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Do Firms Care When They Lose Women?

Vivia Chen

February 10, 2017

F-Business-Woman-Listening-AttentivelyForgive me for being cynical, but I'm not at all convinced that law firm managers are losing sleep when women lawyers fly the coop.

I'm reacting to a recent article in The American Lawyer ("What It Costs when Talent Walks Out the Door") by Paola Cecchi-Dimeglio, a behavioral economist at Harvard Law School. Her thesis is that it's costly to replace female talent, and that it behooves firms to make sure that women stay.

Cecchi-Dimeglio writes that "diversity pays," and that firms with "significant numbers of women leaders" are better at "solving complex problems, which leads to increased innovation and drives financial growth."

The argument that diverse teams (in this case, gender diversity rather than ethnic) get better results has been in vogue in recent years, but the author uses another tact to drive home her point: the replacement cost for talent. She writes:

It takes longer to replace female talent. The time required for replacing a male lawyer ranges from six to 11 months. Replacing a female lawyer requires seven to 14 months. This finding has implications in terms of cost, revenue loss and loss of performance within the organization.

My research also indicates that the cost of replacing a female lawyer is higher than the cost of replacing a male counterpart. The range varied based on the practice group the attorney belonged to, but the differential is about 10 percent for junior and senior associates and 20 percent for partners.

Specifically, concerning male lawyers, it costs 100-140 percent of salary to replace junior associates; 140-200 percent for senior associates; and 200-380 percent for partners. By contrast, the cost of replacing female lawyers is 100-150 percent of salary for junior associates; 150-210 percent for senior associates; and 210-400 percent for partners.

I'll leave it to those of you versed in law firm economics to quibble with her numbers, but what I'm skeptical about is that firms would mourn the loss of female talent—much less feel the need to replace her. To think that firms would consider the replacement cost for a woman is to assume that gender parity is a top priority—which I'm not convinced. (Need I remind you that women are still only 17-18 percent of all equity partners?)

I posed these issues to Cecchi-Dimeglio, and she tells me that there's a direct correlation between diversity and revenue. She says she has been studying the statistics of "several firms—domestic and international" (she won't say how many at this point) for an upcoming book. "When you show firms  that they're gaining revenue by diversifying, they have to be crazy not to diversify," she says. "It's not a moral imperative but a financial one."

Perhaps her book will make the relationship clearer. For now, though, there's skepticism. To start with the obvious, men dominate the ranks of big rainmakers, so who cares if women with scant business leave?

"I agree that firms should treat diverse partners better if they want them to stay," says Merle Vaughn, who leads the diversity practice group at recruiting firm Major, Lindsey & Africa. "But the need to replace partners is more strategic"—and that, she adds, means what counts is who's bringing in the big bucks.

"I don't think firms care about replacing women unless it affects their stats—like if a lot of women left—or if the woman is high profile," says former Big Law partner Patricia Gillette. "Otherwise they just try to explain it away and keep the status quo."

Cecchi-Dimeglio warns that it's short-sighted to put so much emphasis on the revenue partners generate. She writes: "The departure of top female talent impacts firms in some ways that can be hard to see. It is often felt acutely by the teammates they leave behind. And their impact as role models in a profession with relatively few women at the very top cannot be underestimated."

It would be nice to think that a woman's departure would have such a ripple effect, but I don't think that's always the case. Losing a leader—male or female—has repercussions for those left behind, and whether there's a larger significance to a woman's departure depends on the individual and the circumstances.

So here's where I come out: I agree with Cecchi-Dimeglio's goals, but I'm not sure she's made her case. To me, there's a wistful, wishful quality to her arguments that don't quite comport with the reality of the business of law.
"Attrition and related costs don't seem to be a powerful motivator for most firms," says Melissa McClenaghan Martin, a former Fried Frank associate who now advises firms about the promotion of women. "Consultants often talk about high attrition costs—the write-offs needed as other attorneys get up to speed, the costs of training and on-boarding the now-departing attorney and the potential strain in client relationships." She adds: "If firms truly cared about those things, they should be doing more to retain people."
But not everyone is so jaded. Jeff Lowe, global practice leader at Major Lindsey & Africa, thinks this kind of study might help firms better understand the economics of diversity. "Firms are always looking to diversify but they've probably never looked at the mathematics. This will help highlight what they're doing or not doing to retain women."
Which brings us back to the assumption that promoting women is a top priority in the first place.
One can only hope.


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Vivia --- your skepticism is well placed. I have been involved with the American Bar Association Commission on Women in the Profession since it was established in l987.We began making the economic argument 30 years ago and it has not made a dent, I, too, am skeptical that it will now.

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The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: VChen@alm.com

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