Mind the gap(s) – more of the same old inequality and fudged statistics prevalent in Big Law

The second season of gender pay gap reporting has again laid bare the stark disparities between men and women throughout the legal sector. However, with only two rounds of reporting to look at so far, the trajectory of pay equality in legal is still difficult to ascertain. Instead, conversations have turned to the value of reporting gender pay in of itself, particularly given the lack of common methodology in gauging the numbers.

These concerns are not new to the latest reporting round. In March 2018 Pinsent Masons senior partner Richard Foley (pictured) criticised the current regime’s lack of consistency in reporting benchmarks. The Law Society later in November 2018 called for uniformity in gender reporting, publishing guidelines on how firms could provide more clarity on the issue. Recommendations included firms distinguishing between equity and non-equity partners, publishing a full-time equivalent (FTE) compensation gap based on the full financial year and reporting on partner bonus schemes.

There have been some notable improvements since last year. In 2018 firms began reporting their respective pay gaps but initially chose to omit partner numbers, which are not a requisite of the The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. This resulted in accusations of a lack of transparency, with an August 2018 report by the Business, Energy and Industrial Strategy Committee noting: ‘The exclusion of the highest-paid people in organisations makes a nonsense of efforts to understand the scale of, and reasons behind, the gender pay gap.’

Foley is glad the profession avoided the same opprobrium this year: ‘This year was way, way better than last year in that the issue wasn’t sidetracked around accusations of a lack of transparency with firms not including partner numbers. But it’s something we all have to grapple with, gender pay gap reporting in its present form isn’t great.’

Increased transparency or not, the figures by themselves this year have been unimpressive and display in full the erratic nature of gender pay gap reporting. At Freshfields Bruckhaus Deringer male partners earned 18% more than their female counterparts on a mean basis, while at Clifford Chance (CC) the partnership gap stood at 26%. Slaughter and May and Allen & Overy had slightly more encouraging figures, with the partnership gaps at both firms standing at 9% and 16% respectively.

‘Is gender pay gap reporting a blunt instrument? Yes. Are the numbers normally misunderstood? Yes. Is it often misused as a means to simply get your figure ahead of others? Yes.’ Richard Foley, Pinsent Masons

However, with only two years’ worth of data to assess, a meaningful indication of progress is hard to find. Christina Blacklaws, president of The Law Society, suggests that understanding the direction of pay gap figures relies entirely on the quality and quantity of data. ‘It is tricky and completely depends on the quality of the narrative reports and action plans firms provide,’ she says. ‘Three years of data is sufficient to identify a trend and if firms develop robust and meaningful action plans this year, then there should be signs they are moving towards reducing gaps each year thereafter.’

However, determining precisely what data should be assessed remains unclear. Firms rightly point towards the breakdown of their workforces as the primary explanation for the unfavourable pay gap figures, with women overwhelmingly occupying secretarial roles and other positions in the lower pay quartiles. The focus quickly becomes less one of pay and more one of seniority. As a result, some consider pay gap reporting merely a crude tool used to shed light on a wider, more complicated problem.

‘Is gender pay gap reporting a blunt instrument? Yes,’ Foley continues. ‘Are the numbers normally misunderstood? Yes. Is it often misused as a means to simply get your figure ahead of others? Yes.’

Reed Smith’s managing partner for Europe and the Middle East, Tamara Box, is also sceptical about the numbers being treated in isolation: ‘Reporting the numbers is a good practice, but some of those figures have limited value.’

The issue is made more salient as many firms are engaging in broadly the same endeavours when it comes to improving diversity. Having recruiters produce lists of candidates with more women and those from minority groups on them, alongside initiatives such as bias training, are efforts widely endorsed by the legal community. However, no sustained effort to mine the data on these initiatives has been undertaken to understand their effectiveness. As Foley laments: ‘The truth is those good things firms are doing will not be evidenced by a gender pay gap number.’

The gender pay gap is ultimately the obvious product of a starker seniority gap. At Slaughters women make up 71% of the lowest quartile of employees by pay, with the figure plummeting to 37% at the highest quartile. CC had a more encouraging story to tell, with the female/male divide at the highest quartile almost 50/50, despite 81% of the lowest quartile being female. At Linklaters, meanwhile, 59% of the top quartile is male.

Despite increased transparency being considered synonymous with progress on this front, there remains a sense that unrefined transparency can simply complicate the issue. This year, firms took it upon themselves to also reveal their ethnicity pay gaps which, though laudable, some feel makes the issue of pay disparity more disorientating. ‘Is reporting on ethnicity figures a bad idea? Absolutely not,’ Box continues. ‘But including it in the gender figures doesn’t really illuminate – throwing it in there is not really helpful. Some of this is confusing enough as it is.’

‘Is reporting on ethnicity figures a bad idea? Absolutely not. But including it in the gender figures doesn’t really illuminate. Some of this is confusing enough as it is.’ Tamara Box, Reed Smith

Blacklaws shares Box’s endorsement of revealing the ethnicity figures, though also shares her concerns about how it can further complicate the gender data. ‘Monitoring in this area is voluntary and there are concerns around the likelihood of employees declaring their ethnic background in diversity monitoring forms,’ says Blacklaws. ‘Generally speaking, employees are far more likely to declare their gender than their ethnicity.’

Moreover, with ethnic minorities even less represented than women in legal, the data will not carry the critical mass that gender reporting does. At Slaughters 83% of the upper quartile is white, while 84% of the top quartile at Linklaters is also white. Only 14% of all employees and partners at Freshfields, meanwhile, identify as black, Asian and minority ethnic (BAME).

It also remains the case that the factors behind BAME disparities will not be the same in each instance and homogenising the groups is unlikely to be conducive to establishing true transparency. Including the ethnicity figures among the gender reporting also carries the risk of assuming the causes behind the respective disparities are the same. The issue of maternity leave, for example, would not be enough to explain the under-representation of black men at partner level. However, some take a more pragmatic view and feel the revealing of such figures is simply the starting point for achieving greater parity.

‘The importance of honesty and transparency cannot be underestimated,’ Blacklaws concludes. ‘Acknowledging gender and ethnicity pay gaps is the first step in paving the way for actions that can make a difference and create a more diverse and equal profession.’

The consensus across the profession is that pay gap reporting, regarding any demographic in legal, is a needed first step in addressing the sector’s woeful track record. However, greater equality across gender, ethnic and class lines will require more rigorous and consistent reporting in areas beyond that of pay. Despite the complexity of finding value in the numbers, the overriding message for now remains a simple one; the legal industry has a lot left to do.

thomas.alan@legalease.co.uk