Why women leave law firms, and when they’ll return

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Posted in: Diversity

Visiting my alma mater Queen’s Law School recently, I paused, as I often do, before the framed graduation picture of the Class of 1973. It was startling for this member of the Class of 1993 when I saw it 20 years ago, and it’s downright unbelievable seeing it 40 years on in 2013. Among the Law ’73 grads, you will find exactly one — repeat: one — woman (Mary Jane Mossman, who went on to become an award-winning professor and Associate Dean of Osgoode Hall Law School in Toronto).

By the time I enrolled in law school in 1990, women made up about half of all law school classes and were said to constitute as much as 60% of the incoming classes at some faculties. So the Class of ’73, as shocking as it was, seemed like a relic of a distant past. But it’s worth remembering just how male-dominated the legal profession has always been. Check out these figures compiled by the ABA: as recently as 1980, men outnumbered women in the US legal profession by a staggering 92%-8%. Roughly ten years later, the breakdown was 80%-20%, and ten years after that, 73%-27%. (In 2010, the most recent year available, the split in Canada was 68%-32%.) It seemed like a natural progression was underway towards a more balanced profession.

But by 2005, the US split was still only 70%-30%, and several indicators suggest that’s as good as it’s going to get: women and minority hiring has backtracked at large law firms since the financial crisis, and The Careerist points out that of the ten top-ranked US law schools, only one has more women enrolled than men. The issue is especially acute in the private bar: women enter law firms, but they don’t stay there for long, moving to sole practices, into in-house positions, into the public sector, or out of active legal careers altogether.

One statistic nicely sums up the current state of affairs: women constitute just 15% of equity partners at AmLaw 200 firms. Take a moment to let that one sink in. (For more depressing reading, click the link to get a detailed account of ongoing compensation gaps between women and men at these firms.) The profession, to its credit, has been trying for the last 20+ years to address this problem, creating commissions, task forces and programs of all kinds to support women in private practice. Whatever impact these efforts have had, they have shown little evidence of successfully enabling more equitable status for women in law firms.

I’m now coming to conclude that this is because all these efforts, well-intentioned as they might be, are looking at the situation the wrong way. We’ve been assuming that the lower numbers of women in law firms is a problem that needs rectifying. But what if we stop looking at women’s legal career choices as a failure that needs fixing, a failure to fit the traditional standards of success? What if, instead, we start looking at this trend as evidence of women’s eminently sensible and illuminating response to the state of law practice?

Here’s my theory: women aren’t leaving law firms at an abnormal rate. They’re leaving law firms at a perfectly rational and normal rate. It’s men who are staying in law firms at an abnormal rate. Women aren’t the faulty outliers; men are.

When you look at the situation that way, a lot of things start to make sense. Women who enter law firms quickly and accurately diagnose that these are amateurish organizations that employ archaic workflow systems, inept pricing mechanisms, skewed compensation structures, and largely ineffective management, not to mention a whole lotta personal dysfunction. The typical contemporary law firm is nobody’s idea of a good business model, a satisfying workplace, or a solid bet for long-term future success. It shouldn’t surprise us that women abandon this model in droves. The question we ought to be asking ourselves is, why are men sticking with it in greater numbers than should rationally be expected?

Certainly, there are any number of advantages presented to men by the typical law firm model — we created it in our own image, after all. Head and shoulders above all these benefits is the time- and effort-based pricing and reward system. Men continue to shoulder much less of the burden of family and household care than women do, giving them more time to devote to the firm. And since time is the currency of law firm financial success and the measure of law firm dedication, it’s no wonder that men find the environment attractive and rewarding in that regard. The mystery is why we put up with all the other unpleasant, unresponsive and dehumanizing aspects of the model. Why do we accept and endorse a system that delivers exactly one benefit to us (revenue) at the cost of so many other disadvantages to us, to our erstwhile female colleagues, and especially, to our clients?

These contentions underlie my larger thesis: in the medium- to long-term, women will flood into law firms and into the private practice of law generally, but not because the profession or firms themselves have made various “accommodations” (a dangerous and ultimately demeaning word) to the standard model for women. It will be because that model itself will sink entirely beneath the waves of change, replaced by new approaches that more closely resemble modern business practices. My impression is that women are already a growing and increasingly potent force in modern solo practices, where they can make their own rules. The “solo” ethic will, as time goes on, start to spread to larger legal enterprises.

Inevitably, and especially with the advent of “non-lawyer” participation in the market, law firms will lose their 19th-century trappings of time-based pricing and harshly individualistic compensation systems. They will cease to be clubs of privilege and start to be engines of value and productivity. And very shortly afterwards, not by coincidence, they will start to benefit from an influx of the amazing female talent they have been rejecting for decades. Five years ago, I wrote about a “Moneyball” approach to building law firms that recognized and capitalized on the legal market’s ridiculous undervaluation of women: our destination is a market in which that undervaluation comes to an end.

This will not happen overnight; but the current law firm model is inarguably unsustainable, and when it finally falls away, real shifts in the law firm gender mix should be one of the primary unlooked-for benefits. We can best prepare ourselves for that outcome by hastening the fall of the old model — and by considering the distinct possibility that women, far from constituting a “problem” to be “fixed,” have actually been pointing the profession in the right direction all this time.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.             
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Breaking the big firm

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Posted in: Big Firms, Billing, Diversity, Talent

My strongest, greatest fear by far, if it’s not too soon to look to the “other side” of this financial system meltdown and general economic interregnum, is not that things in law-land will look overly different when we emerge, but that they won’t look different enough.

That observation comes from Bruce MacEwen of Adam Smith Esq., and I share his concern that false confidence will lead too many large firms to believe that everything’s going to be basically okay. For large firms, everything is emphatically not okay.  The past couple of weeks have delivered a series of examples that demonstrate one thing: the ways in which large law firms have operated over the past few decades are coming to an abrupt end.

First, consider this this Legalweek report that two major international firms, Mayer Brown and Reed Smith, are jumping onto the fixed-fees bandwagon. Mayer Brown is readying itself to offer fixed fees for all its transactional work, as well as to make more frequent use of abort agreements and success fees. Reed Smith, meanwhile, plans to use fixed or capped fees in its financial industry group, in its corporate and real estate practices, and for transactional work.

What brought about this sudden departure from the easy-and-profitable billable-hour system? The firms’ leaders cite client relationships first and foremost, which is nice to hear. But perhaps equally instructive are two other articles linked from that Legalweek story: 55 job cuts at Mayer Brown in March, Reed Smith hiring a restructuring consultant in July. Few firms undertake changes of this potential magnitude unless the outside pressures exerted on them have made things very uncomfortable. (It’s worth noting, as Jim Hassett’s webcast does, that these are not the first AmLaw 100 firms to  climb onboard this train.)

Even more revealing are the contents of a leaked strategy memo from O’Melveny & Myers that appeared on Above The Law. The firm plans to “adopt a single rate card by FY2012, with volume and ‘investment’ discounts and appropriate alternative fee arrangements … becoming the leader in providing high-end legal services on a fixed fee basis, reducing costs to clients and achieving superior economic performance through practice management oriented toward cost effective client service.” Especially noteworthy are plans to reduce associate leverage to as low as 2-1, a ratio that’s positively Canadian.

Fixed fees, if done right (a big if), are demonstrably better both for the client and the lawyer. The question is whether large firms constructed on billable-hour pyramids can really adapt their culture and systems to make such a monumental change. Many big firms still think the key to flat fees is to take the last ten bills issued for this kind of work, average them out, add 10% for contingency, and present the final figure with a flourish. Fixed-fee veterans in smaller firms are skeptical, to say the least. Here’s Valorem’s Patrick J. Lamb on these big firms’ moves:

The essential element of alternative fees that actually work is that they shift risk to law firms, meaning the value changes from leverage and body count to experience and fewer bodies.  More brain power, less body count.  So a goal of reducing leverage “in some practices” to “as low as” 2 to 1 will make anyone experienced with alternative fees laugh out loud.  O’Melveny might as well take out a full page advertisement saying it really won’t be changing a damn thing.

I’m prepared to give O’Melveny’s initiative the benefit of the doubt, actually — every journey has to start somewhere, and I want to encourage every green shoot of innovation I see. But man, is this a long journey — changing a law firm’s fee and billing structure is like re-engineering your DNA, and the best will in the world won’t make it any less difficult. And for every large firm that is finally acknowledging that the horse they’ve ridden for years has died, ten more are still clinging on to the saddle.

The O’Melveny memo states at one point: “In the very recent past, our business model, as a whole, has yielded disappointing financial and practice growth results. … [O]ur litigation clients are looking for rate and fee reductions, and we expect that mindset will continue into the next good economy and beyond.”  That understates the size of the challenge. It’s not just litigation clients — a lawyer at a large firm confirms to me that the pressure for lower and/or more predictable costs is intense and is coming from across the client spectrum. This is the new reality, and large firms will struggle to make the sort of fundamental changes needed to adapt.

Let’s look at another key element of law firm success: personnel. The results of a survey published in The American Lawyer are interesting, if not surprising: associates in large firms are measurably more unhappy than their counterparts in smaller firms. Not only that, but graduates of the “elite law schools,” from which so many big firms insist on drawing most of their recruits, are the unhappiest of all when compared to their colleagues from “less elite” schools. (It doesn’t help that, as Ron Fox points out, law schools of every rank tend to funnel their graduates towards large firms and away from opportunities to serve ordinary consumers in smaller practices.)

You can probably guess the advice that the study’s authors offer big firms as an antidote: recruit outside your usual law school boxes, and make life for your new lawyers a little less punitive. It’s advice unlikely to be accepted, says Aric Press, editor-in-chief of American Lawyer: “I fear that we will look back at the exuberant spree of the last few years as the high-water mark of nonelite law school hiring. … This leaves an opportunity for the firms wise enough to seek first-class talent no matter what brand is on a diploma.” But how many firms will risk the CYA comfort of consistently recruiting from “the best and the brightest,” let alone make substantive changes to the overall associate model?

The study’s authors note that big-firm attrition is particularly frequent among women and minorities. Underlining that concern is this account of an event celebrating Working Mother magazine’s 50 Best Firms for Women Lawyers. Many of last year’s winners didn’t make the cut this time — in part, perhaps, because despite wishful thinking to the contrary, leaner times at big firms have made it harder, not easier, for women to advance and succeed:

It’s optimistic to believe that most large law firms are rethinking the work/life balance equation during these hard times. Frankly, most firms today are focused on survival and on a need to bring in more business — they are not, it seems, focusing on the larger questions of the meaning of work and job satisfaction. From where we sit, covering women in the profession for almost a decade, we don’t see a revolution on the horizon.

So: profits are dropping fast, more firms are getting ready to change the basic business model, the young talent is alienated, and diversity has been back-burnered. But that’s not the worst of it for big law firms. Because all this time, solos, small firms and midsize operations keep picking up all the opportunities that the large firms keep dropping.

While big firms allow women to walk away, one small firm encourages its employees to bring their children to work — not to an on-site day-care, but into the office, all day long. While big firms burn through their young talent, innovative companies like DirectLaw offer new lawyers reduced pricing to start up a solo virtual law platform — with 90 days’ free tuition to Solo Practice University to boot. While big firms set up committees to consider fixed fees, small firms have long since figured it out and will even tell you, as Jay Shepherd does, how they set their prices. All the momentum in the legal services marketplace today favours small, adaptable, innovative, client-focused, value-oriented, business-savvy providers. Most large law firms answer to immobile, traditional, self-centered, profit-oriented, and business-challenged. It’s not hard to pick the winner here.

Every marketplace, even one as artificially stunted as legal services, operates according to the law of supply and demand. The demand is changing, irrevocably. The suppliers that change with it will survive; the ones who don’t, won’t. Some more large firms are waking up to this fact and doing their best to change — but I’m concerned that 2009 is simply too late to be starting the change process.

Branding, blogging and the attention economy

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Posted in: Diversity, Marketing, Technology

Every online community loves a meta-conversation, a discussion about the community itself, and the blawgosphere is no exception. But even by those standards, the explosion of posts ignited by a law.com article on women law bloggers was remarkable for its strength and immediacy.

Published yesterday, the article posited a relative absence of women blawggers (rather ironically, considering the term “blawg” was coined by Denise Howell) and suggested various hypotheses to explain the shortage. Within 24 hours, the article had touched off responses across the blawgosphere, from Nicole Black, Ann Althouse, Mary Dudziak, Christine Hurt, Diane Levin, and Laurie Mapp, along with Scott Greenfield and Robert Ambrogi.

The upshot of most of these posts is that the writer failed to look deeply enough into the legal blogosphere, restricting her research to the most highly trafficked sites and those of large law firms. While that’s true, I also think there’s something to be said for male law bloggers’ tendency to link to other men disproportionately more than to women. I think it’s also worth noting that if there is a serious paucity of women bloggers, it’s mostly inside of law firms, especially the larger ones. I may be verging on cynicism here, but I think that’s largely because two things law firms don’t tend to take very seriously are the careers of their women lawyers and the utility of blogs.

Several bloggers also pointed out that until this article asked the question, it had never occurred to them to think about the gender of the other bloggers they read or linked to — it was of the sheerest irrelevance. My own blogroll includes bloggers like Carolyn Elefant, Susan Cartier Liebel, Connie Crosby, Merrilyn Astin Tarlton, and Penelope Trunk, but until I made that list, I had never thought about the male-female breakdown. Ditto for the people I follow on Twitter, including most of the above as well as Victoria Pynchon, Mina Sirkin, Donna Seale, Kelly Phillips Erb, and too many others to list. But just because I haven’t thought about blawggers’ gender before isn’t an excuse to not think about it now, and I’m glad for the opportunity to learn about more women law bloggers worth reading.

But what really struck me among all the posts on this topic, and what I’m really interested in writing about today, came from Ann Althouse. Responding to the suggestion in the original article that women avoid blogging because they’re more prone to professional or personal attack, she wrote: “The internet is not going to coddle and comfort you. In fact, the internet wants you out of here.” [Emphasis in original] While the delivery is a little harsh, I think this is a powerful and profound statement, and every lawyer who intends to build her or her profile and brand online needs to be aware of it and accept it. Continue Reading

Preaching to the choir about innovation

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Posted in: Diversity, Innovation

Legal Times reports the release (2nd ed.) of Fair Measure: Toward Effective Attorney Evaluations, by the ABA’s Commission on Women in the Profession. Fair Measure offers law firms instructions and materials to help them conduct performance evaluations free from gender bias. And it offers us a useful prism through which to view the most important role innovation plays in the practice of law.

I haven’t read the book, but its central premise — that evaluations are (a) key to lawyers’ career progress in law firms and (b) extremely susceptible to both overt and unconscious gender bias in favour of men — seems unassailable. But the book also seems vulnerable to two underlying assumptions: that (a) most law firms systematically rely on evaluations or indeed any other rational method when assessing and promoting lawyers, and (b) most law firms are sufficiently troubled by their clear inability to retain women lawyers that they’ll actually do something about it.

In a typical law firm, when partners evaluate associates, they often do so in a peremptory manner that reflects the low priority management has accorded the task — it’s not billable, it’s not tied to the partner’s own status or compensation, and it’s not part of a holistic approach to associate development that includes mentoring and training. Similarly, decisions to extend partnership offers are often made with subjective criteria that reflect partners’ own personal likes and dislikes, which invariably includes stereotyped beliefs about gender and ethnicity.

The real problem is the absence in many firms of rational, consistent mechanisms for evaluating and nurturing talent, and the untroubled attitude towards the negative impact that absence has on fairness and diversity within the firm. In other words, Fair Measure is a book designed for the small minority of firms that actually believe they have a weakness and actually want to fix it. The bulk of the profession likely will pass it by.

But you know what? That’s fine. Continue Reading

Towards diversity in law firms

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Posted in: Big Firms, Diversity

Diversity in the practice of law has been on my mind the last few days. Partly it’s thanks to a confluence of events, such as the second annual Call to Action: General Counsels’ Summit on Diversity, which starts tomorrow in Arizona and gathers 150 top GCs to find ways to increase diversity among their own departments and their outside law firms.

Other triggers include Coca-Cola’s recognition of Kansas City’s Shook, Hardy & Bacon for making significant progress on diversity and Skadden Arps’ innovative $10M program to encourage minority students at City College of New York to pursue legal careers. But I was mostly prompted by my participation in a plenary panel last Friday at the National Association of Law Placement’s Annual Education Conference in Toronto.

Sharing a stage with an advocate like Vernā Myers, and hearing her speak incisively and passionately about diversity in the law, is a moving experience. So is sitting in front of several hundred NALP members, an overwhelmingly female and not uniformly white audience, and thinking about how many of them would, if they wished, be renowned lawyers, practice group leaders and managing partners today were the law firm environments they entered not been so structurally hostile to them.

Vernā made the case that law firms’ business and cultural models are white, male, straight and Western in their orientation; I think she’s right. The fact that there’s a commonly employed compensation system called “eat what you kill” tells you how lawyers like to imagine and narrate the law firm experience. If you had set out to design a compensation and promotion system specifically to reduce the number of women in firms, you could scarcely have done better than the billable hour regime. And male or female, law firm partners are near-universally white, and they continuously hire, mentor, associate with and promote people who look like them.

The results of this culture of exclusion are depressingly clear. Women make up half of law school graduating classes, but only one-third of the practising bar and less than one-fifth of law firm partners. In terms of diversity, 25% of US doctors are from minority groups, along with 21% of auditors and accountants and 18% of professors; for lawyers, the number is 11 percent. I don’t have statistics for Canada or the UK, but I imagine they’re no better and they might well be worse.

It seems to me there are three elements involved in dealing with diversity in the practice of law. The first is to establish that it doesn’t really exist, and I don’t think anyone has a strong argument against that. The second is to establish that its absence is a problem, one that the profession should care enough about to address. And the third is to actually address it and solve it. Continue Reading

What diversity looks like today

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Posted in: Demographics, Diversity

Back in November, before this blog started up, the National Association of Law Placement published some analyses of its 2007-08 NALP Directory of Legal Employers, an annual compendium of legal employer data. You may have already seen these results, and I apologize for the redundancy if so, but they only belatedly caught my eye in NALP’s February 2008 Bulletin, and I felt compelled to mention this finding:

In a survey of 61,297 partners in 1,562 U.S. law firms of all sizes (from 50 or fewer lawyers to more than 700), the total percentage who were white was 94.6%.

Let’s look at that slightly differently, to help it sink in: the total percentage of all minority lawyers was 5.4%. For minority women, the number shrinks to 1.65%. That is to say, there were 1,011 female minority partners in this survey, or about two-thirds of one lawyer per firm. If you lined up 100 typical partners at U.S. law firms, the first 94 would be white (and the first 81 of that group would be male). The last five would be members of visible minorities; only the final, 100th lawyer would be a female member of a minority group.

I mean, come on.

At least the profession is starting to talk about this, though I’m not betting heavily on an imminent change. I don’t have anything else pithy to add. I just thought you might want to sit and think a little about that 100th partner.