Law firms are pro-active in looking at their data for answers on the gender pay gap, but can they lead the way?
Over the past year, all UK law firms with over 250 employees have had to disclose their gender pay gap as part of a new set of pay transparency regulations. These firms have been pro-active in doing so and have reported various pay gap figures. In the top 25 law firms by turnover, some have reported pay gaps as high as 39% median (Linklaters), and others as low as 12% median (DLA Piper).
But what the gender pay gap numbers are in this first year of reporting is almost irrelevant. This stage of reporting merely represents all firms setting out their baseline data and engaging in a race to lower these gaps faster. Through research and discussion with partners and employees of law firms across the UK, we have identified three key reasons why doing this is beneficial:
- Decreasing the pay gap and reporting on it regularly will build trust with employees. Research shows that employees feel valued and show increased productivity when the employer is transparent around pay. One of the most popular pieces of research in this space is ‘When Pay is Kept Secret, the Implications on Performance are Revealing’, which was published in 2013 and looked at the impact of pay secrecy on employee performance. The conclusion of the research was that pay secrecy is likely to not only hurt an individual’s work performance but prompt top talent to seek new employment.
- Law firms, like many other businesses in the UK, are constantly mitigating the risk of employee retention and keeping top talent. Being more engaged and transparent about pay and pay related plans helps build loyalty with employees. You can read more about what happens when this goes wrong and how we can mitigate this in this article.
- Outside these key benefits internally, there are also benefits externally as law firms positions themselves as leading the way on pay transparency and the gender pay gap. We’ve had feedback from a range of firms that find that in doing this they become more attractive for their clients who then trust them to handle their pay transparency related questions.
Over the past year many law firms around the UK have used Gapsquare to understand their gender pay gap data. The regulations require 6 figures for reporting:
- The mean gender pay gap
- The median gender pay gap
- Distribution of the workforce across four quartiles
- The mean bonus pay gap
- The median bonus pay gap
- Proportion of men and women receiving bonus payments
On their own these 6 indicators create a weak baseline for law firms (or any organisations for that matter) to start building any robust changes, they risk being vague and not allowing context to be built around the figures. As the legislation only requires relevant employees to report on their gender pay gap, partners of law firms fall outside the remit of this exercise. This issue has been widely debated and the most innovative firms are already taking action on including partner pay in their own figures.
The firms that have been using Gapsquare’s software to generate intelligent reports and insights into pay disparity are now finding themselves a step ahead of the game. Through deep-diving into their pay data and understanding the reasons behind their pay gap including through choosing to include data around partner pay in their own analysis, our clients have been able to make data-driven decisions to narrow their pay gap more quickly. They have also built transparency into their working practices, which, as we have mentioned, will improve productivity and retention in the long run.
Through this data we have been able to conclude that, yes all firms have their own internal differences, but there are key trends that have emerged and are outlined below.
Flexible and part time work is key to narrowing the gap – flexible working for men and women can help narrow the gaps and allow both genders to lead a more balanced life and therefore be more productive. With access to technology it is becoming increasingly easy to do your job anywhere. Organisations in the services sector, such as law firms have a harder time balancing this with the fact that they bill clients per hours/days worked. These organisations are still likely to value hours spent on task more than efficiency. In this context, law firms might have to do a bigger rethink of their financial model in the age of digital workspaces and ways in which people can be more productive at work.
Recruitment and career progression – is something that still happens in an old fashioned way. Ads for roles are still framed in language that is more appealing to one gender or another. After spending a morning running various legal secretary job ads through the gender decoder (a programme that helps us understand if job adverts are biased in favour of one gender or another), over 90% came back as feminine coded. This means they are more likely to attract female candidates. On the other hand, partner level job ads were coming out as particularly male coded especially in the financial sector.
Occupational segregation has a massive impact on the gender pay gap. This is valid for any sector in the UK economy. Any occupation that is more male dominated is likely to pay more per hour than an occupation that is female dominated. In law firms this manifests itself in the proportion of women taking on support-type roles. Beyond that, it also manifests itself in the type of law female and male partners practice. Employees are more likely to bring in higher value customers for the firm in contractual law or IP law, and these roles are overwhelmingly dominated by men.
All of these intricacies are painting a picture of imbalances that can be easily addressed with the right actions and tracking. Restructuring ways in which the business model works, encouraging flexible and part time work, and re-considering how we perceive suitability in various roles can position law firms as leading the way on this issue. This will make them more attractive to top talent as well as to their clients who are seeking to create similar change in their organisations.
Interested in learning more?
Why not read Gapsquare’s briefing paper: Driving Change Post Gender Pay Gap Regulations: Spotlight on the Legal Sector – Access the Briefing Paper here.
Or watch our recent webinar Driving Change Post Pay Gap Regulations: Emerging Trends within the Legal Sector Webinar
Briefing paper link: https://page.gapsquare.com/spotlight-on-the-legal-sector .
Webinar access link: https://page.gapsquare.com/legalsectorwebinar