United States: Hitting Home: Law Firms Are Now The Target Of A Spate Of New Pay Equity Cases

Last Updated: October 4 2018
Article by Mike Delikat, Kathryn G. Mantoan and Yekaterina Reyzis

Big Law is no stranger to providing advice on pay equity or defending pay equity lawsuits. But until recently, headlines generally featured lawsuits challenging the compensation practices of their clients, not the law firms that represented them.

In the last two years, however, Big Law has itself moved into the spotlight with a wave of pay equity suits brought by aggrieved female partners and, in some cases, female associates. To date, the number of these suits against Big Law—either pending or concluded with multi-million-dollar settlements—has reached double digits and shows no signs of slowing down. We think the details are worth a second look—particularly in light of the complicated dynamics at play in how law firm partner compensation is set.

The number of pay equity cases against law firms began to swell in 2016, when a female partner brought a sex discrimination suit against Chadbourne & Parke LLP (now Norton Rose Fulbright). She was joined by two other female partners, all of whom claimed that, despite being on notice of pay discrepancies, their firm routinely paid women less than men with comparable accolades. The suit settled earlier this year in the U.S. District Court for the Southern District of New York for $3 million (including attorneys' fees).

Ironically, the firm that had defended Chadbourne—Proskauer Rose LLP—became the defendant in a $50 million pay equity lawsuit against the firm the following year in the U.S. District Court for the District of Columbia. The suit was dropped through a stipulated dismissal last month for undisclosed reasons but several other cases followed, transforming what was once an anomaly—lawyers suing their law firms—into a more regular occurrence across the nation. Other prominent national law firms facing gender bias pay equity suits in the last two years include: Sedgwick, LLP; Steptoe & Johnson, LLP; Morrison & Foerster; and, in June 2018, Jones Day. Even law firms that specialize in labor and employment cannot seem to escape these lawsuits; Ogletree Deakins, a labor and employment behemoth, was slapped with a $300 million class action suit in federal court in San Francisco. On deck is at least one other firm—Manatt, Phelps & Phillips, LLP—which faces an EEOC complaint for gender-based workplace discrimination, including equal pay violations, filed by one of its former employment partners.

The allegations in many of these cases parallel those in the suit against Chadbourne. Female partners (and, in the case of the suits against Steptoe and Morrison & Foerster, female associates) generally allege a "male-dominated" (Sedgwick) or "fraternity" (Jones Day) culture, and claim that there are significant pay discrepancies with alleged male comparators perpetuated by male-dominated law firm leadership. The law firms often respond—both in court and in the press—by denying any wrongdoing, pointing to legitimate, non-discriminatory factors that impacted the compensation of the particular woman (or women) bringing suit, and highlighting robust firm-wide diversity and other policies benefiting women. Should any of these cases proceed through discovery to the class certification or summary judgment stage, the evidence will likely focus on what compensation structures and policies are in place at each firm, how those policies operate, and whether the work performed by and contributions of different attorneys satisfies the comparator standard of the relevant law (Title VII, the federal Equal Pay Act, or the relevant state analog). See, e.g., E.E.O.C. v. Port Auth. of N.Y. & N.J., 768 F.3d 247, 251 (2d Cir. 2014) (affirming judgment on the pleadings on Equal Pay Act claim because plaintiff attorney failed to plead facts "about the actual content of the work done by the dozens of attorneys either within or across practice areas at the Port Authority").

The legal profession has grappled with retention and advancement of women, especially in Big Law, and many firms are increasingly making significant strides to incentivize and recognize female achievement at all levels, with an emphasis on representation of women in the partnership and firm leadership. Junior attorney mentoring programs, more robust parental leave, alternative work and flexible hour arrangements, and expansion of affinity groups are examples of law firm efforts to address these issues. But the equal pay lawsuits we have seen to date confirm that these efforts do not immunize firms from suit and in some cases, it appears to be a case of "no good deed goes unpunished". Moreover, the publicity surrounding any case brought against a law firm, especially Big Law, is enough to attract substantial interest from the plaintiffs' bar in continuing to bring these claims.

It remains to be seen how these pay equity suits play out in different jurisdictions, and how law firms will decide whether to settle or litigate. In many of these cases involving equity partners, there is a threshold issue as to whether equity partners are "employees" for purposes of coverage by anti-discrimination statutes. The law on this issue is less than clear and is driven by the particular facts and circumstances surrounding each firm's partnership. In any event, the rest of Big Law will no doubt be watching, and may want to incorporate lessons from these suits into reviews of their own compensation practices and compliance with the changing landscape of state pay equity laws (typically through privilege pay audits conducted by outside counsel). What's clear is that law firms should seek advice now as to how to avoid being sued in a pay equity dispute and how to be in the best position to defend these claims if they are asserted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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