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Where Are All the Female Partners? The Effect of the Lateral Hiring Process on Gender Diversity

Daniella Isaacson law.com

Lateral partner hiring is an important component of firm growth. According to ALM Intelligence analysis, lateral hiring increased 36% from 2010-2015 and is poised to continue to rise. Last year alone lateral hiring reached 2,890 moves, a 5.6% increase from the prior year.

Moreover, lateral partner hiring has an impact that transcends the recruitment itself: The majority of firm leadership comes from lateral hires rather than organic growth within the firm.

That means that as lateral hiring becomes an increasingly integral piece of firm growth post-recession, firm leaders must confront the reality that the process perpetuates the gender diversity problem.

The stats on gender diversity in the legal industry remain consistently bleak: Female attorneys only comprise a small percentage of law firm senior leadership. Women comprise approximately 16% of equity partnerships and 25% of non-equity partners — numbers that have remained level for the past five years. Women also constitute a distinct minority on top governing committees: 4% of executive management overall, 23% of top governing committees, 28% of promotion committees, and 28% of compensation committees.

The data on female lateral partner hiring mirrors these numbers. Women comprise just over 20% of the lateral partner hiring market.

The issue is circular and, in fact, partially stems from the lateral hiring process itself.

As much as firms have tried to quantify the success rates from lateral hiring through different metrics, most notably portability of book of business, the process in and of itself has a strong subjective component. It relies upon senior firm leaders to make a judgment call as to the potential lateral partner’s fit in firm culture.

Female partner underrepresentation in senior leadership, particularly on hiring and executive committees, deepens the gender diversity problem. There are fewer women on average on hiring committees to argue in favor of female lateral hires.

When considering portability of book of business, firm leaders should remember that women are often less comfortable in a business-generating role. This issue is part-and parcel of the struggle that women face in attaining origination credit. Strikingly, a study by ALM Intelligence and Major, Lindsey & Africa found that between 2012 and 2014, origination credit to female partners dropped 12 percentage points in the same time span that origination credit to male partners increased 8 percentage points.

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