The world is rich with powerful women leaders. In 2014, Janet Yellen became the first woman to chair the Federal Reserve. For nine years, Indra Nooyi has led food and beverage giant PepsiCo. And in 2016, the US just might elect Hillary Clinton as its first-ever woman president.
This is an impressive list of highly accomplished women. It’s also a list of outliers. Today, despite examples of high-profile women in leadership positions, they’re the exception to the rule in male-dominated professions. Women comprise just 20% of Congressional members. They’re just five percent of Fortune 500 CEOs and 17% of Fortune 500 corporate board members, according to Pew Research.
The numbers are even worse for women in law. Women comprise half of law school graduates and half of associates in “Big Law” firms. Parity ends there. Women begin leaving big-firm practice early in their careers, and that flight accelerates over time. Their median compensation lags that of men’s in all positions, with the biggest discrepancy at the partner level, according to a study conducted by the American Bar Association and the National Association of Women Lawyers. Women accounted for only 16.5% of law partners in 2013, according to the National Association for Law Placement—and only four percent of managing partners in the nation’s top 200 law firms, according to the ABA.
So, what to do about these unacceptable numbers—in particular the significantly lower representation of women at the most senior (and profitable) leadership levels in law firms? How do we fix this problem?
It’s tempting, of course, to complain—and as with any wrong that needs righting, it is essential to speak out. But that alone won’t fix the problem.
Nor will good intentions. Many big firms have instituted diversity programs, including recruiting and mentoring to retain women. But such programs often don’t address the key issues that keep women from advancing to leadership roles. What’s the value of recruiting and hiring more women if those women just end up leaving? Bringing more associates on board, even increasing the ranks of partners, is meaningless progress if women don’t stick around to claim their seats at the table as leaders of the business.
And, I would argue, therein lies the solution.
If we want more women leaders in law, or quite frankly in any industry, we need to change the economics—so that women can become not just leaders, but leaders of the business, and leaders who hold the purse strings.
What does that mean? In law, as in so many other industries, leading the business really means contributing to its growth—by bringing in new clients and by increasing profitability. In law firms, those perceived to be the drivers of top line growth or bottom line profitability are the ones with the most power and those that are most likely to assume leadership positions.
Litigation finance: an important tool for women lawyers
So if we want more women leaders in law, we need to give women the tools to drive new business and make the business more profitable. Litigation finance is such a tool.
Think of litigation finance just as it sounds: specialist financing for commercial litigation—in other words, for the work that women lawyers do. And that’s hugely important right now, because despite having become increasingly more expensive, neither the way most law firms charge clients nor the typical law firm business model have changed. What that means is that many corporate clients struggle to pay for or to justify paying for substantial litigations. It also means that many law firms are more dependent than ever on new business and struggling harder than ever to bring it in.
Litigation finance helps solve these problems. It’s effectively a contingency fee in which an outside financier provides the financing needed to pay lawyers’ fees and other costs related to pursuing a case. In return, the funder receives a negotiated return on its capital if and when the case resolves favorably.
What does this have to do with empowering women in law? A lot—let me explain how from two perspectives: women in private practice law firms and in corporate law departments.
Women rainmakers at law firms
Increasingly, litigation finance is a practical tool to generate new business—and thus it offers a unique opportunity for women lawyers to become rainmakers and power brokers outside of the traditional paths to power like golf outings and power networking.
For example, if a woman lawyer brings the idea of litigation finance to a client to help the client manage costs, it improves the economics of the case for the client and for the firm. It is especially advantageous if the client is seeking a contingency or another alternative fee arrangement, and the law firm is unwilling to enter into such an agreement. By bringing litigation finance to the table, that woman lawyer is in a stronger position to convince her firm’s contingency fee committee to move forward with the case—ultimately advancing her standing with the firm and her career overall. As importantly, by showing the client that she’s an innovative thinker who’s ambitious about representing its interests, she positions herself as a partner to her client for the long-term.
At private practice firms, it’s the rainmakers who call the shots. So giving women the tools to become rainmakers on their own terms is one of the best ways to advance them in leadership roles.
Women in-house lawyers: from cost center to profit center
Litigation finance also helps women in in-house roles elevate their stature as bottom line contributors. To understand why, it’s important to state the obvious: legal departments are not popular in corporate America, because, in the simplest terms, litigation is by definition costly and unpredictable, and legal departments are hard-pressed to budget with certainty. You can imagine how popular that makes them with the C-suite, which perceives legal departments and their occupants as, essentially, very expensive overhead.
Conventional wisdom holds that women lawyers often move to in-house roles (since they’re friendlier to work-life balance and raising families). Now imagine if, instead of women in-house counsel struggling to defend their legal budgets and battling their perception as very expensive overhead, these women lawyers were able to significantly reduce costs, increase profitability and even transform the legal department from a cost center into a profit center?
In the past few years, more and more in-house lawyers have begun to do just that. Companies have used outside funding in a variety of ways: to defray the cost of pursuing bet-the-company litigation that has real value to the organization; to finance defense matters, thereby reducing short-term cost; and to monetize the value of pending claims, manage risk and resolve the negative accounting impact of litigation on financial balance sheets.
Simply put, litigation finance is a tool that women in-house lawyers can use to position themselves as innovators with the financial savvy to significantly impact the business’s bottom line—setting them up for success in leadership positions.
Change the economics
There’s no questioning the statistics: while women are making inroads in garnering leadership positions in industries throughout the world, there is still much progress to make—and that is especially true in law. Speaking out is important—but neither it nor the best intentions are enough to solve the problem. Real, lasting change will only happen when the economics change.
There are lots of ways we can change the economics.
Companies can make a point of promoting women in in-house legal roles—and they can, in turn, demand that the firms they retain appoint women to lead their litigation teams. Women can start their own firms (as a recent article in the New York Time reports). And, most importantly, women can empower themselves, seizing tools like litigation finance to become the rainmakers and business innovators they need to be to succeed in law.
Enterprising Women is a partner in the new Million Women Mentors (MWM) initiative.
The initiative supports the engagement of one million science, technology, engineering, and math (STEM) mentors — women and men — to increase the interest and confidence of young women to pursue and succeed in STEM degrees and careers.