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EXECUTIVE SUMMARY <strong>Compensation</strong> in Law Firms: Why Women Equity Partners Are Compensated Less for the Same Billable Hours and Business Origination as Male Equity Partners Harry Keshet, PhD. & Angela A. Meyer, PhD., PE This study examines how gender effects compensation and the nature of compensation decision, the level of satisfaction with compensation systems, the gender bias in compensation. Since compensation is highly correlated with business origination, we also examine the differences in the way gender, race and ethnicity influences how business development resources are distributed. Our finding show that compensation is gender based with male equity partners receiving more compensation than women equity partners do. This fact is true when women and male equity partners bill the same number of hours, generate the same levels of origination, have the same level of law firm tenure and work in the same size of law firms. The level of compensation differences increase with the more women increase their billable hours and origination, the higher tenure and work in larger law firms. Statistical Factors Since our survey was launched in 2010, the total number of respondents includes: By Gender: • 915 Male Respondents • 814 Female Respondents By Ethnicity • 1269 White Respondents • 420 Non-white Respondents 1 By Position 2 : • 865 Equity Partners • 342 Non-Equity Partners • 463 Associates For the purposes of this report, the data was aggregately grouped into four focused variables: 1 The category “Non-white” was compiled from the following racial/ethnic choices: Asian/Asian American (including South Asian), Black/African American (including Caribbean), Hispanic/Latino, Arab/Arab American, Native American/Alaskan Native, Pacific Islander, and Bi-racial/Multi T racial.” 2 Respondents indicating they were “Other” or “Solo Practice” were excluded from analysis. 2
Findings & Analysis 1. Overall, male equity partners (MEPs) are more highly compensated than female equity partners (FEPs), with MEPs reporting mean compensation $166,932 higher than FEPs. The difference in mean compensation is statistically significant. 3 2. For equity partners, billable hours and compensation were weakly correlated. 4 *MEPs received higher mean compensation for the same billable hours compared with FEPs. *Among EPs who bill less than 1800 billable hours, MEPs report mean compensation $159,876 higher than FEPs, a statistically significant difference. 5 *Among EPs who bill 1800 or more billable hours, MEPs report mean compensation $249,564 higher than FEPs. This difference is not statistically significant. 3. Origination and compensation are strongly correlated 6 for equity partners. *Increases in origination yields increases in compensation that is significant and strongly correlated to EPs. *The more equity partners originate, the higher the compensation they received. MEPs receive higher compensation at each level of origination than FEPs with the same level of origination. *At the $2 million or more level of origination, MEPs mean compensation was $77,143 more than the mean compensation for FEPs. 4. Not surprisingly, increased tenure within the firm correlates with increased compensation for EPs. 7 *The longer EPs remain in their firms, the higher their compensation. *MEPs receive higher compensation than FEPs in each tenure group. 3 t(432.2) = 2.809, p< .05. 4 r(415) = .216, p < .001). 5 t(422.6) = 4.12, p
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Compensation

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