Will wage transparency close the gender pay gap in law?

Australian women continue earn less than Australian men in every – yes, every – profession. Despite efforts to reduce the difference in earnings and a period of notable progress in the last decade, our gender pay gap remains stubbornly high at 19 per cent, which amounts to a median of $18,461 over the course of one year.

Australia is now ranked 43^rd in the World Economic Forum’s global gender gap index, behind the US (27^th), the UK (22^nd) and New Zealand (4^th).

With the aim of attempting to reduce the gap, the Workplace Gender Equality Agency (WGEA) now publishes the gender pay gaps for all private sector employers with 100 or more employees. The landmark policy saw the first batch of data released in February to nervous executives across the country.

For law firms, the avalanche of data exposes some awkward, but perhaps unexpected, truths. Across the legal sector, the gender pay gap persists at 29 per cent – well above the 5 per cent WGEA says allows for normal business fluctuations. Notably, more than 50 percentage points separate the best performers from the firms with larger gender pay gaps.

Some firms have included partner renumeration, while others haven’t. And the dataset doesn’t include the hundreds of small and medium-sized sized firms that employ large swathes of the country’s practitioners.

Yet it’s clear the renumeration playing field is far from level across the profession and more must be done to close the gender pay gap in law firms.

“Women are working more than ever before and they’re earning more than ever before, but there’s still this persistent pay gap,” explains Natasha Bradshaw, senior associate at the Grattan Institute.

“The government doesn’t have a lot it can do because many of the levers sit with businesses. You can’t tell businesses what to pay men and women – but you can nudge them towards thinking about it.”

So, will greater wage transparency lead to meaningful change and help close the gender pay gap in Australian law firms?

Understanding the gender pay gap

The gender pay gap measures the difference between the earnings of women and men in the workforce. Crucially, the gender pay gap is not the same as equal pay, where women and men are paid the same for performing the same role, which has been a legal requirement in Australian since 1969. Rather, it’s the result of social and economic factors that combine to reduce women’s earning capacity over time.

“Historically, we’ve had a very large gender pay gap in Australia, as in many other countries. Partly, that’s because of deliberate government policy a long time ago that set women’s wages much lower than men’s,” Bradshaw says.

“There’s been this long catch-up for women in terms of getting into the labour market and getting into higher paying jobs that has been happening for several decades, but progress has stalled.

“What the gender pay gap reflects is women’s work being undervalued in the broader economy.”

Key drivers of the pay gap

Many firms cite an over-representation of women in lower-paid administrative, paralegal and junior lawyer roles, and more men occupying financially lucrative senior leadership positions, as a key driver of the gender pay gap, which is evident at all ages across the profession.

“Our gender pay gap reflects the higher proportion of women than men in administrative and legal support roles, which are the lower paid roles,” explains Genevieve Collins, chief executive partner at Lander & Rogers, which recorded a gender pay gap of 25 per cent.

She says the firm is the first in Australia where 50 per cent of its partners are women. “It’s really a workforce composition issue for us. We’re proud of our gender ratio in the senior roles, but we accept that we have a gender pay gap and we do think it’s too high,” Collins says.

In a pattern replicated in female-dominated industries across the country, branches of law that employ a greater share of women are also more likely to pay lower salaries. Professor Chantal Davies, co-vice chair of The Law Society’s Women Solicitors Network in the UK, which introduced similar mandatory gender pay gap reporting laws in 2017, says this is a reflection of complex structural issues.

“It’s about recognising that it’s the roles and the areas of work women are going into within the legal sector. They’re going into the smaller high street firms where they’re not getting the larger salaries and the areas of law where you don’t see the big bonuses,” she says.

“If you go into a family law department it will be predominantly female – and family law notoriously doesn’t pay well. If you go into a commercial property department in a large corporate firm, it will be predominantly men. There isn’t that gender balance that you’ll see in other areas of law.”

Other key factors that contribute to the gender pay gap in law have much to do with women’s responsibilities outside of work: unpaid caring and domestic duties, which can impede time in the paid workforce, lack of workplace flexibility to accommodate caring responsibilities and higher likelihood of part-time work. Female part-time workers make up 18 per cent of practitioners, according to the 2022 Annual Profile of Solicitors NSW.

“There are a lot of women in the sandwich generation caring for young children and older parents who may choose to work part-time because of the demands of that unpaid workload they’re taking on within their family units, and care inequality can amplify the gender pay gap,” says Justine Anderson, president of the Women Lawyers Association of NSW, adding that it’s common for women to leave private practice for in-house or governmental roles to better access part-time work.

At Hall & Wilcox, where the gender pay gap sits at 9 per cent, managing partner Tony Macvean says one of the biggest challenges for women working in law firms is “managing caring responsibilities and a thriving professional career”.

“We’re very focused on getting women into partnership and we’re making great progress with that. The challenge is then to support women progressing from being junior partners to becoming middle-level and then more senior partners, particularly when women are caregivers,” he says.

“It’s changing but it’s changing more slowly than getting women into partnership.”

Naming and shaming poor performers

Countries that have introduced similar legislation requiring employers to publish their gender pay gaps, such as the UK, Canada and Denmark, have seen the gaps come down. Bradshaw says she expects to see similar outcomes in Australia.

“Companies have been given this information privately for a long time. It’s just that it’s now in the public domain, which forces them to address it a bit more,” she says.

“In the UK, the worst performing companies were named and shamed. If that continues to happen every year, it puts women off wanting to work in those businesses, which, when there’s a shortage of talent and such a low unemployment rate, becomes quite a problem for businesses.”

Anderson agrees that greater transparency may be the push many law firms need to make changes to reduce the gender pay gap.

“What we have found is that if industries are left to their own devices to altruistically provide policies that promote gender equality, there will be certain businesses that will because they believe in advancing women through their industry. But it’s not generally something that companies will do without some encouragement,” she says. “What this demonstrates is how important policy is to cultural change.”

With significantly more women entering the profession than men since 2011 and female solicitors now outnumbering male solicitors, Bradshaw says the law industry is in a good position to reduce its gender pay gap “if businesses are willing the make the effort”.

“In law there is this huge pipeline of very talented women going into the industry and it’s generally a well-paid industry,” she says.

Deploying real world strategies

Macvean says Hall & Wilcox has been tracking its gender pay gap for many years and has seen gradual improvement with the implementation of new policies.

“Really supporting flexible working and encouraging people, men and women, to work flexibly and to seek to blend their work and professional life is perhaps the thing that has had the biggest impact on narrowing the gender pay gap,” he says.

Partner and chair of Hall & Wilcox’s diversity, inclusion and wellbeing advisory council, Fay Calderone, says the flexible work policy comes without caveat. “What we’re trying to do as a firm is be very deliberate and consistently encourage and reinforce flexible work and the need for it to be taken up indiscriminately,” she says. “You don’t need to qualify, you don’t need a reason – we want everyone working flexibly and having that balance, regardless of their personal circumstances.”

Anderson agrees that flexible working policies available to and used by everyone are an important contributor to lowering the gender pay gap in private practice firms. “If these policies are only accessible or are largely only [taken up] by women, we are only addressing half of the problem,” she says.

Lander & Rogers also tracks its gender pay gap and Collins says that as of 1 January it has decreased to 20.4 per cent. The firm’s staff benefit from a fully flexible and hybrid work policy with no mandated number of days in the office. Formal job-pair arrangements help more part-time workers progress to senior roles.

“A senior part-time practitioner who might be a parent, usually a mother, is paired with a junior full-time practitioner,” Collins says.

“This enables the senior practitioner to cover court dates if the court hearings occur on days when they’re not working, and it benefits the junior practitioner because it enables them to have access to more interesting work earlier than they might otherwise.”

Collins says legal support roles are set to evolve with the support of technology, and with this change will come opportunity for a more even gender split. “It’s no longer about introducing calls and filing but about having skillsets, so we are conscious of upskilling our people into different roles like graphic design, communications and client relationship management. There’s a whole lot of roles that we need to be planning and preparing for,” she says.

Crucial, too, is reducing – and ultimately removing – unconscious bias during recruitment and remuneration and promotion reviews. “De-identifying the documentation so a reader can’t tell if it’s a woman or man applying for a role or remuneration increase can help to combat unconscious biases,” Anderson says.

Macvean says “having real rigour in ensuring that any unconscious biases don’t come to the fore has also been something that has really helped improve our gender pay gap and reduce it”. “When there are salary increases or a pay review time, there’s a standard process that everybody goes through, which includes people coming in or returning from parental leave,” Macvean says.

Indeed, Anderson says re-examination of promotion policies for women who take time out of the workforce to have children can help to close the gender pay gap.

“We’ve all known women who in the middle of the financial year have left on maternity leave and when they return they still have unreasonable budgets or KPIs to meet in order to be promoted or reach a target. Sometimes, because they have taken that time out, they’re looked over in terms of the promotion cycle because they haven’t hit those particular KPIs.”

Tracking changes over time

The actions firms now take, rather than the release of the gender pay gap data itself, are what can lead to meaningful and lasting change.

Prof Davies says the UK legislation “hasn’t necessarily addressed the gap – it’s unearthed the gap” and that a significant gender pay gap persists in UK law firms. “At the top 50 law firms we’re looking at nearly 30 per cent in terms of the gender pay gap. It is significant and it suggests that there’s a significant problem within our top 50 law firms,” she says.

The UK pay gap data doesn’t include partner pay, which Prof Davies says indicates the gender pay gap is “probably much higher than what the reported data suggests it is”.

In Australia, it’s hoped discrepancies between firms that have supplied this information versus those that haven’t – Lander & Rogers did while Hall & Wilcox didn’t, for example – can be evened out in subsequent data collection rounds, although there are limitations given the different structures firms operate under.

“Because of the way that the recording rubric works, and with an added layer of complexity in relation to how the firms are structured, it can really skew the data,” Anderson says.

It is also possible for a firm to be making serious efforts to improve while its gap remains large.

An effective measure of progress likely lies in how the gender pay gap – of individual firms and the profession at large – changes over time. “It will be really interesting to review the numbers at the three-to-five-year mark, because by that time we’ll have more of an understanding of the trends and what’s happening in firms,” Anderson says.