Are 'big law' firms ready for a makeover?

Are 'big law' firms ready for a makeover?
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Women’s issues in corporate America are on center stage. Topics such as the number of women among senior executives and pay differences between genders are news stories that resonate have become the subject of policy debate. But “big law,” an industry nickname for the nation’s hundred largest law firms, largely has avoided this attention. Law firms are not incorporated.  Rather, they are limited liability corporations (LLCs) and thus not subject to traditional reporting requirements. In other words, they can operate under the radar, even though big law generates revenues of $100 billion annually.

Big law needs to set aspirations and meet expectations to remain competitive. Research and supporting literature suggest that firms that voice a commitment to women’s issues enjoy the benefits of a higher number of powerful clients committed to diversity and the potential for increased firm profitability. Because advancing women and minorities actually can increase revenue, it’s time for big law to be “woke.”

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First, let’s check the numbers. Only 9 percent of Am Law 100 firms currently have women in a topmost (firm chair or firm-wide managing partner) position, compared with 24 percent of Fortune 100 companies. Between 2013 and now, a grand total of 15 women have been firm chairs in Am Law 100 law firms. Managing partners and chairs not only serve as the face of a firm; they also play an important role in crafting business strategy and charting a course that will deeply influence the organization’s long-term success and reputation.

Firms that have women in top leadership positions tend to have more female equity partners, and firms that are recognized for their support of women tend to have higher percentages of female equity partners. Among the firms recognized in Working Mother’s 2017 edition of “50 Best Law Firms for Women,” 20 percent of equity partners are women. The time seems ripe to capitalize on this opportunity, for all the right reasons.  

The data also showed that “women are more successful as senior partners” and “for laterals who move in their 50s, 44 percent of women move to higher [public-private partnership] firms, compared with only 30 percent of men — implying that these women are more sought after.” Keeping women happy in their positions clearly should be a central focus for firms.

Arnold & Porter, WilmerHale and Katten are prime examples of firms that have committed resources to women’s issues and have supported female leadership. These firms have the highest number of clients of any Am Law firms, with American Bar Association Resolution 113 signatory clients (firms that have pledged to promoting diversity in the legal profession), and have received recognition from Working Mother since the inception of the award in 2007. It’s a stark contrast to firms whose newest partner class may be Y chromosome-heavy and white-washed.

Given all of this, why the overall lack of women partners and leaders? Last time we checked, law firms seemed pretty keen on revenue. Although the data analyzed did not show a definite correlation between firm revenue per lawyer and top female leadership or a higher percentage of female equity partners, it seems undeniable, given the current environment and client preferences, that in the coming years there will be clearly visible financial differences between firms that have invested wisely in women and those that have not.

So, is big law ready for the makeover these firms so need? Leadership and equity partner percentages and pay equity ratios can provide some idea of a firm’s commitment to the advancement of women and minorities, but ultimately it may be most valuable to examine how firms handle specific challenges and opportunities that are related to diversity issues.  Corporations in America have embraced many positive initiatives in this respect. To remain financially secure and build a valuable talent pool while enacting positive change, law firms would be wise to introduce similar initiatives.

James R. Bailey is a professor and Hochberg Fellow of Leadership Development at the George Washington University School of Business, and a fellow in the Centre for Management Development, London Business School. Follow him on Twitter @ProfJamesBailey.

Jane Azzinaro is a digital strategy consultant in Maryland.