The Talent

February 24, 2010 9:06 AM

What Women Want: Partnership Details

Posted by Vivia Chen

Women lawyers are furious, and the legal profession at large doesn't even know it. The reason for the fury: law firms dismissed a request made by the National Association for Law Placement (NALP) for details about partnership structures--namely, a breakdown of equity versus non-equity partners in their ranks. This year, NALP tried, and failed, to get those breakdowns, hoping to include the information in its annual  Directory of Legal Employers.

Women and minority lawyers say there should be greater transparency about the number of equity and nonequity partners at law firms. It's the difference between having real power and the semblance of power, says Fernande Duffly, a judge on the Massachusetts Appeals Court and a former president of the National Association of Women Judges. Duffly, an advocate for achieving greater diversity in the profession, had pushed NALP to collect the information for the last two years. "If you're making a career selection, you want a place where you have opportunity for real leadership; I think law students want to be full partners," Duffly says in explaining why the breakdown is important. She adds that she has a personal stake in the issue: "Law firm partners are part of the pipeline for our judiciary."

In May 2008, several national organizations dedicated to promoting women and minorities in the law sent a formal proposal to NALP about collecting more precise information on law firm promotions. The groups included the National Association of Women Lawyers (NAWL), National Association of Women Judges, Minority Corporate Counsel Association, Center for Women in Law at the University of Texas, and various bar associations. NALP's board approved the plan last November and then launched its partner data collection effort in mid-January. Now, just a month later, the effort has come to a halt.

"The majority of our members refused to provide the breakdown," says NALP executive director James Leipold. "Many [firms] said they would not fill [out] the NALP form if we required it." NALP dropped the effort on February 12.

NALP's legal employer directory, which appears both online and in book form, "represents an important revenue source for us," admits Leipold, "[so] we had to back peddle on this." He adds that NALP will continue to try to convince firms to cooperate in the future.

One reason some of the law firms refused to divulge the information--the distinctions are a matter of firm business and firms aren't obligated to share the information. "How we divide profits is our business," says Joe Sims, a senior partner at Jones Day, who insists that the firm makes no equity/nonequity distinction.  "All partners make capital contributions and have voting rights," he says, though he does acknowledge that some partners are paid a fixed amount and others are paid based on the firm's profits.

NALP's Leipold says most firms cited privacy concerns for not divulging the details of their partnership arrangements. Because some firm offices are quite small, firms indicated they were concerned that nonequity partners would be easily identified and stigmatized, says Leipold.

So, the firms are holding back in order to protect their nonequity lawyers? Michele Dauber, a professor at Stanford Law School, doesn't buy it. "It's not about protecting women, it's more about protecting billing rates," Dauber says. "They don't want clients to know who's equity and who's not; ambiguity allows them to bill at higher rates."

Dauber, who also directs the Building a Better Legal Profession program at Stanford, won't let the firms off so easily, but she's also pointing the finger at NALP for failing to hang tough. "They caved in to firms that probably have shameful diversity statistics," she says.

Stephanie Scharf, president of the NAWL Foundation, takes a more charitable view: "I don't blame NALP at all; it has to suffer what we all do."

Will the collective pressure from women lawyers and judges and NALP finally move firms towards greater transparency?  And will law firms finally get why women are ticked off? Leave your comments here.

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My sense is that the real issue may arise from the way firms report profits per partner. That is, I don't believe, though I may be wrong, that non-equity partners are ordinarily included by firms in the profits-per-partner ratio they report to influential publications like this one, thus causing the per-partner profit figure to appear higher than it would be if non-equity partners were included. Yet, at the same time, non-equity partners, who are disproportionately women and people of color, are included in law firm reports in the "partner" category.

I agree completely with Drucilla's observation, and more to the point: when AmLaw compiles its diversity information, it should require firms to post race/gender/LGBT partner numbers using the same definitions of "equity" and "non-equity" partners as are used when posting financial to AmLaw. Similarly, if NALP can't require firms to make that distinction, it should ask firms to do so voluntarily and then highlight the ones who do so -- it would be a very positive marketing tool for those firms that are more transparent with their numbers, versus those that are not.

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