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September 30, 2008 11:21 PM

Diversity's Bottom Line

Posted by Ed Shanahan

By Susan Hansen
Excerpted from the Fall 2008 issue of Minority Law Journal

Even in an era of $160,000 salaries for first-year associates--plus bonuses--not every young lawyer is feeling equally flush. Law school debt and the uncertainty of today's tumultuous markets have left many associates feeling squeezed--and a lot of them are minority lawyers.

This year our Minority Experience Study focused on the economic life of big-firm midlevels. Comparing responses from young attorneys of different racial groups, we found that African American associates, in particular, generally appeared to be in a less secure financial position. They, together with Hispanic lawyers, reported higher levels of debt and lower bonus compensation compared to their white and Asian American counterparts. More black attorneys said that their workloads were too light, and overall they reported lower billable hours, even though they took less of the vacation that they're entitled to than other groups.

As in previous years, the Minority Experience Study drew on data collected by our sibling publication The American Lawyer for its Midlevel Associates Survey. The survey, conducted in spring 2008, includes 7,259 third-, fourth-, and fifth-year associates at 180 large law firms who identified their racial background, including 5,390 whites, 539 Asian Americans, 241 Hispanics, and 212 African Americans. (The 877 survey respondents who did not specify their race were not included in the Minority Experience Study.)

The economic disparities among different groups of associates begin early. More than 90 percent of Hispanic and African American lawyers reported that they borrowed money for law school, while just over 80 percent of whites did. Only about three-quarters of Asian American attorneys took out law school loans. Black and Hispanic attorneys were also more likely to have taken out loans of more than $100,000.

To several diversity professionals, those numbers aren't surprising. Since minorities are more likely to have lower incomes, they note, fewer African American and Hispanic families can help their children foot the bill for law school. Furthermore, our survey found, lawyers of color were often more likely to have chosen to work at law firms because of that debt. More than half of African American and Hispanic lawyers said that law school loans were a major factor in their decision to join a firm, compared to just under 40 percent of white and Asian American midlevels.

Hours_compensation_2 One financial gap that shows up on our survey is in the area of compensation. Both African American and Hispanic respondents report an average base salary of about $178,000. White associates say they make $184,000, on average, and Asian American associates say they make $195,000. (For a larger view of the Hours & Compensation chart at right, click on the image.)

Since most large firms pay associates via a lockstep system, the salary disparities probably reflect differences in associates' experience and geographic distribution. A higher proportion of the black and Hispanic respondents to our survey were either younger associates or worked in cities with lower associate salaries. Nationally, third-year associates make about $25,000 less than fourth-years, and $45,000 less than fifth-years ["The Paycheck Report," The American Lawyer, August]. Slightly more--some 45 percent--of black and Hispanic respondents to our survey were third-year associates, compared to 40 percent of white and Asian American respondents. In addition, a smaller proportion of black and Hispanic associates (54 percent and 49 percent, respectively) were based in the high compensation locales of New York, Los Angeles, Chicago, Boston, Washington, D.C., and the San Francisco Bay Area. Almost 60 percent of white associates and three-quarters of Asian Americans worked in those areas.

Marked Differences in Bonuses

For bonuses, the picture is a little more complicated. Outside of New York, most firms do not pay lockstep bonuses, but instead base bonuses on a range of factors, including billable hours. Our survey, meanwhile, found marked differences in average bonuses among the different racial groups. Mean bonuses were about $29,000 for African Americans, $34,000 for Hispanics, $37,000 for whites, and $41,000 for Asian Americans.

Again, it's likely that experience and geography play a significant role in creating these disparities. For instance, median midlevel bonuses in Atlanta, where almost 10 percent of black respondents are based, are at least $20,000 below the national median, according to The American Lawyer.

Billable hours, however, represent another factor that might contribute to lower African American bonuses. Although all groups reported working and billing similar amounts of time each week, African American midlevels reported total yearly billable hours that were at least 100 hours lower than those of other groups. (For Hispanic midlevels, the gap with whites and Asian Americans was far smaller, about 25–30 hours per year.) The lower hours did not seem to be for lack of willingness to take on work. Black associates were the most likely to say that their workloads were too light (about 10 percent)
and the least likely to say that their workloads were too heavy (about 5 percent). They also reported taking only 60 percent of their allotted vacation, less than any other group.

Diversity consultant Arin Reeves sees a clear connection between lighter workloads and lower discretionary bonuses. But she also contends that black midlevels may be getting lower bonuses because they’re less likely to have strong mentors who can help them get work that's critical to the firm--and also advocate for them at bonus time. "All these things are very tied in," says Reeves. Lower pay is actually a
symptom of other problems, she adds: "It's the consequence of other things going wrong."

A PDF of the full report, Diversity's Bottom Line, and the Minority Experience Study is available at Minority Law Journal.com.

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I think this report falls short in one key area - it should include ALL minorities, including GLBT attorneys since they are just as likely, if not more likely, to experience discrimination in large law firms.

This study suggests that minority lawyers may have even more debt than their white counterparts, which may create a barrier to entering public service. Another study by the National Association for Law Placement (NALP) shows that many entry-level public interest lawyers may earn up to $120,000 less than their big-firm counterparts. These are serious issues and more can be be done to eliminate these gaps. Visit http://equaljusticeworks.wordpress.com/ for more information on public interest law, salary gaps and law school debt relief.

There is a huge difference in racial minorities and GLBT: racial minorities are easily identified, and thus subject to prejudice.

GLBT minorities look just like everyone else, especially when they dress in business casual or business formal attire. Before any discrimination could occur, a GLBT attorney would have to actively disclose their sexual preference. You don't have to hide your sexual orientation. If you show up to work and do your job, no one will know what fun parts you're partial to.

The only reason to disclose your sexual orientation is in hopes of getting different treatment (firms may be more willing to hire/keep you in order to boost their diversity numbers).

Hmmm. . . I wonder what the income disparity between African American Women and Asian Men associates is?

Even with a large loan, those salaries certainly don't force someone to live below their means.

Nice blog, its great article informative post, thanks for sharing it. Thanks for the information!

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