Accelerating Progress on Gender Equity in Law Firms

Accelerating Progress on Gender Equity in Law Firms

The issues of gender equity and diversity have been major topics of discussion in law firms for decades, but in recent years law firms have begun to focus more critically on these issues, and in particular on increasing the number of women and diverse lawyers within partnership ranks and leadership. While there are bright spots, progress remains slow.
In this Insight, we are focusing primarily on gender equity at law firms, but many of the challenges and proposed solutions apply to diversity more broadly.

The Investment Years

The Investment Years

The last several years mark some of the highest levels of recurring profitability growth ever experienced for many law firms, outpacing historical profitability growth by a significant margin. Between 2019 and 2020, Profits per Equity Partner (PPEP) among AmLaw 200 firms grew 12% on average, and the Compensation Average for All Partners grew at 10%. While year-end data for 2021 is not yet publicly available, our work with law firms confirms that these growth rates will be met, if not exceeded when ultimately reported for 2021. Given that we are still early in the year, it is hard to predict whether law firms will experience another banner year in 2022. Headwinds around geo-political uncertainty and rising costs, including ever-increasing associate compensation, are likely to pressure profit growth to some degree. However, demand at this early stage appears strong, and results thus far indicate solid financial growth.

Accelerating Progress on Gender Equity in Law Firms

Looking Ahead to 2022

Each year we look ahead and make predictions for the coming year. The last two years have been unpredictable in almost every way, but clearly demonstrated the resilience of the legal industry.

Enemies of Agility

Enemies of Agility

Over the past several years, we have seen a growing gap between the highest performing firms and the rest of the market. In working with and observing law firms across market segments and jurisdictions, we see clear differences in how firms respond to market changes. The most agile firms benefit from a strategic advantage based on their ability to respond to change and capitalize on opportunities more effectively. This agility frequently drives superior performance relative to the rest of the market. By contrast, firms lacking agility seem to fall behind, whether through inertia or because their focus is elsewhere.

Gearing Up for Growth

Gearing Up for Growth

As we enter the second quarter of 2021, the picture looks fairly rosy for many law firms. Preliminary signs point to the potential for another growth year in terms of demand across a number of practice areas. Signs of increased demand, combined with strong 2020 financial performance, indicate that some firms are poised for material revenue and profit growth and the potential to leapfrog competitors over the coming years.