performance models are limited. Most often, firms employ an eat-what-you-kill system, meaning that lawyers have to constantly be on hand to ask for work to build up their billable hours, without knowing exactly how those hours are tied to performance and advancement. A lack of workload predictability is another factor. A system where an individual has no control over the work and hours that they’re expected to put in is entirely incompatible with having a family or needing to be available for anything outside of work.
All of the above factors mutually reinforced each other to create a pay gap that systemically disfavors women lawyers, given that most also serve as the primary family caregiver.
ALSPs’ Flexible Work Arrangements & Fixed Pay
While there’s no cure-all solution for the gender pay gap, one of the most promising ways of solving the pay gap is to offer flexible work arrangements that have the potential to make a real difference.
Alternative legal service providers (ALSPs) are creating a new playing field by offering remote, flexible work arrangements that allow lawyers to be in control of their own lives. This not only helps women lawyers looking to raise families, but it also helps any lawyer desiring a better work-life balance and personal happiness. (And while some Big Law firms have tried to adopt the ideas of remote work and flexible schedules, the number of small steps required to get firms to change the way they’ve been doing things for hundreds of years will take many more years to have any real impact.)
In the meantime, ALSPs are starting over with a fresh approach and focusing on the lawyers they’re hiring and the realities of how their lives function. Technology plays a huge role in defining what the modern lawyer looks like, and many ALSPs offer platforms and delivery processes that accommodate for flexible schedules.
As for the standard lawyer compensation issue, ALSPs have found a way around that as well, adopting fixed compensation structures, whereby payment is equal across an organization. In fact, some ALSPs offer a fixed-fee compensation model that cannot be influenced by external factors. Further, this model also aligns customer needs with lawyer capacity to make sure that the lawyers have the amount of work they want on a schedule that fits with their needs. Add in the use of big data and tools to allocate client work equitably and remove discriminatory allocation practices based on favoritism and face time, and you have equal pay for equal work on any given customer account.
This past year, InCloudCounsel studied a population of lawyers who work on our platform who chose to self-identify. We found that, among those lawyers, our platform is currently 50% women. We also found that a slightly higher percentage of total payments (not rates) goes to women lawyers. This shows that the women lawyers that we work with are willing to take on plenty of hours when the work arrangement is flexible enough to accommodate the rest of their lives.
Taken together, these methods employed by some ALSPs allow lawyers to do their best possible work in the most efficient manner, all at fixed prices that put everyone on equal footing.
The Way Forward for Law Firms
As with ALSPs, technology has similar potential to be a great equalizer at traditional law firms. Law firms have large volumes of data regarding time and utilization that’s not being analyzed or explored. They have a huge opportunity right now to invest in technology that can help to equalize the distribution of work by identifying needs and allocating work according to capacity, rather than personal relationships.
Firms can also work to lessen the pay gap by recognizing that contributions outside of client work are crucial to running a successful firm and equitably compensating their attorneys for those contributions. Critical business tasks like mentoring, training, recruiting, and marketing are more often performed by women, and the failure to give equal credit and compensation for those tasks directly contributes to the current pay gap and the lower percentages of women in law firm partnership ranks.
Finally, in-house counsel are increasingly demanding more diversity on the teams that handle their work, mirroring the priority they put on diversity at their own companies. Having a token woman or person of color on a pitch team is not enough. Clients want evidence that diverse lawyers are not just being hired but are being retained and advanced — receiving certain minimum percentages of the work, staying with the firm, making partner.
By implementing formal structures around those demands, law firms will be forced to make business-critical decisions that ensure a more equal distribution of work.