More women partners make firms more profitable for all

There are fierce arguments about the need for or merit of affirmative action to increase the proportion of women equity partners in law firms. However, many miss the key argument that having more women at the top simply makes business sense.

We have modelled the financial impact of more women and concluded that gender-rich firms are more profitable than those with a bias towards men.

The business modelling argument

It is no secret that most firms have too many lawyers and not enough business leaders: managing partners continuously bemoan the difficulty of attracting and retaining quality partners who can develop business, nurture client relationships and engage staff.

When modelling partner performance, we took into account factors such as billable hours, number of associates supported, write-off levels, and so on. We assumed a spread of individual performance ranging from 70 per cent to 130 per cent of the average. This established the base case.

We then started to ‘cut the tail’ of low-performing partners, replaced them with high-performing ones and calculated the impact.

If one assumes that men and women are equally distributed in their performance, then having a more balanced mix of both allows fishing from two talent pools instead of one, thereby increasing average performance.

Obviously, law firms have the raw material for quality women partners, so we decided to model what would happen if more made it to the top.

The bottom line is that, using conservative modelling, shifting the gender balance to 30 per cent women equity partners yields a 10 per cent net increase in profits. Given that PEP is still comfortably around £3,000 to £400,000 all the way down the top 100 firms, this pays for a lot of support to women who may need it.

Talent management, not distortion

The model described above only works if firms have a steady stream of quality partner candidates. During the course of our research, we interviewed very successful female lawyers (one of them has since become the managing partner of a top-20 City firm) and asked them what was needed to encourage women to stay in the profession.

The answers are simple in concept and complex in implementation: manage talent at every stage of a woman’s career and provide a fair environment. Do not discriminate against men but engage them on the business case. Monitor performance and take corrective action as needed.

Women drop out of law firms at every stage of their careers. Once they are gone, they tend not to return. Firms need to provide specific input, from coaching to training at every level, not just to those who have already made it.

The childbearing years represent all but a small proportion of the reasons why women leave the profession and are used as a fatalistic excuse in many firms.

Enlightened firms ruthlessly monitor their female talent pipeline to understand where it is leaking. They then put in place the policies, systems and resources to ensure that they hold onto as many of the 60 per cent women graduates that they hired in the first place.

Each firm is unique and needs to design its own system. In the same way that you would not spread your marketing spend equally across all clients and prospects, talent resources have to be applied where it makes most business sense. This is demonstrably the case with women partners.