The Business Case for Retaining and Advancing Women in Private Practice in BC

The Benchers of the Law Society of BC have approved a report from the Retention of Women in the Law Task Force that presents a business case for retaining women lawyers in private practice.  The members of the task force are:

  • Kathryn Berge, QC (Chair)
  • Gavin Hume, QC
  • Richard Stewart, QC
  • Jan Lindsay
  • Jennifer Conkie, QC
  • Anne Giardini
  • Rosanne Kyle
  • Maria Morellato, QC

SUMMARY

This business case supports the retention of women in private practice by highlighting the business advantages of retaining and advancing women for small, medium and larger law firms in BC. Retaining and advancing women to leadership in private practice makes good business sense for firms, with the potential to increase revenues by responding to the changing demographics of legal talent and client demands, and to decrease expenses by reducing the monetary and opportunity costs of turnover and attrition.

The companion Report of the Retention of Women in Law Task Force to the Law Society of BC calls on the Law Society to implement the following initiatives:

  • Adopt, Publish and Promote the Business Case;
  • Task the Equity and Diversity Advisory Committee with Monitoring and Promoting Existing Law Society Programs and Resources;
  • Enhance Existing Law Society Programs;
  • Consider the Feasibility of Creating a BC Think Tank for Regional/Mid-Size and Smaller Firms; and
  • Consider the Feasibility of Additional Law Society Programs.

This business case calls for proactive engagement and implementation measures on the part of the Law Society and law firms in BC. The next step will be for firms to consider best practices or a toolkit to identify and implement strategies for creating effective change

INTRODUCTION

The practice of law requires a sound business foundation that allows talented lawyers to serve the firm’s clients based on their skills and abilities, regardless of gender. Given the demographics of the legal profession in BC, and the fact that law firms will continue to need to compete for talent, law firms need to seek and maintain advantages in the competition for talent and for clients. Law firms that fail to engage women lawyers and prevent their departure in disproportionate numbers will be less able to compete against those that do succeed in retaining and advancing women lawyers. Law firms cannot continue to lose talent and incur the costs of lawyer turnover. Keeping and developing talent increases efficiency, client service, lawyer morale and future recruitment ability. The rewards are measured not only through increased profits but also through the development of a stronger and more sustainable firm culture based on merit, flexibility and diversity.

The business advantages of retaining and advancing women lawyers are significant. Firms that are able to provide quality services and value to clients on a consistent basis will be well-positioned to ensure their financial stability and to attract new talent and new clients in an increasingly demanding and diverse market. This holds true during the current unprecedented economic downturn and will remain true for the eventual upswing.

The business case does not advocate special treatment for women, unwarranted costs for firms, or conflicts between lawyer expectations and client expectations. It stresses the competitive advantages of creating firms that retain and advance talented lawyers, with a focus on serving clients in effective ways that make business sense and people sense. It shows the advantages of engaging men and women in creating innovative and positive change in the practice of law.

SETTING THE CONTEXT

Watching Women Leave Private Practice

Women have been entering the legal profession in BC in numbers equal to or greater than men for more than a decade and in substantial numbers for thirty years. Yet women represent only about 34% of all practising lawyers in the province and only about 29% of lawyers in full-time private practice.

The under-representation of women in private practice in BC starts with the disproportionate number of women who are no longer practising within five years of call. Of all women called to the bar in 2003, only 66% retained practising status in 2008 (40% in private practice) compared with 80% of men called in the same year (66% in private practice).

While the experience of individual firms may vary, in general women are not reaching partnership positions within firms in significant numbers. A recent survey in Ontario found that almost all firms reported having women in numbers equal to or greater than men at articling and junior associate levels. However, most firms reported a disproportionate loss of women at the senior associate level and significantly fewer women than men as partners.

Canadian and US statistics indicate a range in the proportion of women partners from fewer than 16% of equity partners to about 20% of partners in large and medium size firms. While the Law Society of BC does not collect partnership data from its members, its Retention of Women in Law Task Force has reviewed the data from other jurisdictions and, for the purposes of this report, considers it reasonable to conclude that partnership proportions in BC are within a similar range. Despite the hopeful perception that this disparity will resolve itself over time as more women progress through the legal pipeline, in reality the pipeline itself is leaking lawyers – women lawyers in particular. Some research suggests that at present rates women will not reach parity with men in law firm partnerships until at least 2088.

Facing a Shortage of Lawyers

The legal profession in BC is aging. Over the last ten years, the number of lawyers in the older age ranges (50 – 65) has increased significantly. In contrast, the number of lawyers in the younger age ranges (25 – 40) has remained the same or has declined. In 1998, 77% of BC’s legal profession was under the age of 50, the average age was 43, and only about 18% of lawyers were between the ages of 51 – 60. By 2008, only 55% of the profession was under the age of 50, the average age increased to 47, and 29% of lawyers were between the ages of 51 – 60. In addition, out of about 9,800 practising lawyers in BC, over 1,100 were over age 60 and almost 200 were older than 70.

If these trends continue, the profession can expect to lose many older lawyers to retirement without a corresponding increase in the number of younger lawyers. The result will be a net reduction in the number of practising lawyers at a time when the general population and demand for legal services are both growing. The population of BC is increasing and society and business arrangements are growing more complex and litigation is becoming more common. Notwithstanding measures such as more work conducted by paraprofessionals, more tools for public self-help, greater use of technology, greater reliance on in-house lawyers, and legal outsourcing offshore, it is anticipated the demand for legal services will continue to grow for the foreseeable future.

The effects of age and gender may be even greater for smaller firms, where losing just one lawyer can have a significant negative impact. In smaller communities, where there are fewer lawyers available and a smaller percentage of women practising law, lawyer attrition can have great implications for access to legal services. The legal profession is facing a looming shortage of lawyers and, in order to serve the public, needs to stem the outflow of lawyers in general and women lawyers in particular.

THE BUSINESS CASE

Competing for Clients

In terms of corporate work, firms recently surveyed in Ontario noted increased pressure from clients to have greater representation of women in the firms retained by them. This trend is now being noted in BC. A growing number of Canadian corporate counsel clients are themselves women who expect more diversity in the firms they retain. Larger US corporations and multinational clients, many of which do business in Canada, are also more likely to expect law firms to promote diversity and consider diversity to be an important factor in hiring decisions. In fact, over one hundred US-based corporate counsel have signed A Call to Action – Diversity in the Legal Profession, a pledge to select outside counsel based “in significant part” on diversity performance. Moreover, they agree to end or limit relationships with firms that consistently fail to show “meaningful interest in being diverse”. Signatories include Wal-Mart, Microsoft, Target, Boeing, Intel, Starbucks, Johnson & Johnson, UPS, Pfizer, Coca-Cola and Xerox. Some large Canadian firms are already being asked to provide information about diversity in requests for proposals from multinational companies doing business in Canada.

Canadian law firms need to remain competitive in the global and regional markets. Firms that commit to diversity may have an important competitive advantage in both the fight for clients and the fight for talent. For smaller firms that are not necessarily competing for multinational corporate clients, retaining women lawyers still provides an important business advantage. Research shows that women entrepreneurs are one of the fastest growing segments of the Canadian economy. Four out of five businesses are started by women and there are more than 821,000 women entrepreneurs in Canada who annually contribute more than $18 billion to the economy. The number of women-run businesses is rising 60% faster than those run by men. These businesses are a growing segment of the client pool and firms that cannot offer experienced women counsel risk losing work to firms that have better managed their retention issues.

Maximizing Business Performance

Women are good for business and increase the corporate bottom line. Research has shown that companies with more women board directors outperform those with the least number of women by 53% on return on equity, 42% on return on sales and 66% on return on invested capital. Women have a positive impact on both organizational excellence and financial performance. Having three or more women directors maximizes their positive impact on decision making, as women tend to consider perspectives of a wide set of stakeholders, to address difficult issues and problems more persistently, and to contribute to a more collaborative boardroom dynamic. Law firm management committees, analogous to corporate boards, may equally benefit from greater participation of women decision makers.

Fighting for Talent

Law firms aim to recruit the best lawyers in an increasingly competitive and global market for talent. Women are a significant portion of the top talent. For example, from 2003 to 2008, nine out of twelve Law Society of BC Gold Medal winners for academic achievement were women graduates. Recruiting and retaining the best means that firms need to be attractive to women lawyers and create environments in which women succeed and reach partnership and leadership levels.

While older lawyers are retiring, firms are recruiting from a new generation of lawyers, the so-called “Generation Y” or “Millennials”. Members of this generation are more diverse and their expectations about the practice of law differ from those of preceding generations. The majority of these young women and men are seeking equal opportunities, interesting and challenging work, and transparency about advancement to partnership. They are more likely to insist on work/life balance and flexibility. They evaluate firms accordingly and will not join or will leave if their expectations are not met. Firms competing for young talent need to consider how to ensure their work environments effectively engage the new lawyers they need to recruit.

Bearing the Costs of Lawyer Attrition

Lawyers are mobile. The old career model in which a young lawyer would join a firm, work hard for a number of years and then become a partner is no longer the norm in today’s economy. A recent survey of Canadian law firms found that 62% of women associates and 47% of men associates intended to stay with their firms for five years or less.

While some level of attrition is expected and acceptable given the recruitment model and partnership structure of most firms (in which not every associate will become a partner), many firms nonetheless face “unwanted” attrition. Lawyer turnover costs vary widely, but the average cost of an associate leaving a large firm has been estimated by Catalyst at $315,000, with an average firm breakeven point on an associate estimated at 1.8 years (but ranging up to four years). This turnover cost figure represents “hard costs”, such as investment costs (e.g. recruitment, training and development) and separation costs (e.g. severance and lost productivity). It does not include “soft costs”, such as opportunity costs and the effects on client service and firm reputation, which may be even more significant. Clients do not benefit from lawyer turnover and can be expected to resist having attrition costs passed on to them as new lawyers get up to speed on a file, particularly as clients increase focus on value and more efficient resource allocations.

While the lawyer turnover cost figure of $315,000 was estimated in the context of large firms, the impact of associate turnover is equally if not more significant for smaller firms, not only in monetary terms (estimated by one 15-lawyer firm in Victoria at $250,000), but in their ability to provide legal services to their clients. The loss of even one associate can seriously compromise the quality and delivery of client service in a small firm environment.

NEXT STEPS

Understanding the Economic Realities of Legal Practice and Investing in the Future

Women leave private practice for many reasons. Researchers in Ontario found that maternity and parenting responsibilities are significant factors leading to the departure of women from private practice, primarily affecting associates who leave before reaching partnership. However, research also shows that few women chose to opt out of their legal careers to care for their families on a long-term basis. In a recent US survey, only 22% of women who left private practice identified themselves as “not employed”. Most did not even leave the legal profession; instead, they left law firms to work in more flexible legal and professional environments, such as government or non-profit organizations. In fact, most professional women off-ramp for very short periods of time, averaging only 1.2 years in the business sector.

Despite popular perception, research in Alberta has shown that, over time, after controlling for the number of years at the bar, there were no significant differences in billing hours between men with children and women with children. Women without children billed significantly more hours than did either women with children or men with or without children. The attrition of women from the profession at an early stage in their careers represents an incalculable loss of future years of productive and profitable work. Law firms need to recognize the value of letting women take parental leaves and return to practice, because of the longer term contributions women make to their firms and to the profession. Some research has suggested that providing parental leaves reduces the risk of women’s departure from law practice by 74%.

About one out of every two lawyers (both women and men) in Canada report feeling challenged in managing the demands of work and personal/family life. When asked what factors would be important to consider in choosing to work at another firm, both women and men reported the same two top factors: an environment more supportive of family and personal commitments, and more control over work schedules. Part-time or flexible work arrangements that help retain women and men in private practice may or may not, in the short term, cost money. However, the costs that are incurred should be seen as investments that appear to pay off over time. One founding partner of a women-owned New Jersey firm where all 15 lawyers have flexible work arrangements described the firm’s approach: “We sell to our clients that we are creating a work environment where our lawyers never leave – the lawyers they are working with now will be the same lawyers ten years from now.”

In addition to leaving practice in order to address work-life balance conflicts, women also leave when they do not feel valued, when they do not get good work, or when they face barriers to advancement such as exclusion from informal internal networks and lack of mentoring opportunities, client development experience and role models. While there can be a cost to programs that support women’s advancement, such as mentoring, networking and business development programs, in many cases those costs appear to be outweighed by women’s increased profitability.

Leading the Way in Retaining and Advancing Women in Private Practice

Despite making significant progress in the legal profession over the last few decades, women still often face numerous unintentional obstacles to equal opportunities for advancement. These obstacles include:

  • Hidden bias, stereotypes and assumptions about women and mothers that can significantly and negatively impact women’s careers;
  • Informal practices such as random free market and “hey, you” work assignment systems (which allow partners to distribute work to those they know best or feel most comfortable with) that disadvantage women from having access to career-advancing work;
  • Conflict between 24/7 professional expectations and cultural norms that burden women with a disproportionate share of family and personal responsibilities;
  • Lack of mentors and champions; and
  • Lack of access to business development opportunities.

Research and experience in Canada and the US suggest a number of best practices that firms can use to help overcome these obstacles and attract and retain talented women lawyers, including:

  • Raising awareness of and correcting unintentional/hidden bias and stereotypes that may inadvertently hold women back in the legal profession. For example, research has shown that gender effects in performance evaluations can be improved by using more objective, behaviour-based criteria;
  • Ensuring access to high-quality assignments;
  • Promoting workplace flexibility. Research has shown that lawyers who have positive perceptions of a firm’s work/life balance generally plan to stay for longer periods of time. Both women and men are seeking balance these days;
  • Promoting meaningful mentoring. Research has shown that mentoring can be a powerful tool in retaining and advancing women lawyers; and
  • Promoting business development opportunities for women to support their profitability and advancement (creating rainmakers).

Firms that adopt measures and programs to retain women distinguish themselves from their peers. Many businesses have enjoyed marked success when they institute specific policies and practices aimed at ensuring the retention and advancement of women in their firms.

There is no one-size-fits-all answer. Effective strategies will depend on many factors, including firm size, firm culture and location. A large firm in downtown Vancouver will have resources, flexibility and infrastructure to address the issues differently than a 15-lawyer firm in Victoria or a small firm in the Interior. However, research indicates that there are three critical success factors to any strategy:

  • Leadership and commitment from senior partners – to set the tone at the top, reinforced by consistent messages, and to ensure that women are well-represented and visible in senior leadership positions;
  • Measurement and accountability – to set objective benchmarks and measure progress, and to ensure responsibility for progress on diversity; and
  • Taking action and engaging both men and women lawyers at all levels – to ensure that initiatives are relevant to partners, practice leaders, senior women and aspiring junior women lawyers.

Women lawyers are more likely to stay in work environments when they are satisfied with a number of key factors:

  • Advancement opportunities;
  • Availability of mentors;
  • Management of their organization;
  • Professional development opportunities; and
  • Control over their work.

Firms have the opportunity to create supportive and inclusive firm environments that retain and advance women lawyers. These firm environments will also help retain men, who are leaving private practice in greater numbers than before, particularly “Millennial” lawyers with greater expectations of work/life balance, flexibility and diversity.

All strategies will have costs, both in money and in the time that must be devoted to implementing change. They are, however, investments aimed at promoting effective retention strategies that will maximize a firm’s key assets – its lawyers, both women and men. The investments may be expected to pay off in tangible benefits for firms, by attracting and advancing the best lawyers, by securing the best clients, and by adapting to new economic realities in an increasingly diverse global market.

Taking action now will help firms create more inclusive and more profitable businesses and be better-positioned for the future. Potentially, in terms of both money and opportunities lost, failing to take action may simply cost too much.

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