Legal Departments Have Leg Up on Firms in Closing Gender Pay Gap

A $4 million settlement this year between a group of female in-house claims litigators and Farmers Group Insurance served to highlight that gender pay inequity—and court actions to challenge it—are increasingly found among the upper echelons of Corporate America.

A $4 million settlement this year between a group of female in-house claims litigators and Farmers Group Insurance served to highlight that gender pay inequity—and court actions to challenge it—are increasingly found among the upper echelons of Corporate America.

While in-house legal departments are not immune from pay inequity problems, they may be far better poised than their law firm counterparts to address the problem by analyzing pay data and making adjustments where gender inequities arise.

Unlike at big law firms, where consensus decision-making is customary in the partnership model, all that's needed in the corporate legal environment is one CEO or human resources director committed to the issue, says Michelle Banks, who retired as general counsel of Gap Inc. in March and now serves as chairwoman of the board of directors of the Minority Corporate Counsel Association. "The corporate world is exciting in that it can move quickly," she says. "You can imagine that this could have been a five-minute decision at Amazon. That would never happen in the law firm world."

U.K.-based legal research firm Acritas Research Ltd.'s 2016 Diversity Report, released in August, found that female in-house lawyers are being paid significantly less than their male counterparts, with the largest gender pay gap in Canada, where female GCs make 31 percent less than males in similar organizations. In the United States, the wage disparity is about 18 percent, according to the report, which surveyed nearly 1,800 senior in-house counsel across the globe.

Jean Lee, CEO of the Minority Corporate Counsel Association and a former attorney at JPMorgan Chase & Co., puts the figure within American companies slightly higher, saying that "20 to 30 percent less seems to be the common trend."

In the Farmers case, the female in-house claims litigators alleged men doing similar work earned $50,000 to $100,000 more than they did.

Pay disparity across Corporate America is likely greater among senior-level positions, where companies tend to have broad discretion in making compensation decisions. For younger lawyers, compensation generally is determined by set pay brackets, says Lauren Rikleen, an equity partner in a law firm for more than 20 years and now president of the Rikleen Institute for Strategic Leadership.

While the existence of the gender pay gap is nothing new, recent legislative efforts have moved the issue into the national spotlight. Massachusetts, for example, enacted a law in August banning employers from asking job applicants about previous salary histories with the aim of reducing the gender pay gap. This push for transparency has led many female in-house attorneys to ask themselves and each other, "'Why do we get paid 25 to 30 percent less when we do the same job?'" says Lee.

While discussion is great, advocates would rather see action. They want to see companies undertake data-driven, detailed analyses that compare the salaries of male and female employees and, where gaps between the two exist, demand accountability. "Until workplaces actually monitor and measure how women are doing compared to men, I think we will continue to run the risk that women will be paid significantly less," says Rikleen.

Companies that have embraced metrics are already seeing progress, Banks said. Banks cites the example of Salesforce, which last year conducted a comprehensive analysis of the salaries of its global 17,000 employees and, as a result of the findings, announced in March that it has spent nearly $3 million dollars to eliminate statistically significant differences in pay.

In 2014, Gap, in a CEO-led effort, was the first Fortune 500 company to announce that it pays men and women equally based on an analysis of pay information for Gap's 130,000 employees worldwide, Banks says. "We need people to run the data, analyze the data and make a commitment that whatever the data shows, we need to do something about it," she says.

In a sign of progress, in June, 28 companies pledged to analyze their pay by gender across their entire workforce and take action accordingly, a commitment that gives momentum to the movement to achieve pay equity for in-house female attorneys and other employees. By late August, another 29 companies had joined the effort.

"I'm really excited about the concept of the data analyses and CEO-level commitment," Banks says.

But it's not just dedicated CEOs or HR directors who can lead the way. GCs can make a significant difference in eliminating the pay gap, says Lee. Uber's general counsel, Salle Yoo, is a good example. "I also have a policy that if someone gets a sign-on bonus, the other person who has equivalent experience and comes in at that level at that same time, he or she gets the same upfront bonus," Yoo wrote in a November piece in Fortune. "I once told a female hire, 'I'm giving you a sign-on bonus even though you didn't push for it.' I told her so that next time, she would think to ask for it directly."

While corporate law departments may not face the long-standing cultural challenges confronting law firms, achieving pay equity in-house is a "very complex" issue that requires vigilant attention to the data, says Michele Coleman Mayes, GC of the New York City Public Library and former GC at Allstate.

Particularly tricky in the in-house context, Mayes says, are cases where otherwise comparable attorneys have different pay because market conditions have changed. In those cases, conscientious GCs committed to maintaining pay equity within their department should say to the existing lawyer, "I'm going to do a market adjustment on you. Your job is commanding more if I went out to hire you now, so I'm going to give you an extra $5,000 or $10,000," Mayes says.

GCs also can help close the pay gap by keeping salary ranges established for particular in-house titles as narrow as possible, the experts say, and by standardizing requirements for merit-based bonuses. In addition, they should be mindful of who they are assigning high-profile assignments to. If men tend to get the best assignments, they'll probably eventually get better pay too.

For their part, women in-house lawyers can take certain steps to help guarantee that they're getting paid the same as their male colleagues, Mayes says. These measures include understanding how their compensation is determined, becoming proficient at and comfortable with self-evaluations and learning how to effectively advocate for themselves. This last skill is particularly important for women attorneys just joining an in-house legal department because "initial compensation has lifelong implications," Rikleen says.

"Your compensation is always pegged as a percent of where you are currently," she says, adding that data show that women do not negotiate as much at the outset as men do.

Indeed, teaching women how to better negotiate their compensation is perhaps the greatest step toward achieving gender pay equity at in-house legal departments and elsewhere, says Olga Mack, GC of the San Francisco-based sales and marketing startup ClearSlide. "Negotiating a salary is very complicated," she says. "What do you do when you get an amazing job and you want to come across as strong but not too strong? It's not just about having the courage. You have to know who to ask, what to ask for and why you're asking for it, and we don't teach people generally and women in specific how to do that."

Mack says female in-house lawyers have an advantage over their law firm counterparts in these negotiations since in-house compensation is based on a number of factors, including salary and bonus, as well as stock and option awards, all of which, as Mack puts it, are "levers to pull" in the bargaining process, assuming the women know how to do so.

"Nothing is worth not feeling compensated for your talent or feeling undervalued," she says. "That's not a way to build long-term relationships and ensure that that person is going to be productive in the long run."

Originally published on Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Contributing Author

Kristen Rasmussen

Rasmussen is a reporter.

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