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Study: Gender Disparity in Billing Rates

July 15, 2014 | Posted in : Billing Practices, Fee Data / Fee Analytics, Fee Scholarship, Hourly Rates, Legal Spend, Litigation Management, NALFA News, Study / Report

Sky Analytics, a leading corporate provider of legal spend management software for corporate legal departments, recently announced the release of the first ever gender study based on actual billings from law firms.  The gender study (pdf) casts light on stark inequalities between men and women in the legal profession.

The study analyzes law firm invoices collected by Sky Analytics from corporate legal departments with annual legal spend ranging from $1 million to $1 billion.  The data set spans over $3.4 billion in legal spend across over 40,000 attorneys and timekeepers and over 3,000 law firms in the U.S., including 73 of the AmLaw 100 firms.

“In light of the recent Pay Equality bill signed by President Obama, we decided to analyze the Sky Analytics’ database to see if we could cast light on any gender disparities in the legal market,” said Dr. Silvia Hodges Silverstein, Vice President of Strategic Market Development at Sky Analytics.  “We were surprised not only by the pay inequality, but also the staffing role biases.” 

“We set out to create the world’s deepest and most detailed legal spend database and analytics platform,” noted Jonathan Kash, Chief Data Scientist.  “This study reveals the power that is locked in invoice data which can help drive positive change in the industry.” 

Key findings of the study include:

Female partners earn an average 10% lower billable rate versus their male counterparts.  This pay inequality is especially pronounced in the Mountain and South Central regions of the U.S. where rate disparity rises to 16% and 20% respectively.

Women are billed at significantly lower rates per hour than men, no matter what size of firm.  The average female partner’s hourly rate is $47 less per hour or 10% less than her male colleague’s ($426 vs. $473) at top tier firms.  The difference is even more significant at smaller firms where female partners are billed at $64 less per hour or 12% less than males at ($498 vs. $562).

Virtually no women are billed at over $1,000 per hour compared to 2% of men in top tier firms.  While 6% of all male lawyers bill over $800, only 2% of female lawyers bill over $800.  Furthermore, 51% of men in top tier firms charge over $500 per hour, compared to 31% of women in the same tier.

The differences in pay start early.  At top tier firms, the average hourly rate of a female associate is $27 less per hour than her male colleague’s ($377 vs. $404).  At smaller firms, 30% of women charge less than $150 per hour compared to 22% of men.

Based on invoice task codes, there are specific “female” jobs and “male” jobs.  Only four jobs were “female” jobs (˃50% female): word processing (UTBMS code E103); fact investigation/fact development (L110); deposition (L330); and “other” (P280).  By comparison, 177 jobs were “male” jobs: Juror research (Me210); Discovery On-Site Inspections (L360), International Patent Prosecution (PA600), Operations (B200), and Hosting Costs (L651) are most likely to be done by a man.

Female partners bill 24 minutes per day more than male partners.  Male and female associates bill about the same number of hours per day, while female paralegals bill 121 minutes (or 22%) less than male paralegals.

“We value diversity and equality so hopefully law firms will look at their own data to make sure they’re sending the right message to clients in the marketplace.  Also, it’s important to look at staffing and making sure women are staffed on the right matters,” Dr. Silvia Hodges Silverstein told NALFA.

“This is a groundbreaking study that’ll hopefully spur economic and social change in the legal profession.  Plus, it’s good to see legal spend data used to drive positive change in the industry,” said Terry Jesse, Executive Director of NALFA.

Sky Analytics is the leader in legal spend management software.  They analyze corporate legal invoices to give companies greater transparency into their legal spend and to benchmark their rates and matters against their peers.  Their legal spend management platform is the only one that does not require a lengthy implementation or e-billing integration.  For more information, visit http://www.skyanalytics.com.