Levelling the playing field: Managing the impact of discrimination and equal-pay laws

Law firms might have modernised dramatically in recent years, but there remains a reputation among many for being old boys’ clubs, with all the working inequalities the term implies. James Davies, joint head of the employment and incentives department at Lewis Silkin, explains what firms need to do to ensure that they meet legislative requirements for diversity and equal opportunities, while ensuring a better, happier workforce.

Ironic as it may sound, law firms are among the most vulnerable employers to sex-discrimination and equal-pay claims. The most common complaints arise out of pay and promotion decisions, requests to work flexibly (often on return from maternity leave), and harassment. While sex discrimination and equal-pay laws of course protect both women and men from disadvantage related to their sex, the main issue for law firms is avoiding discrimination against women.

It is not uncommon for such cases to reach the public domain (for example, the joint claims of Sian Heard and Sian Fellows against Sinclair Roche and Temperley, and Sarah Collins’s claim against Tarlo Lyons). But these represent the tip of an iceberg, as most major law firms would be able to testify.

Pressures on both claimant and law firm to settle out of the public glare can be compelling. Claims can be costly to fight and defend in terms of both external lawyers’ fees and, in the firm’s case, valuable management time. (Consider the fees that could have been earned by partners or associates involved in preparing for or giving evidence.)

The reputational risks can also be substantial. A firm’s good name risks being sullied by allegations – whether or not they are well founded – that are gratefully publicised with impunity by the trade or even national press. No less is the potential damage to the claimant from airing publicly even the strongest of cases. Win or lose, the claimant’s career prospects are unlikely to be enhanced by a public spat.

Equally important are the stresses and pressures on accuser and accused. The strongest and most robust of lawyers cannot fail to be affected by participation in claims of this type.

Despite the strong incentives to settle, cases do on occasion still fight. There are good reasons for this. No law firm wants a reputation as a ‘soft touch’, which would only encourage future claims. Principle also plays its part, on both sides. Many lawyers and law firms embark upon the bringing or defending of claims, with a determination to achieve ‘justice’. Then, before long, the litigation gains a life of its own and there are legal costs to factor into (and complicate) settlement negotiations.

For many firms, it is only the experience of facing a complex, acrimonious and costly claim that causes them to address this issue. More law firms and employers generally are beginning to recognise the benefits of proactive risk management. This is highlighted by the growth of equal-opportunities, diversity and claim-avoidance training being offered by major employment-law departments and specialist training providers to their clients.

Any risk-management programme should take into account that discrimination claims faced by law firms may be: (a) well founded; (b) without merit; or (c) arguable. The programme should tackle both claims and the causes of claims. It should deal not only with preventing discrimination, but also combating perceptions of unfairness that lead to claims.

Pay and promotion decisions are common sources of complaints, particularly from women overlooked for partnership. Law firms have long been bastions of subjectivity and opaqueness in such matters, with decisions being made by groups of partners according to unclear or unsatisfactory criteria. Little surprise, then, that the female lawyer denied partnership is often at a loss to understand the decision. Moreover, the factors commonly cited tend to increase suspicion of an uneven playing field, for example, ‘commitment’ (a reference to the fact that she finds it more difficult to put in late nights because of her children?), ‘gravitas’ (clients expect senior lawyers to fit a particular (male) image?) or, even worse, ‘fit’ (doesn’t play golf with the partners?).

Even reference to fees billed is not certain to escape challenge, particularly where work is handed out by senior partners and favouritism suspected (this was one of the grounds of complaint in the Sinclair Roche & Temperley case). Career advancement in law firms can depend heavily on networking and mentoring, so employers need to guard carefully against the perpetuation of gender imbalance in these areas.

Suspicions are often reinforced by the way in which performance issues are raised. While such concerns may be valid, they are often addressed in a way that reflects poor performance management. Lawyers do not necessarily make good managers, and partners are more often promoted on account of legal rather than managerial skills. In a lot of firms, they receive no adequate training in management techniques. Many discrimination claims arise because of a mismatch between the perceptions of the partner and the claimant lawyer in relation to abilities.

One can only sympathise with the lawyer who smells a rat when confronted for the first time with apparently long-held concerns. Such criticisms are often justified, but the partner has avoided confronting the lawyer on account of a desire to shy from conflict, or in the belief that this would do little good as the lawyer is trying her best but lacks the requisite abilities for the work. Worse still, the most recent appraisal might, for the same reason, paint a misleadingly positive picture. Persuading an employment tribunal that the last appraisal was unrepresentative is not an easy task.

It must be said that arrogance sometimes plays a part too. Some law-firm partners are unwilling to have their subjective decision-making powers fettered by ‘politically-correct’ diversity policies. Such individuals tend to be unfamiliar with the subtleties of subconscious discrimination and/or unreceptive to values that have changed since their careers began.

Law firms therefore need to ensure that their decision-making processes are transparent, consistent and well documented. If people know why decisions are made and what criteria are taken into account, and if surprises are avoided through proper performance management, fewer claims will arise and firms will be better placed to defend those that are brought.

In discrimination cases, the burden of proof shifts to the employer, once a claimant has established a prima facie case of unfavourable treatment. This means that firms need to make efforts to avoid ‘inferences’ of discrimination being drawn. There are many steps firms can take to present themselves in a good light in this regard.

Developing a comprehensive equal-opportunities or diversity policy is a good start. But this will be counter-productive unless the policy is properly implemented, communicated and adhered to at all levels. Training partners, associates and other staff is not only beneficial in itself, but also helps to portray the organisation as taking issues of equality seriously.

Workplace romances gone sour can lead to harassment complaints. Some firms, most usually those with US head offices, have introduced rules for relationships between colleagues (often referred to as ‘love contracts’). In the UK, firms need to consider carefully whether this approach matches their culture. It also potentially gives rise to human-rights issues under UK law.

In many discrimination and equal-pay cases, unfortunate comments or incidents are raised as evidence of the sexist environment in which the claimant worked. Such matters may have occurred many months previously and are often unconnected with the allegations in issue. They can, however, potentially be far more embarrassing for the firm than the subject matter of the claim.

Eliminating comments and incidents of this type is an important element of any risk-management programme, removing the leverage that claimants can apply in discrimination litigation. Lawyers work long hours and often socialise and drink together. Establishing and maintaining acceptable behavioural standards in an environment where – at least in minds of those involved, if not the law – work and social-life blur can represent quite a challenge. E-mail communications return to haunt the sender in all too many discrimination cases.

Setting clear standards and providing well publicised means for concerns to be raised at an early stage, before the offending behaviour gets out of hand, will greatly help. So too will reminding e-mail users to think before they press ‘send’, thereby creating a permanent record that will often be disclosable in litigation or obtainable via a data-protection ‘subject access’ request.

Statistical evidence can also be highly relevant. Questionnaires have long been used by claimants to demonstrate gender inequalities – for example, the disproportionate number of men at senior levels. This does not in itself demonstrate discrimination in a particular case, but it can result in the burden of proof passing to the employer for an explanation. The role of statistics has been enhanced with the extension of the questionnaire procedure to equal-pay claims with effect from April 2003.

Firms’ responses to questionnaires highlight the importance of dealing carefully with the preliminary steps in equal-pay litigation. There is no legal obligation to respond to a questionnaire, but an unreasonable failure to answers questions can count against the employer in any subsequent tribunal proceedings. Law firms are, however, frequently reluctant to disclose pay details that they regard as confidential. Data-protection arguments are often deployed to justify non-disclosure. Such an approach should be taken with great caution. The tribunal will often order disclosure of the relevant material and the firm’s earlier reluctance will be thrown back at it as grounds for drawing an inference of unlawful discrimination.

Flexible-working requests frequently result in conflict and allegations of discrimination. The legal position is clear. A requirement to work full time disproportionately disadvantages women who, on average, are more likely to have childcare responsibilities. It is, therefore, discriminatory unless the firm can objectively justify its need for full-time work. The statutory right to request flexible working, introduced in April 2003, adds little to employees’ rights under the Sex Discrimination Act 1975, essentially imposing procedural obligations on the employer.

Reduced-hours working encompasses part-time arrangements (for example, working a reduced number of days each week), fixed hours (for example, needing to leave at a fixed time each day for childcare reasons) or a combination of the two. Government initiatives to promote parents’ need to balance work and family commitments are frequent. Law firms, however, are generally slow to embrace flexible working practices. There is a common mindset that lawyers who are not free to work seven days a week, 24 hours a day will diminish client service and potentially damage the business. Enthusiastic or not, firms will have to adapt to the 21st century workplace sooner or later and accept that part-time lawyers can perform other roles apart from professional support.

This is not to say that firms must accede to every flexible working request. A clear policy will not only ensure consistent decision making and help defend claims, but also enable lawyers to understand what level of flexibility is possible. Consistency and predictability should make it less likely that individuals will perceive they are being treated unfairly. The policy may also highlight that individual requests are more likely to be granted if they show a flexibility over days worked each week, and availability to be contacted on days out of the office, and so on.

A flexible working policy can also address the impact on pay. Employment contracts might refer to core working hours of, say, 9am to 5pm, but the vast majority of lawyers do not work 9 to 5. If a lawyer works fixed hours, it is unfair on others if he or she is paid the same as those who in practice work much longer hours. One method is to set the hours a busy lawyer is normally expected to work and then calculate reduced hours pay from there.

There is much that law firms can and should be doing to protect themselves from discrimination claims. This article has focused on sex discrimination, but UK law also outlaws discrimination on the grounds of race, disability, sexual orientation and religion or belief. And, of particular interest to law firms will be the arrival of age-discrimination laws in autumn 2006. Like other discrimination laws, these will protect partners as well as employees. All in all, there is a great deal to keep the busy managing partner occupied for some time to come.

James Davies is joint head of the employment and incentives department at Lewis Silkin. He is co-author of Employment, Discrimination and Partnership Law for Professional Partnerships, recently published by Legalease. He can be contacted at james.davies@lewissilkin.com