Politically Incorrect Paper of the Day: So Sue Me!

Gender Gaps in Performance: Evidence from Young Lawyers

Abstract:  This paper documents and studies the gender gap in performance among associate lawyers in the United States. Unlike other high-skilled professions, the legal profession assesses performance using transparent measures that are widely used and comparable across firms: the number of hours billed to clients and the amount of new client revenue generated. We find clear evidence of a gender gap in annual performance with respect to both measures. Male lawyers bill ten percent more hours and bring in more than twice the new client revenue than do female lawyers. We demonstrate that the differential impact across genders in the presence of young children and differences in aspirations to become a law firm partner account for a large share of the difference in performance. We also show that accounting for performance has important consequences for gender gaps in lawyers’ earnings and subsequent promotion. Whereas individual and firm characteristics explain up to 50 percent of the earnings gap, the inclusion of performance measures explains a substantial share of the remainder. Performance measures also explain a sizeable share of the gender gap in promotion.

Comments

Open access version: http://ftp.iza.org/dp9417.pdf

Wait a minute, is this implying that girls issues are not restricted to math?

Not "douchebaggish/bitchy" enough... thats my take...

I'd define better performance as either delivery of a better product given same inputs, or delivery of the same product given fewer inputs. So in this regard it would be client satisfaction per $ billed. Really not clear that billing clients for more hours represents improved performance. Better at rent seeking perhaps.

But the extra hours are the service in this case. More value is added to the client if they give you something at 5pm and you turn it around by midnight for it to be on their desk at 7am rather than if you pick it up at 9am and turn it around for noon. The latter is more efficient *better performance*. The former is what they want.

Billing during daytime (9 to 12) has an externality of 3 times the client's hourly rate, which is not the case during clients' sleeping hours. In other words: money never sleeps, but clients do!

Bringing in new clients is a big component of how performance is judged in professional service firms.

but young lawyers (or young associates in any professional services industry) rarely bring in a large % of new clients

"Really not clear that billing clients for more hours represents improved performance."
I imagine this depends on whose perspective you take.

You are welcome to starting your own law firm with your new and innovative performance metrics. I look forward to seeing how you do.

Law firms are ultimately fairly Darwinian and individual contribution can be tracked with reasonable accuracy. If you bring in the money, you will be rewarded.

I went to a Tier 1 law school where students in the top 5-10% were able to obtain associate positions at the corporate law firms (known in lawyer jargon as biglaw).

The critical factor in biglaw associate hiring is grades so even a stellar personality during interviews would probably not help a candidate in the top 15% from my school get a position in biglaw.

One major exception to this rule was attractive blondes (and to a lesser extent attractive girls) who were in the top 30% were able to obtain associate positions from my school in biglaw. It's blatant in biglaw that many recently hired female associates have poorer academic track record. Perhaps having attractive blondes at the office makes the workplace less depressing and fosters productivity and teamwork overall, but no doubt it also contributes to lower average female associate productivity.

Wow, that is a remarkable comment. If you are correct then the sample bias is very large. Basically they chose whether the person was working at the same place as the qualifying metric. You argue that a better metric would have been "works at same place" "had similar grades while at university" and maybe even "went to similarly tiered university".
That would have been a better sample for sure!

This has not been my observation. I went to a T14 school and have worked at two biglaw firms (in two non-NYC markets) or at the other firms where I know people or where I met lawyers out on recruiting gigs. Maybe this is a factor in a particular firm or in your particular market?

My experience is that there's no broadly observable knowledge or skills gap across genders. The only gap I'd say is reliable across genders is that maternity leave significantly outpaces paternity leave.

T14?

Terminator 14.

He's from the future, where, coincidentally, they've changed to a base-6 numbering system to confuse the robots. So in our lingo, he means Top-10. Because caring whether you were Top-13 or Top-14 or Top-15 is clearly ridiculous.

/slow clap

I have no idea why this is, but for some reason, in the world of law, people view a stark difference between 14 and 15+, view schools 7-14 as mostly the same, as are schools 4-6, and 2-3, with #1 standing on its own. However, more often than not, when someone says they attended a "T14", they mean they went to Georgetown

Just like lawyers - if they don't like the way the world is, they just change the rules. Why so many lawyer turned politicians can't fathom the idea of moral hazard. The world doesn't always work the way they want it to.

There's a reason for the madness.

The Top 14 schools of the USNews law School rankings have always been the Top 14 schools. The rankings within the top 14 has changed, of course, but none have ever fallen out, and none have ever broken through.

It's also a fairly accurate cut-off of where a student who finds themselves roughly in the median of their law school class can expect to find employment in the lucrative world of "BigLaw"

The new Russian main battle tank.

Actually, a top 14 law school.

For those who didn't go to law school, T-14 means the top 14 law schools, a set of law schools widely known as the top band of law schools. I went to a school in the top 50. In terms of biglaw hiring my school is a world apart from the top 14. It's also why I noticed hiring patterns that might not have stood out to you. In a top 14 law school, even those who graduate in the bottom half could get hired by biglaw. At my school, only an elite 40 or so students went on to biglaw. Most were of the magna cum laude variety. Some graduated cum laude (with two exceptions known to me these were the hot babes). This stark pattern was probably obscured in your experience because most people who wanted to work in biglaw did so within your circle of close experience.

"attractive blondes (and to a lesser extent attractive girls)"

In a law school?

You are grading on a curve.

Everyone knows that the real eye candy in the law firm gig is in the recruiting/marketing department.

look but don't touch...

Especially at Louisville.

Social skills play a big role in long term success as a lawyer. Attractive blondes get a leg up (as it were) in that department.

"the differential impact across genders in the presence of young children and differences in aspirations to become a law firm partner account for a large share of the difference in performance"

Political incorrect? This is fully 100% consistent with feminist discourse.

The former,not the latter.

I don't know what feminist discourse says, but I don't see any political incorrectness or anything insulting to women here. It says that men bill more hours - which tells us nothing at all about the relative quality of the work - and that the time difference is explained by differences in family responsibilities and level of ambition. Big whoop.

You mean: women are not "douchebaggish" enough to be good lawyers??? ;)

To be serious, this "gender gap" due to "performance measures" is also present in other industries, notably in the academia...

But in politics, men are allowed to express their maternal side, as long as they have thick skins to withstand the attacks on their failure to commit to the party needs.

Paul Ryan is refusing to abandon his children which will make him far less successful as Speaker because he will not be able to blackmail members of his party by withholding campaign contributions.

Newt had no problem abandoning his family to deliver for his party
Nor did McCain have a problem with dumping his family.

Of course, Bidden is missing his shot by refusing to abandon his family.

And Obama failed to abandon his children to smooze with Republicans and Democrats to get them to cut deals.

Yes, and in Hollywood and in professional poker and in auto racing and in chess and in a lot of other professions where gender shouldn't matter, but it does.

Low fertility Western nations are probably going to have to adopt a form of affirmative action for women who have had many children. Women are increasingly career driven, and having kids hurts your career, ergo women are having fewer children. But if Goldman was required to have 100 mothered children for every 100 managing directors, then ambitious and intelligent women would quickly realize that having many kids is a strong path to success.

The ambitious and intelligent women will have to mate with generally ambitious and intelligent men to produce offspring that will make their life better, pretty much like it's been for the entire duration of the human race.

From the looks of things, Idiocracy is not far off.

About 13% of the workforce are to be found in professional-managerial occupations and only a fraction of those are in occupaitons as consuming as BigLaw. That's not driving the occidental world's fertility deficits (and, no, women are not increasingly career oriented).

Isn't this what just about every study of gender gaps has found? The raw gender gap is often very large; after taking into account everything possible -- experience, skills, performance, etc. -- the gap shrinks considerably. But there's still an unexplained gap remaining, usually around 10%.

The unexplained variance is typically 0-2% in my experience.

The unexplained bit is statistically insignificant. See this paper that was posted here last year for example: http://marginalrevolution.com/marginalrevolution/2014/01/claudia-goldin-on-the-gender-pay-gap.html

The unexplained gap has women on top

The most intense competition among young lawyers within the firm is for the approval of more senior lawyers who control the flow of work to the young lawyers, especially the flow of work that will be billed at premium rates and promptly paid. That usually means litigation and transactions that have very high stakes for the client and the legal work for which usually comes at a premium. On the other hand, estate planning is usually something provided for key employees of very good corporate clients more as an accommodation than for the fees generated. My point is that billable hours and total collections of a lawyer in a firm are a function of much more than ambition and willingness to work hard. How that might have different effects on young female lawyers and young male lawyers is an interesting issue. One might speculate that the more senior lawyers who control the flow of work to the young lawyers are mostly men, who may naturally gravitate toward the young male lawyers, or young female lawyers may be attracted to work that is less profitable such as estate work. In any case, the dynamics within different firms may vary, but all firms have this in common: intense competition among the young lawyers within the same firm. It's a "hostile work environment" by nature and not something that many find very rewarding, other than the narcissists.

+1
I was going to ask if there is a lawyer who can answer: Don't associates get work assignments from partners? And doesn't this mean that the potential to generate billable hours is non-random, and that one type of associate (men) might end up receiving higher-payoff assignments than does the other type (women)?
I am not saying other issues such as maternity leave and ambition don't matter, only that the "productivity" measure might suffer from this bias.

Law firms like to believe that the process of weeding out the young lawyers identifies the "best" lawyers. Maybe. But law firms today aren't like they once were. By that I mean that law firms once grew within (young lawyers hired right out of law school and trained in the firm way to be a firm lawyer), whereas today lateral hires and mergers are the norm; hence, law firms today have lawyers with widely varying ways of practicing law and widely varying talents. And this works both ways: lawyers once were loyal to the firms that hired them, whereas today lawyers are hired guns. I'm nearly old, so my experience is from a time long ago (the 1970s and 1980s), when lawyers (and clients) stayed with one firm. We took great pride in having been trained in the firm way, and older lawyers invested in the younger lawyers because they benefited from the continuity (the young lawyers would eventually assume greater responsibility for the clients so the older lawyers could continue to receive compensation while devoting more time to whatever they wanted to do, whether serving on boards or Bar activities or whatever). That model doesn't exist anymore. As for the older lawyers today, if they don't produce, they are gone. As for the plight of young women lawyers, I'll tell a story about my first day on the job, which was devoted mostly to orientation, meeting lawyers in the firm, equipping an office, etc. A mid-level partner I met in the morning asked me to meet him and several other partners for lunch at the restaurant on the top floor of our high rise. Later in the morning I met a young woman lawyer who, like me, was on her first day with the firm. I invited her to join me and the partners for lunch. At noon, she and I rode the elevator to the top floor and walked into the foyer of the restaurant where the partners were waiting, waiting with a look of horror on their faces once they spotted us. I was confused, but only until we entered the restaurant, where it was obvious why: the only women in the place were waitresses. It was the "best" club in town, reserved for men only. Not an auspicious first day on the job for me, and not an auspicious day for the partners to belong to such a "club". That night I told my wife about it, and she told me never to go to that place again, ever. Not too many years later the club changed its policy, and I asked my wife if it would be okay for me to join. I guess I'm lucky that I'm still alive.

Regarding your last sentence, it's my experience is that it's not the narcissists but those higher on the sociopathy scale who find the bruising infighting of working in a law firm most rewarding. I imagine that narcissists who are effective in that arena would also enjoy it, and that narcissists who were less effective would quickly find another environment.

The lawyers I work with aren't personable enough to be sociopaths. They're more like autistics.

As a biglaw partner myself, and a veteran of five biglaw firms, I would have to say:

1. The number of attractive blonde female associates is statistically insignificant. They can't possibly be affecting the results of any studies.
2. Most partners aren't interested in the associates as human beings. They see them as cogs. They want the work done well and quickly, and in some cases efficiently. They aren't parceling out the work based on whether they feel comfortable with the race or sex of the individual associate, because they don't see the associates as individuals. It may be different at smaller firms, but biglaw is all about the numbers.

Who would choose to waste their life in such a vile world?

Welcome to capitalism ;) Dog eat dog!!!

There is no capitalism, and no morality, without empathy. Thank God you twits are so marginal.

I think a lot of people just put in a few years in Big Law to get experience, build a resume, develop references and contacts, etc; and then move on. But the people who climb the ladder get Capital-P Paid. That's why.

'two commas'.

I knew one fellow who clerked for the Appellate Divsion in New York. He lasted one year in Big Law. Another clerk there had been the editor of the law review at Buffalo. He was an associate for some years at a diversified metropolitan firm that might be considered one step below Big Law and then put in a few years in Big Law, but never cadged a partnership. He's worked as corporate counsel and in compliance for about 15 years now.

I agree about the money, but the work is intellectually interesting, especially as you get more senior. I would note that the number of biglaw partners with two comma incomes is a fairly small subset of the total set of biglaw partners. (I am defining biglaw as Amlaw 100 firms that pay "going rate" (currently about $165K) to first year associates.)

"such a vile world"

Lawyers of course.

People who can't do math but still want the below-mentioned 'two commas' by age 35

two commas by 35 is a pipe dream. Even if you make partner, you'll be a non-equity partner or a very junior partner making about half that, at best.

net worth, not income. I assumed someone asking dearieme's question would have no conception at all of how big the payscale in question is, and would think of "two commas" as a lifetime net worth target most people try to get to by retirement rather than an annual income level to get to in your 40s

by "most people" I don't actually mean "most people" but something more like "most people with a undergrad but not graduate degree and a white-collar career"

As a former biglaw partner myself, I agree with all of that, although there's still the possibility of unconscious bias (you want the best cog, but you're more likely to think it's a male).

One other possibility I didn't see discussed - women are less likely to pad their hours (or more likely to underbill). I have no idea if it's true, but it's not a crazy thought given other studies showing differences in asking for salary, etc. Associates in big law are under tremendous pressure to bill.

"women are less likely to pad their hours"

Good insight. I know several women who left (or were pushed) Big Law jobs because their billing was low.

2200+ hours (even with partial hr. billing) is nearly impossible without padding.

by implication women then are systematically delivering more value per hour billed and so clients should / will deliberately seek out female lawyers. would the research pick this up?

Padding depends on opportunity, and male lawyers are over-represented in the types of case that present the opportunity. Like complex litigation and complex transactions. Of course, it depends on the definition of "padding": productive time to one lawyer may seem like padding to another. Also, a common practice in some insurance defense firms is "unit billing". For example, responding to interrogatories may be billed at a uniform rate, regardless of how much (or little) time it takes.

They specifically address under-billing in the research paper. But who would bother to read that?

Thanks for the insight y81.

I'm also a biglaw partner and a veteran of 3 biglaw firms. I can confirm in my experience that the partners don't care if the associate is man or woman; white, brown or green; human or martian. Its not all about the billable hours, we definitely value associates that keep the clients happy (and we hear about it from clients constantly).

It is possible that the clients have a bias against women. On the other hand (with the caveat that I know that anecdote doesn't equal data) approaching 100% of the female associates that have worked for me have voluntarily taken themselves off the partnership track for less demanding alternatives, while the only men that have voluntarily done so either left to go to another firm or went in-house to equally demanding roles. In my view its a real shame because the women tended to have better and more stable relationships with the clients.

I'm interested in hearing the opinion of y81 and other biglaw partners on the issue of hiring attractive blondes with relatively poor grades compared to peers as first year associates. Do attractive blondes add more value to a firm than other associates due to their physical attractiveness? Considering associates with lower grades are probably less conscientious and motivated, do you think any benefits of hiring attractive blondes outweigh the moderate drag on associate productivity?

I acknowledge y81's comment about statistical insignificance since in an associate class of 40, there might only be 1-2 attractive blondes. Accordingly any drag on productivity from hiring on looks is at most moderate when considering an entire class year.

Biglaw practice for associates involves so little face-to-face time with clients, I don't see how an attractive blonde would be helpful as an associate. If there is a hiring bias in favor of such individuals--and I can't say I ever noticed it--it must be more self-indulgence on the part of the hiring partners, who want some eye candy in the office, than any financial considerations.

Bringing in new clients is a metric? So what if clients are sexist and don't want a woman telling them what to do, legally speaking? This same effect could also explain billable hours (fewer legal questions to female lawyers from sexist clients).

Not sure performance pay is a good instrumental variable in this case -- there is no way to to separate performance from sexism because clients could be sexist.

Our causal diagram is not

clients --> performance --> pay
sexism --> pay

but rather

sexism --> clients --> performance --> pay
sexism --> pay

As I noted above, you are welcome to start your own law firm that has at its core your new and innovative function for scoring. I look forward to the results.

However, in the world today what matters to law firms is generating revenue and to do that they need clients.

And it is the government that should provide the kids that become new clients??

Its free lunch economics. The focus on only a single transaction and optimizing the profit in that while ignoring the downstream impact which flows back to impact the business.

Get rid of the employees with kids to get higher profit. After all, in 50 years, the lack of kids becoming customers will be something to blame liberals, Democrats, Obama for.

Oh, wait, Obama was blamed for not working with Republicans by devoting 100% of his time to talking with them, instead spending an hour or two every day with his kids.

Clearly Obama is a failed president because he did not abandon his kids.

Wow, this was dumb.

News flash. Men tend to be more competitive in the workplace and have different objects in life which affect the distribution of their efforts, features of everyday life which grow manifest in demanding occupations like law. There are also more men in special ed classrooms and in prison, not that Nancy Hopkins gives a rip about that.

Yes, men are more competitive by nature, but I think there is an additional interactive effect. Men are still the primary household income earners, and thus there is more pressure on them to advance their careers. One would think that there are greater gains to be had at the margin by investing in the wife's human capital, but that implicitly assumes equal opportunity costs.

I was a public servant when I married my wife who has always stayed at home. It was a traditional values choice we made and never regretted. I improved my income by leaving the legal profession for financial services. I never wanted to be a salesman of legal services, but I found fewer ethical compromises in finance. Of course I earned my place before and without the latest jiggery pokery in the markets.

I disappointed a lot of mentors, but I'm happy as a clam.

Men are still the primary household income earners, and thus there is more pressure on them to advance their careers.

Still? I suspect that's not going to change. People make all sorts of adjustments and compromises to get along in life, but marriages wherein the wife is the primary earner have structural defects which make them less secure than others, ceteris paribus.

That is interesting

i left a much more lucrative career in financial services to become a lawyer because I felt like I was pushed towards to many ethical compromises in finance.

What percentage of wives in divorce cases are represented by female lawyers (further broken down to plaintiffs and defendants)?

Such a great title. We always hate hearing data that disproves what they want to be true.

Penelope

Ok. so the problem with women is they must be involved with having kids.

Or to put it another way, kids are the problem.

Men have an advantage over women by being able to abandon kids.

For women to compete with men, they must abandon kids.

Thus economists argue to an economy without kids as the best way to have the most productive workers.

And yet, economists then go around moralizing about the single parent households that are overwhelmingly headed by women being a bad thing. What are they thinking when they argue men should not devote any time to their kids?

You didn't mention Obama. Are you feeling okay?

Making partner in biglaw these days is all about bringing in business. A big problem that young attorneys of both sexes face is that it's hard to bring in business with the title of "associate." People want to hire a Partner, not an associate. I think this bias might affect young women more than young men, so that could contribute to these findings.

Where is it written that women's productivity and compensation must at all times equal men's? Let women be good lawyers and good mothers, and if their pay doesn't match the workaholic male partner of the month, then so be it. Let Mr. Workaholic be top dog if that's his primary life-focus. The notion that women should have balanced lives while simultaneously competing on a par with those who don't makes no mathematical sense.

As a lawyer that runs marathons around the world, I make (sometimes quite serious) career sacrifices to do what is important to me. For me, physical competition is an emotional, biological and spiritual imperative. I need to run and I need to compete. Period. It's how I'm built.

Feminism treads into deeply illogical areas when it insists on career/compensation equality at the same time as insisting on the imperative (and inherent non-equality) of being a good mother.

The goal at the outset of feminism was to open doors to any and all women who wanted to pursue careers. But the notion that those careers must follow identical and equal paths is more like some kind of big-government socialist nightmare.

I have no doubt that men on average work longer hours. Let them. And quit your whining, ladies. We choose our lives.

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