Barriers to entry: diversity in law firms

Mounting evidence has established a clear link between a diverse workforce and greater levels of economic success. Yet law firms in particular seem to be slow on the uptake. Global Insight examines the factors that could be inhibiting progress.

DINA MEDLAND

The top international law firms are thriving. In the UK over the past six years the top 10 firms by revenue have pulled away from the rest, generating growth of 18 per cent despite the financial crisis, according to new research from Deloitte.

This quarter, fees per fee earner at the top 100 UK law firms increased by 2.4 per cent compared with the same period last year, resulting in overall growth of 3.6 per cent in fees per fee earner this financial year. Making the case for greater levels of diversity in these very law firms might prove difficult in the face of such degrees of economic success. Yet, despite this, diversity, in particular gender diversity, is on the mind of every international law firm across many countries.

In recent years business and media attention worldwide has focused on the absence of women at the top of commercial enterprises. In the UK in 2011, the review of the lack of women on boards of publicly listed companies, by Lord Davies of Abersoch, sparked a much wider debate on the progression of women in business. Alongside this debate, there has also been an increasing focus on the need for businesses to better reflect society’s diversity of socioeconomic background, ethnicity and sexuality.

Initiatives such as the 30% Club expanded the scope of calls for gender diversity to include accountancy and law firms. Their ten-week project Shifting The Needle, facilitated by Mckinsey in 2012, set a goal of increasing the number of women at partner level. With the participation of ten law firms, the project found that to reach 20 per cent by 2020, three out of ten new partner-elects needed to be women. In order to reach a 30 per cent target, six women needed to be appointed partner out of every ten new appointments.

At the time of the Mckinsey analysis, women made up 15 per cent of partners at participating law firms, and 55 per cent of respondents to the survey remained unconvinced that a diverse partnership would improve performance. Two years later, it is a rare individual who publicly questions the benefits of gender diversity at the top of all commercial enterprises. But progress remains slow, as law firms wrestle to devise the best strategy to achieve the goal.

This may be because the demand for gender diversity has become part of a much broader global trend demanding equal rights in the workplace, for example the lesbian, gay, bisexual and transgender (LGBT) movement. Consequently it is just one part of a wider struggle to assimilate this growing desire for equality into each nation’s culture.

Maria Isabel Tostes da Costa Bueno, Vice-Chair of the IBA Women Lawyers’ Interest Group, points out that generational change is inevitably slow to come, and that women themselves are changing. ‘In Brazil we have been the second generation of women demanding change. We supported the notion that you can have both (a personal family life and a professional one). Now the third generation is saying “we want both but we don’t want to make concessions on either the business or the personal side.” I am really very proud of this third generation,’ she says.

Tostes da Costa Bueno does not believe that law firms are ‘a special case’ when it comes to dealing with demands for gender diversity. Despite South America having a reputation for conservatism, she says last year law firms there saw 20 per cent of women becoming partners. But when it comes to sexuality, progress in this part of the world may be slower than elsewhere.

Germany, on the other hand, has one of the worst reputations for women being promoted to equity partnership. ‘It is a very difficult goal for both men and women because of the structure of the firms’ says Maria Wolleh, Co-Chair of the IBA Women Lawyers' Interest Group. Sweden – which many might expect to be ahead on this issue – has only between 1214 per cent female partners at law firms.

Yet Sweden is widely recognised to be well ahead when it comes to promoting other forms of diversity. As US President Barack Obama said in September 2013, on the first ever bilateral visit by a US President to Sweden: ‘We share a belief in the dignity and equality of every human being; that our daughters deserve the same opportunities as our sons; that our gay and lesbian brothers and sisters must be treated equally under the law; that our societies are strengthened by diversity.’

Unconscious bias

Organisations have begun to train their employees on what is referred to as ‘unconscious bias’, in a move to improve their understanding of diversity and the barriers to achieving it. Middle managers can represent a major stumbling block to thinking differently about diversity, as they are often responsible for identifying individuals for progression. It is important, therefore, to make them aware of the bias they may bring to this process, so that they can enable diversity, rather than stifle it. Law firms, like their accountancy counterparts, vary in how they have approached the issue.

In April this year Macfarlanes became the third top 30 City of London firm to adopt a
‘CV-blind’ policy in a bid to combat unconscious bias and elitism in its recruitment. There has been a general sense that the top law firms favour Oxford or Cambridge graduates at entry level, thereby perpetuating a tendency to hire in their own image. Macfarlanes joined Clifford Chance and Mayer Brown in using policies that have assessors interveiw candidates without prior knowledge of their educational backgrounds.

However, the candidates’ CVs are still examined in full at the initial stages of the selection process. Critics suggest that such policies are mere ‘window-dressing’ when it comes to broadening the gene pool that enters law firms – and that the crux of the problem lies instead in the nature of the path to progress and retention.

‘Even where management has taken a lead, change is slow,’ says a female partner at a Magic Circle firm. ‘For example, on gender diversity, where a few years ago you would get challenged on your views, now they are listening.’

The 30% Club has certainly created a powerful spotlight for monitoring change. A female partner at another prominent law firm says: ‘Helena Morrissey [founder of the 30% Club and CEO of Newton Investments] managed to charm the law firms into participating and they did not realise what they had got themselves into. Now the pressure is on them to deliver.’

There is widespread acceptance that the problem lies not in attracting women to the profession, but in retaining them when they get to the stage of considering partnership. Law firms tend not to publish their retention figures. Many firms, such as Magic Circle firm Freshfields, have set up women’s mentoring schemes and networks. These boost confidence, create expectations among associates and encourage women to be ‘more strategic about their careers’ says Avril Martindale, a Freshfields partner.

Others have openly set targets for female partners. Eversheds, a top-10 UK law firm, is one of them, having made a decision to do so at board level last year, due to both declining numbers of female partners and pressure from clients. It identified having board support and senior levels of engagement as key success factors in achieving greater diversity, and set about careful managing and mentoring of the pipeline for partner at all levels.

Fiona Hobbs, Linklaters partner since 1996, head of firm’s Client Sector and Global Head, Diversity:

‘I started at Linklaters straight from university and have been there ever since. When I became a partner there wasn’t a tracking system for partnership, but there is now. It’s a formal three-year pipeline where everyone puts in ideas for who might be partnership material – and it’s not just about women.


It is the most massive waste of talent if we recruit 50/50 by gender and then fall down to 35 per cent women’


We have a women’s leadership programme in place – the third one has just launched – for those who have been at managing associate level for about a year. They are highly likely to make it to partner if they get to that stage. It is the two-to-four-years-qualified stage where we lose them, and it is not just about them going off to have babies. 

It is the ‘how and why’ we are losing people that remains the puzzle. I became Global Head of Diversity last summer and it’s the first time we have had such a role on the executive committee of the managing board. I have asked people to think about why we lose talent – there isn’t one answer and we are having a lot of conversations at the moment.

We needed to start by setting targets around the things we can readily measure – such as women in senior positions at the top and on the board. If you don’t set the tone from the top you don’t get change. It also sets the tone for expectation for the associates.

I have been the only woman on the exco [executive committee] for the last four years, and that can be lonely.

Our next target is electing women to partnerships. We exceeded by some margin the percentage we set last year and 43 per cent of new elected partners were women. But I would be happier if it was a percentage of the partnership as a whole.

There are also global challenges, and there isn’t a ‘one size fits all’ [that works] in all geographies. What wins hearts and minds in Germany – one of the toughest nuts to crack – isn’t going to win hearts and minds in Asia.  Whether women work and progress in the workplace is often a societal issue.

In the end it is the most massive waste of talent if we recruit 50/50 by gender and then fall down to 35 per cent women. [Speaking generally] it is clear that so many women who leave go to in-house roles because they just don’t want to be faced with a pale and male team.

Our global client base means that we need to look like them in terms of both gender and colour – they do comment when you take a woman to a pitch. At the same time clients have other demands which can be hard to meet.’

Eversheds has set targets to achieve 25 per cent female partners by 2016, and 30 per cent by 2020. It has already attained its 2016 target by having 30 per cent female board membership. As of December 2013, the proportion of female partners had already increased from 2124 per cent. Ian Gray, an Eversheds senior management team sponsor for gender, says: ‘The percentage of female lawyers at all levels of seniority below partner has now stabilised at parity or above. As we continue to embrace the gender diversity programme, we are confident that our targets are achievable.’

The Law Society of England and Wales believes that: ‘Targets help to provide clarity about career paths and expectations.’ Clifford Chance, the UK’s biggest law firm by revenue, was the first Magic Circle firm to set targets (30 per cent globally) for female partners as far back as 2008, but has struggled to meet them. In 2012 its female partnership worldwide was 15.3 per cent, while in the UK it was 21 per cent.

For others, the best strategy focuses on discouraging discrimination, rather than promoting diversity through initiatives such as quotas. Maximo Luis Bomchil, based in Argentina, is Managing Partner at M & M Bomchil and Co-Chair of the IBA Law Firm Management Committee. He argues that ‘from the perspective of a medium size firm with about 90 lawyers and 17 partners... We should keep on the track of not discriminating and if it becomes necessary to give certain facilities for someone to become a partner when he/she has earned the promotion, try to satisfy them.’ Bomchil’s strategy has made some in roads: ‘from the 17 partners we have, four are women,’ he says.

Culture clash

In June Linklaters adopted targets of 30 per cent female membership on its executive committee and international board by 2018, as well as its cohort of new partners. But critically, in order to succeed, gender targets require essential buy-in by a male-dominated top tier of management. At the 2012 IBA Annual Conference, Gianmarco Monsellato, managing partner of international law firm Taj in France, caused a stir by calling for 50:50 gender balance in law firms.

His speech is remembered by one IBA member present as notable both because it was given by a man, and because it inspired a Havard Business Review (HBR) blog by Avivah Wittenberg-Cox suggesting that it is often an ‘outsider’ who takes a chance. Monsellato himself points out that he doesn’t write his own speeches. However, Taj has achieved gender parity and has produced Seven Lessons In Gender Diversity (see box).

Changing the culture of a law firm to ensure gender balance is a complicated subject on which many of those concerned are publicly silent. Janet Cooper, the most senior female partner globally when she left Linklaters, says: ‘[Big law firms] are a very male dominated environment. It is a 50 hour week and you need a wife to do that.’ Her husband moved from his role as partner in a law firm to take an in-house role when she became a Linklaters partner. ‘It was a conscious decision on our part,’ she says.

This ‘conscious decision’ has been repeated by a startling number of female partners who find themselves in a similar position. Raquel Flórez, one of three female partners at Freshfields in Spain, says: ‘Change is not coming at the pace at which it is necessary.’ Together with her husband, she made personal choices for a lifestyle that allowed her to do a job she says she loves (see box). 

The growing number of women leaving law firms to become in-house lawyers is also testimony to the search for a different working culture with different demands on lawyers. As Canadian lawyer Jordan Furlong wrote in 2013 in a blog entitled ‘Why women leave law firms, and when they’ll return’: ‘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.

‘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 lot of personal dysfunction,’ he says.

‘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,’ Mr Furlong added. There are many female lawyers who echo these views, privately.

Setting targets for client-pleasing strategic and marketing reasons may be a growing trend, but to achieve long-term change to the working culture of law firms, they may have to look harder at number four of the 30% Cub’s recommendations: ‘to develop innovative, more flexible client service models to update working practices to unlock the full potential of talent.’

As Martindale points out: ‘The work [for lawyers] is now increasingly in Asia, and the need for mobility is once again raising its head. Clients may come to you because they want a Magic Circle firm doing a deal in English – or in Mandarin – and this is an increasing challenge when it comes to involving women.’

Maintaining that fee-per-earner lead while also committing to greater diversity may well be seen as the next hurdle. Not everyone buys in to Monsellato’s firm belief that ‘fairness and profit are consistent and not mutually exclusive.’

Seven lessons in gender diversity

From French law firm Taj, a member of Deloitte Touche Tohmatsu Limited (2012):

1   Get top management commitment – if you don’t have this, the rest will be much more difficult

2   Ensure you have a diverse set of people in the room when making important decisions – and most certainly always and without exception when it’s about hiring and promotions

3   Ensure leaders have competencies in inclusive leadership

4   Effectively manage change, challenges and setbacks

  Really listen to people, invest in them equally and teach them what is important

6   There are no diversity programmes

7   Measure promotions: female promotions, that is

In 2012, Taj had 50 per cent women as partners, 50 per cent women in executive roles, equality of pay with women representing 50 per cent of the top earners by compensation level, and considerable success as a firm.

Raquel Flórez Freshfields partner, Spain

‘In the Freshfields universe Spain is one of the best countries for gender diversity and we have three female partners out of ten overall. I would say it has happened because of a combination of factors.

There are people who would describe me as a ‘feminist’. I believe in gender quotas for the boardroom. If you could show me a situation where everyone on a board was there on merit I would respect the argument for no quotas by gender. I am not sure why the burden of proof is so strongly on the women here.

At Freshfields, management have taken a lead on gender diversity in terms of how it is viewed. A few years ago you might get challenged but now they are listening, and thinking harder about women and why they are not progressing in the same way as men.

It varies so much by country. In Spain, of three female partners at Freshfields, two are managing families and the balance is a big challenge. In Italy we have no female partners, which means talent is leaving the company and not expecting to become partner.

But I do think it isn’t all about flexible working. There is a need for realism as to what the job entails and the choices one needs to make as a result. Work as a law partner is very demanding and it is something you just have to manage.


If you could show me a situation where everyone on a board was there on merit I would respect the argument for no quotas’


 

It is also difficult to use existing female partners as ‘role models’ because everyone manages it differently. You may have children, use a nanny and be happy doing that – or you may do that and have to deal with feeling very guilty. Or you may decide that if this is what you want, you don’t have children. The pressure from society is considerable whatever the choice you make – and that varies, depending on the society.

These are choices that are also made by men. Not everyone wants to make work into an entire life. In the law firm model at the moment not everyone can make it, so it is to some extent a closed system – for both men and women.’

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Dina Medland is a freelance journalist and can be contacted at dinamedland1@gmail.com