On the cusp of a potential economic downturn, attorneys are still riding the high of besting the last economic threat. While the pandemic threatened the very core of the economy, law firms came out more profitable than ever. Will lawyers weather the next storm as well? Signs aren’t exactly positive.
But that’s tomorrow’s problem. Today, Law360 and Major, Lindsey & Africa released their 2022 Partner Compensation Survey compiling responses from 1,815 respondents across the country. And the last year was very good to lawyers.
The top line takeaway is that partners averaged $1.12 million in compensation. This is the highest average ever and amounts to the biggest year over year increase since 2016.
That said, male partners averaged $1.21 million while female partners clocked in at $905,000. This amounts to a 34 percent discrepancy. Astoundingly this is relatively encouraging based on the history of this broken industry because the gap was 53 percent as recently as 2018. So… hurray for 34 percent? I guess?
Can this gap continue to narrow? Sure, but it’s unlikely to keep closing at this pace. The fact that around 75 percent of the variation stems from gaps in originations (and, to a much lesser extent, billing rates) amounts to a long-term worry. Originations are the pyramid scheme of law firms with established partners tending to take legacy credit on relationships, essentially baking in the discrimination of yesteryear. Male partners reported average originations of $3.045 million, while female partners reported $2.022 million. That will close as the seniority of firm partnerships tilts toward the modern era, but it’s going to require clearing out a lot of offices.
On the subject of Biglaw’s diversity efforts…
The average total compensation for those identifying with a non-White ethnicity is 10% lower than that of White partners ($1,030,000 vs. $1,133,000). Hispanic partners reported a 56% increase in compensation, followed by a 33% increase for Asian Pacific partners and a 17% increase for White partners. Black partners were the only category to report a decline (-9%).
Not to besmirch the gains among some ethnic groups, I’d be interested to see these figures broken down by practice, because I suspect they reflect less an advance in egalitarian compensation and more the Biglaw expansion into booming markets. How much of this leap is attributable to a growing Latin American transactional practice or a spike in export control business with clients in China? It doesn’t diminish the importance of these gains just because they might correspond with growth in markets where lawyers with specific backgrounds may have linguistic or experiential advantages, but it means these gains won’t be evenly applied. That Black partners saw decline tends to reinforce this.
Beyond the representation issues, the report offers insights into the War Of The Cubicles. Pronounced generational gaps remain when it comes to remote work:
Over two-thirds of all partners said they value their ability to work remotely, with the more junior partners indicating a greater importance of working from home (80%) compared to more senior partners (57%).
But given that this push is coming from the younger generation, it’s going to have a profound impact on the next few years as the talent carousel might punish entrenched office interests.
Ten percent is a hell of a lot of talent ready to walk out the door over remote work. As we continue to hear reports from within firms grappling with the right balance, the prospect of losing 10 percent — or more — of their partnership for failing to get it right will be a big factor.
That said, most firms seem to be erring on the side of caution.
There’s a lot more in the report to check out, but to close let’s tie these two concepts together:
Black partners were most likely to place importance on working from home (84%) but least likely to say they would change jobs because of it (5%), while White partners were least likely to place importance on working from home (69%) but were more than twice as likely to say they would change jobs because of it (11%).
If you’re looking for a perfectly distilled example of white privilege in action, behold!