Law firms’ partners are making more money a new survey shows, but gaps in compensation when gender, ethnicity, and equity status are factored in are widening

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Lawyers are making 38% more than they were 10 years ago, but the disparity between compensations of male and female, white and non-white, and equity and non-equity partners are widening, according to a new report by legal recruiting firm Major, Lindsey & Africa.

The firm’s report, published Tuesday, also found that attorneys who made lateral moves earn more than their non-lateral counterparts.

This comes as partner compensation continues to be a hot-button issue in the industry. Firms are increasing pay for equity partners even as they’re laying off workers amid the ongoing pandemic. And, Davis Polk recently announced that it’s abandoning its strict lockstep system as the battle for top legal talent becomes increasingly competitive.

Average partner compensation has grown 38%, from an average of $640,000 in 2010 to $885,000 in 2018, according to the report, which surveyed thousands of partners at law firms ranked in the Am Law 200, NLJ 350, or Global 100 on the salaries they paid from 2010 to 2018.

The key driver behind this increase is a commensurate 40% rise in originations, which is based on how much revenue is generated by clients that a partner brings to the firm. Survey respondents said that originations were the most important factor in determining partner compensation.

Despite an overall rise in compensation, partners of color see mixed results

However, the increase in pay is not universal when broken down by partners’ ethnicity.

While reported average compensation of white, Asian Pacific, and Hispanic partners all rose in the past decade, that of Black partners actually fell from $565,000 in 2010 to $539,000 in 2018 — a 4.5% decrease. By comparison, average compensation for white partners in 2018 was $864,000.

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Lowe footnoted this trend with the caveat that it’s difficult to draw meaningful statistical conclusions from this data, since there are so few partners of color to begin with. He does think, from a bigger perspective, that there’s been a marked improvement in diversity in law firms from 20 or 30 years ago, when firms didn’t acknowledge that there was a diversity issue.

Read more: 2 key steps law firms must take to boost diversity — and how being inclusive can help land major clients like Microsoft

The topic of diversity has especially been sparking discussion in recent months as the country undergoes a racial reckoning. Law firms, which are traditionally seen as dominated by white males, are no exception. Despite efforts to increase diversity and inclusion, some firms may not know how to implement meaningful changes.

“What hamstrings them now is that they’re not quite sure how to fix it,” Lowe said. “Continuing to make sure that everyone’s given a seat at the table is really important.”

Gender pay disparity may be widening, especially among non-equity female partners, but lateral moves might help

Along similar lines, the report found that while the proportion of partners who identify as female has increased from 15% to 24% in the last eight years, female partners earned an average of 35% less than male partners in 2018 — down 11 …read more

Source:: Business Insider


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