Faced with dire rates of female retention, law firms have abandoned previous resistance to public gender targets for their partnerships. Will it work?
It had been a fairly dry debate at the 2013 Georgetown Law panel discussion in London, covering a number of worthy issues facing the profession. Dry at least until near the end, when a Legal Business journalist on the panel told the sizeable audience of lawyers that law firms were perfectly able to function commercially while haemorrhaging female lawyers, the caveat being that if the profession was waiting for economic drivers to solve the gender diversity dilemma, it would be a long wait. The journalist then mentioned that the profession may want to consider more drastic measures.
The comments sent an immediate jolt through the room, with some attendees near outraged over what they viewed as a callous acceptance of the status quo of male-dominated partnership ranks. Some others got the point – in the short amount of time it took the bemused editor to walk out of the room, four senior lawyers took him to one side to express support for more radical measures to kickstart diversity.
It appears that others have come to the same conclusion, with a group of major law firms this year finally having a late conversion to the cause of publicly declared targets for partnership gender diversity within specific timeframes. This has finally picked up after a little-noticed 2009 pledge from Clifford Chance (CC) to get its female partnership to 30%.
Firms to issue some form of aspirational benchmark for female partner numbers now include many of the UK’s largest law firms, including Allen & Overy (A&O), Linklaters, Hogan Lovells, Herbert Smith Freehills (HSF) and Pinsent Masons.
Having argued for years that targets were against their culture of meritocracy – an assertion that looked increasingly unsustainable given the prolonged failure of 50%-plus female trainee intakes to translate into more gender-balanced partnerships – City lawyers have responded to a wider shift in the diversity debate in corporate circles.
That has been defined to an extent by the 2013 book by Facebook’s chief operating officer Sheryl Sandberg, Lean In: Women, Work, and the Will to Lead, which sparked a renewed debate around the role of women in the c-suite. Even more to the point has been the 30% Club, launched in 2010, which focuses on getting 30% female membership of FTSE 100 boards but also has a wider diversity ambit.
A further influence was the groundbreaking 2003 legislation in Norway to bring in a 40% target for female representation on boards of large listed companies. The measure was initially strongly opposed by business but later proved to work effectively, leading other countries to bring in broadly comparable measures, including Belgium, Italy, the Netherlands and Spain. Governments in Australia, the UK and Sweden have threatened legislation without progress while the European Union has floated a region-wide quota.
Also relevant has been a gradual but perceptible shift in attitudes among general counsel (GCs) from making diversity a box-ticking procedure to get through at panel reviews to an issue that can potentially influence if an adviser makes the grade at all.
The question for law firms is whether such targets can finally succeed where 20 years of women’s networks and mentoring schemes have failed? And, if so, what impact will such a shift will have on institutional cultures and their business models?
But what has to be beyond debate now is that there is little prospect of change in commercial law without a more dramatic intervention.
Linklaters litigator Christa Band puts the case for this more robust approach: ‘If we didn’t intend to change anything we wouldn’t be doing anything at all different. Targets are a way of articulating our aspirations and it’s a more sophisticated way of clarifying and communicating what we’re trying to do through the entirety of our efforts. Gender diversity is talked about much more frequently and concretely than it was five years ago.’
Gender diversity – the client view
While it would be an exaggeration to say that all or even the large majority of major clients are focused on gender diversity, a clear consensus from discussing the issue with in-house counsel and law firms emerges that buyers of legal services have over the last five years become increasingly willing to make a lack of female representation a significant part of the procurement process.
This has been apparently driven by an increasing support for gender targets in public companies and higher female composition in senior roles in-house compared to private practice.
Alison Kay, group general counsel and company secretary at National Grid, comments: ‘Diversity is high on our list of priorities, there is no doubt about that. We instruct a panel of firms both in the UK and the US that are technically competent in everything that they do, so diversity is the extra bit that really adds the value. It is absolutely up there as one of the things we will take into account when we go out to tender for our external panel later this year.’
Funke Abimbola, UK managing counsel of Roche, is adamant that diversity is prominent in her decision-making process. ‘I have made it very clear to the firms I regularly instruct that they need to demonstrate a commitment. And if the firms I use hadn’t shown that commitment we would have re-tendered and gone elsewhere. It is something I feel very strongly about: mentoring, senior role modelling, proper support leading up to and following maternity leave – including reduced fee-earning targets and actually properly honouring flexible working commitments without this being perceived as not pulling your weight or somehow being a part-timer. Diversity means a lot more than just the male and female but certainly a very good starting point is looking at what happens at female partnership level.’
What is notable is the extent that the debate with clients has focused on legal teams at major corporates, traditionally among the most conservative clients. As such, smaller and mid-cap corporate counsel appear less engaged on the issue.
Karena Vleck, head of legal at Rugby Football Union (RFU), stresses that clients remain focused on hiring the strongest lawyer over other considerations. ‘When I am looking to instruct firms, diversity isn’t an enquiry I would make. If I was asking them to tender for a piece of business, I’d ask who can do the work and what their experience is. But I do suspect there is indirect pressure coming from the in-house community and I hope law firms also put pressure on themselves because better diversity makes a better business.’
Kay argues that law firms should be more imaginative on diversity: ‘[Law firms need] tools and mechanisms in place to allow and to get women to want to advance – to get them right up to equity partnership level, which is where we still see a really, really big drop in female representation. This is where law firms are going to feel some pressure from the likes of National Grid.’
kathryn.mccann@legalease.co.uk
Still scoring low
The numbers on female retention in the legal profession have made grim reading for years and still do. According to the most recent Law Society Statistical Report, as of 31 July 2013, 46% of the male solicitors in England and Wales in private practice were partners, compared to just 21% of women lawyers.
The report illustrates that significantly more young women are holding practising certificates (PCs) than men, and for those aged 35 and under, women represented around six in ten PC holders, while in the over 35 age group, only four in ten PC holders were female, highlighting the level of women leaving the law during their thirties.
While such levels of low senior female representation are seen in many comparable industries such as banking, accountancy and consultancy, law has considerably higher levels of female intake and consequently a worse record on retaining the scores of well-educated young women it attracts.
Focusing on the larger firms in the UK only amplifies that message. Canvassing the UK’s top 25 law firms in revenue terms for this piece – only three had more than 25% female partnerships: King & Wood Mallesons SJ Berwin; Irwin Mitchell; and DAC Beachcroft.
As expected, law firms with national coverage and those less focused on transactional law score substantially better than traditional City firms. The entire Magic Circle had less than one in five female partners, with Freshfields Bruckhaus Deringer having just 12% of its partner ranks female.
International law firms’ female ranks are also often dragged down by their Continental European partnerships, which are generally more male-dominated than in the UK. Linklaters, Freshfields, A&O and CC all have higher proportions of female partners in the UK.
While there is nothing surprising about such numbers, what is striking is there has been virtually no progress in recent years despite agreement that gender diversity has moved up the profession’s agenda. Looking at comparable statistics compiled in 2010 by Legal Week, none of the Magic Circle has seen any increase in female representation in four years, despite all having stated aims of improving female retention.
This lack of progress comes despite many firms making up considerable numbers of female partners over the last three years. Nearly 25% of CC’s partnership promotions over the last three years were female – 15 out of 68, against 27% at Linklaters. Other firms to make up a high proportion of female partners include Norton Rose Fulbright (43%), Slaughter and May (46%) and Ashurst (28%).
That female partner ratios are stuck below 20% for the majority of law firms suggests that City firms are either failing to retain senior female lawyers even once they make partner or that women partners are being disproportionately impacted by partnership exits and restructurings.
In terms of targets, Linklaters, which has a 25-member board currently including four women, declared 30% of partner promotions and board members will be women by 2018; Ashurst stated 25% of all equity partners and management positions and 40% of partner promotions will be female.
In perhaps the most ambitious and challenging pledge made, HSF earlier this year gave itself a target of achieving a female partnership ratio of at least 25% by 2017 followed by 30% in May 2019. This will be a huge undertaking, given that only 18% of its current partnership is female.
Making rough calculations illustrates how hard some of these targets will be to achieve. As a comparison point, a large City-based law firm that houses 50 female partners out of a total partnership of 300, would have to make up 40 female partners by 2018 to hit a 30% target – or ten a year even if no female partners left or retired.
Given a firm of that size would typically make up 12-15 partners annually to sustain itself, it becomes apparent the challenge involved in reaching a 30% target for many major law firms, requiring them to sustain over 50% female partnership promotion rounds for years.
This is striking when considering CC’s position. With 92 female partners out of its current partnership of 573, the firm would have to add an additional 80 female partners assuming its ranks stayed stable to achieve a 30% benchmark.
One managing partner at a large international firm comments: ‘We are not getting any closer to our target goal. The tiniest movement in partnership affects the overall stats. And we are not alone. If any firm says they have made a massive leap forward and are on target, then that would be highly misleading.’
The 30% solution – redefining the diversity debate
In June, the 30% Club’s goal of ensuring there are no all-male boards in the FTSE 100 was finally achieved when Glencore appointed Patrice Merrin as an independent non-executive director. It came less than four years after the chief executive of Newton Investment Management, Helena Morrissey, launched the organisation with the aim of ensuring that 30% of FTSE 100 board members are female by the end of 2015.
The body rapidly gained endorsements after initial support from a group of senior women executives and Sir Roger Carr and Sir Win Bischoff, then respectively the chairs of Centrica and Lloyds Banking Group.
The group – which draws its members from the FTSE 100 and 250 and major professional services firms – has arguably been the most significant illustration of the changing sentiment and itself a driver towards a more progressive attitude on gender diversity in UK boardrooms. Since its launch the proportion of women on FTSE 100 boards has risen from 12.6% in 2010 to 22.2% in July 2014 and it has expanded its efforts into a series of new initiatives, including pushing for the formation of equivalent clubs in other countries, with launches in Hong Kong and the US.
Among the business leaders that have signed up to support the group are four of the profession’s most high-profile ‘chief executives’ – Clifford Chance’s Matthew Layton, Linklaters’ Simon Davies, Slaughter and May’s Chris Saul and David Morley at Allen & Overy. Other law firm leaders among supporters include Linklaters’ Robert Elliott, Neville Eisenberg at Berwin Leighton Paisner, Norton Rose Fulbright’s Stephen Parish, Jonathan Scott at Herbert Smith Freehills and Penelope Warne at CMS Cameron McKenna.
Despite heavy engagement from law firm leaders for the group as a whole, lesser known has been the 30% Club’s involvement with law firms via its professional services ‘pipeline’ sub-group.
The professional services sub-group launched in 2011 after law firms, consultancies and accountancies approached the body for support. The group is headed up by Caroline Carr, EMEA head of talent development at Goldman Sachs International, and 12 of the 20-firm group are law firms. Carr told Legal Business: ‘The group allows professional services firms to share ideas in what has become a mutual goal. The 30% Club is here for the long haul.’
There are three action groups within the professional services team to address flexible working, work allocation or sponsorship issues. Samantha Mobley, a partner at Baker & McKenzie and a member of the pipeline group, comments: ‘Agile working has not been looked at in sufficient granularity to date. This looks at working arrangements and the path to partnership – not just of women – but men also. We don’t spend a lot of time sitting around talking about how organisations should embrace agile working. This is about the implementation steps.’
Freshfields Bruckhaus Deringer, meanwhile, was involved in a pilot scheme last year to provide staff with sponsors outside of their organisation, a scheme that has worked well among the Big Four accounting groups, and has signed up again this year, providing ten mentors at partner level – three of whom were female – and offered nine female senior associates and one female partner external mentoring. It is the only law firm signed up.
The 30% Club is ostensibly against quotas and is critical of the ground-breaking policy in Norway of a mandatory 40% female target for boards of major public companies. However, this is arguably a semantic distinction since the body’s raison d’être was a recognition that a publicly-stated target and a more interventionalist stance were required to break the 10-15% level of senior female representation seen in many industries. The creation of the body was also in part an attempt to show ‘business-led’ change could head off the threat of EU legislation to force mandatory targets. But whether via the threat of Brussels diktat or boardroom persuasion, the 30% Club appears to have been a substantial success.
Hitting the bullseye
Given the challenge they face many law firms have moved to dust off or reboot a series of initiatives they have in place to support, motivate and retain female associates.
Linklaters has relaunched its women’s network and is running a series called ‘Inspiring Women’; Reed Smith offers maternity coaching; Clyde & Co has ‘Family Matters’ – a forum for discussion and support, and has regular visits from senior speakers, including Vodafone’s group GC Rosemary Martin and Aviva group GC Monica Risam; Baker & McKenzie has appointed employment partner Sarah Gregory to the newly-created inclusion and diversity role; while Freshfields conducts a global women partners’ conference every 18 months, offers back-up childcare and eldercare for all City employees and runs a network to address issues facing women in the lead up to partnership.
Pinsents, meanwhile, launched ‘Project Sky’ last year to encourage gender balance across its board and partnership. The firm currently has three female members on its ten-strong board and aims to improve this by pushing for gender diversity in its partner promotion rounds twice a year, and questions practice heads if targets are not met.
Pinsents HR director Jonathan Bond says: ‘The pipeline is excellent for women at graduate level, but a number of factors have stopped them from reaching partnership. Gender balance on the partner promotion list has to reflect the ratio of gender balance now in each respective department.’
Pinsents has also begun to experiment with flexible working in its corporate practice – so that fee-earners are encouraged to be around during core hours of 10am to 4pm but beyond that have far more flexibility around remote and flexible working.
Firms like Baker & McKenzie provide training to tackle unconscious bias, such as requesting a gender balanced shortlist from recruiters when looking to hire.
Similarly, Clydes set up a partnership selection committee in 2013 of 14 members comprising five women, including diversity chair Liz Jenkins, where practice leaders are required to identify associate talent, with a special focus on female associates who might be expected to come through to partner in the following three years.
According to Clydes employment partner Heidi Watson, around 40% of the standout individuals identified so far have been women. ‘Given our target of increasing female representation in the partnership to 25% by 2018, we think we have set ourselves an achievable target,’ says Watson. ‘Our aim is to use our mentoring and Family Matters programmes to keep those women in the business and encourage them to pursue the partnership path.’
Bakers disputes partner Joanna Ludlam says: ‘We offer agile working at Bakers, but it’s something we are constantly looking to refine, because we recognise how critical it is to retaining top talent. These days it is not just the women who want to work flexibly but also the men, because they too want to spend more time with their children and they often have partners who themselves have a career. So we need to make agile working work for our talent and for our business.’
She adds that while having children lengthens being an associate, partners have more control over how they spend their time. ‘My work and home life is blurred and I allocate my time around what works best,’ says Ludlam.
This has been enhanced through advancements in technology and hot-desking and marks a stark contrast from ten to 15 years ago when associates would very rarely work flexibly or from home.
Ludlam adds: ‘Partners are reluctant to talk about the pros because the pros are that you do get paid a lot more, you can delegate work, and control your own time/workload better; these aren’t necessarily what partners want to discuss. But the reality is, when you are partner you have much more control than when you are an associate that enables you to create your own work/life balance. As an associate this is much more difficult, so there are rewards for hanging in there.’
As many believe that the conflict between parenting and demands made of partner-track associates are fundamental to the lack of female partners in the City, A&O made one of the most ambitious attempts to tackle the problem by introducing a flexi-time scheme aimed specifically at equity partners.
Launched in 2010, the scheme was intended to help the firm retain female equity partners by allowing partners to benefit for up to eight years, including five years as a full equity partner and three years as salaried. Over the past five years, around 5% of the firm’s partnership has taken up the option, which allows partners to work a four-day week.
While many firms operate some form of flexi-time scheme for staff and junior fee-earners, extending such a scheme to equity partners was considered hard to win support for and the move has not been followed by another major firm.
It is generally considered that the scheme has failed to gain traction and A&O’s female partner ranks have not improved since then. A&O global managing partner Wim Dejonghe comments: ‘We always said it wasn’t going to be a silver bullet as this is a big issue that needs to be tackled from a number of different angles.’
However, the firm says it is currently working towards meeting its target to increase female partnership to 20% by 2020 after announcing the goal in June this year.
‘The danger period’
What is notable is many of the previous ‘soft’ initiatives at law firms have failed to stem massive outflows of female lawyers and improve senior representation in law, and even some of the more substantive measures such as A&O’s flexi-time scheme have not been a clear-cut success.
The reason for this inertia when by consent law firms have become more progressive in social attitudes over the last 20 years is open to debate. Almost certainly the push towards transaction-based practice areas, which are notoriously macho in culture and hard to balance with childcare commitments, has been a factor as female representation is clearly higher in advisory areas and disputes.
Freshfields’ Deirdre Trapp, one of the City’s top antitrust lawyers, comments: ‘It can be easier for women to make more impact in advisory work, such as antitrust, employment and tax; litigation may also be more manageable than some other fields as deadlines are set by the court so you are more aware of your timing.’
Likewise, the push to maximise profitability and billing related to the globalisation of law since the 1980s has doubtless gone against the grain of a more socially aware profession.
In addition, the expansion of the lateral recruitment market for partners has further entrenched male domination of partnership as an even higher proportion of laterally-recruited partners are men than are promoted internally. Some also argue that the increasing focus on partners with business-winning skills plays to the more aggressive style of male partners.
Another key issue is that while law firms have generally become more attuned to flexible working over the last ten years, the conflict between the most demanding years of motherhood and partnership is so direct that considerably more measures will be needed.
‘The danger period is after maternity,’ says Watson at Clydes. ‘It is tough and confidence is knocked. The supervisory partner’s role is fundamental here as the returning associate or partner requires support. Firms need to improve support here to show these women that it is a marathon not a sprint.’
There is also by consent an element of self-selection happening where talented women lawyers are taking themselves out of the race to be a partner as part of a broader rejection of the law firm career track, rather than slog on in the increasingly slim chances of making partner.
Research from Legal Business last year found reduced promotion rounds had led to shrinking partnerships – particularly in the UK – while male associates are two to three times more likely to make partner than female equivalents at many firms on current trends.
Such a dynamic speaks to another reason why there has been so little progress over the last decade, which is clear yet rarely discussed in polite conversation: law firms’ partnership model has evolved over the last 25 years so that only a small minority of associates make partner. City law firms, for the time being at least, can keep making money with sky-high levels of attrition of mid-level female associates.
In this narrow economic regard it is possible there is some progress, not least in hardening in attitudes among clients, reinforced by the fact that so many influential in-house counsel are now women.
Kate Cheetham, deputy GC at Lloyds Banking Group, expresses an increasingly common view among clients: ‘From a strategic perspective it is highly important that a firm considers and encourages diversity – both within its organisation and externally. At Lloyds Banking Group we do exactly that – we recognise the benefits of having a diverse colleague base and encourage diversity however we can, including through the firms we work with.’ (See ‘Gender diversity: the client view’.)
Trapp picks up the point, arguing it would be ‘bizarre’ for a law firm to turn up for a major pitch with an all-male team these days.
It may also be that the equation for law firms will further change as they face a tipping point where female lawyers have an increasingly transitory commitment to private practice beyond a three-year post-qualification period to be traded in for a career working flexibly, the greater career opportunities of in-house or in moving outside the profession entirely.
Part of this is no doubt due to a generational shift in attitudes to work that has seen young female lawyers reject the attitudes of the earlier generation of female professionals who were more likely to directly assimilate into a man’s world.
What would also produce a major driver for change is if a handful of major City firms manage to achieve competitive advantage by building a reputation for being a natural home for talented senior female lawyers. Such a move would potentially open up a very substantial talent pool of lawyers that are, by wide agreement, being under-deployed.
Ludlam at Bakers sees this as a realistic prospect: ‘In five years’ time there will be a group of firms that are ahead in terms of gender balance at the top, and it will therefore be apparent which firms have invested heavily in the gender diversity challenge and which have not.’
Much of the problem is that many initiatives are seen as marginal and lacking support of influential members internally. There is a lot of cynicism regarding women’s networks as effectively ghettoising female lawyers.
Many law firms have also struggled to secure buy-in from high-performing male partners in their forties, the group that are most focused on client work and have been the most intolerant of calls to change practices to accommodate flexible working or wider cultural changes.
Clydes litigation partner Sarah Clover says it is time for a more robust approach: ‘We are trying to achieve an overall culture across practice areas. The culture comes down from the top. Our board has ten members but zero women. This is very regrettable. This is partly because being on the board is extremely time consuming so puts a lot of people off generally. Firms are finally committing – a bit of a bandwagon but it’s a good one.’
Band at Linklaters likewise agrees there has been a necessary change in mindset: ‘All organisations have been looking to find ways of encouraging and supporting women. The most important way to do that is to make sure that the tone is set from the top.’
Gender diversity – young lawyers’ perspective
‘While some firms have started to adopt gender diversity targets, will targets alone result in change? Such changes are unlikely to occur unless firms actively support and encourage women to apply for senior positions. The issues faced by women are that they tend not to be good at self-promoting within their organisations and women are often deterred from applying for senior roles because of caring commitments at home. Law firms need to take these issues into consideration and proactively take steps to encourage women to progress regardless of their commitments and provide support or mentoring internally.’
Monica Kapur, associate, insolvency team, commercial litigation, Wright Hassall
‘The key obstacle facing women is children. I don’t have children but if I decide to have children, then this will be the biggest test. Firms need to create more flexibility, so women can work from home, leave early or come in late.’
Nicole McKinnon, senior associate, disputes, Clyde & Co
‘There are lots of women in law at a junior level. But it’s as you go further up the hierarchy that they get pushed out. The career ladder just isn’t compatible for women who want to take time out to have children. Plus, law firms are only just coming around to the idea of flexible working. They are still quite traditional in that regard.’
Deborah Boddy, trainee solicitor, Berwin Leighton Paisner
The meritocracy myth
What is interesting about law firms’ rapid conversion to the cause of clearly defined targets is the extent to which it has tackled the taboo that has so often previously blocked progress: the notion that law firms are high-performing institutions basing progression purely on merit. This argument as recently as three or four years ago was taken as blanket justification for avoiding ‘quotas’ or any move to supposedly compromise quality via targets.
Two factors broke down that taboo – the first being the wider shift in the debate in favour of using targets for female board representation and the 2010 launch of the 30% Club, which has drawn considerable support from law firm leaders and helped re-invent hated ‘quotas’ as an aspirational virtue. Also significant in this regard was the 2011 Government-backed report on women on boards by Lord Davies, which has been subject to an annual update report since.
The second issue was the simple weight of statistical evidence piling up that demonstrated so clearly there was something fundamentally interfering with the supposed meritocracy of law firms, a status quo leading to increasing discontent even from current female partners.
But this decision to use targets takes law firms into new terrain and the challenge will be to effectively tackle the evident problems with fair advancement without generating unneeded bureaucracy or alienating star male partners, who will always be top of the headhunters’ hit lists.
‘In any organisation you have to be very conscious that while you’re doing your best to support a particular group of people, you don’t alienate others. We have to ensure we’re doing the right thing by the men in the organisation,’ says Band.
‘For too long firms have taken the view that promotion should be on merit alone. This fails to recognise that men and women are often not on a level playing field. Firms need to recognise these distinctions, and, of course, everybody should be evaluated on merit, but the way merit is evaluated needs to be looked at very closely so as not to allow unconscious bias to creep in,’ says Bakers’ Ludlam. ‘Without the awareness that there are very real key differences in the way men and women approach their careers, you can’t say these differences don’t play a factor in decisions when making promotions.’
The interesting implication of this more hard-edged commitment to diversity is that actually achieving these targets will inevitably start to change the underlying character and culture of law firms. However, it looks like the profession has finally reached a point where the issue can no longer be realistically kicked down the road.
Reed Smith’s co-chair of the financial industry group and head of structured finance, Tamara Box, says: ‘All our competitor firms will have published a target otherwise they’ll look like they’ve fallen behind. The rising tide is going to bring all boats up.’
National Grid GC Alison Kay likewise gets to the bottom line: ‘Some firms absolutely do get it, other firms realise that they haven’t got any other choice but to get it because it will eventually start having a real knock-on effect on their business.’ LB
jaishree.kalia@legalease.co.uk; tom.moore@legalease.co.uk