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Wage gap narrowing for in-house

More lawyers going in-house with less experience explains reduced wage gap
|Written By Jennifer Brown
Wage gap narrowing for in-house
Dal Bhathal says legal departments in Canada are hiring more junior lawyers as they grow their departments.

The largest salary divide between men and women in-house in Canada exists in the most senior roles for equivalent work and diversity remains a challenge, but as more young lawyers make the switch from private practice sooner in their career that gap should close, according to a recent survey.

According to the “2018 In-House Counsel Compensation & Career Survey Results” done in partnership with the CCCA, while the wage gap has been reduced to 11 per cent from 15 per cent in 2016, the survey shows that when compared to men in the same roles in the profession, women still earn less and the largest gaps are seen at higher wage levels.

“It’s quite consistent with what we’re seeing occur in the market,” says Dal Bhathal, managing partner with recruitment firm The Counsel Network.

As more respondents this year came from the lower salary range, the by-product is that it caused a slight drop in the average base salary to $163,000 in 2018 from $165,000 in 2016.

As the junior base of respondents increases, the wage gap is not going to be as great.

For the first time, female participants outnumbered males (51 per cent female compared to 48 per cent male). In 2018, the average male base salary stands at $173,000, which is $19,000 higher than the average female base salary of $154,000.  The gap narrowed because the male mean salary has decreased while the female mean salary has increased.

However, 13 per cent of males have a mean salary of $180,000 to $200,000, while only 8 per cent of women receive this level of pay. And 26 per cent of men earn $200,000 or more, compared to 15 per cent of women. The survey found: “Women are paid less than men at all job role levels.”

One factor at play that explains part of the discrepancy between males and females relates to an analysis of gender and sector. A higher percentage of females are in-house counsel for government, Crown corporations and not-for-profits. In comparison, a slightly higher percentage of males are employed by privately owned and publicly quoted companies.

The highest average base salaries are found in the oil and gas sector at $196,000, resources/mining/forestry at 193,000, construction at $183,000, pharmaceuticals/medical at $177,000, retail/hospitality at $173,000, real estate at $172,000 and manufacturing/auto/aerospace industries at $165,000.

Pharmaceuticals/medical and oil and gas saw the largest gains in annual base salaries up $26,000 and $15,000, respectively.

Both Ontario and Alberta report average base salaries above the national average, consistent with results in 2016. However, base salaries in Alberta, when compared o the national average, have dropped over the past two study periods. The big drop occured in Edmonton. Average salaries in Atlantic and Central Canada continue to lag behind the national average, according to the survey.

Overall, the survey did not find a decrease in base salaries across the country, but the trend to recruit more junior lawyers in-house is consistent with what Bhathal says she is seeing in the market.

The 2018 results show that 40 per cent of this year’s respondents had less than 10 years of experience compared to 30 per cent in 2016. And the longer the period of time in private practice, the higher the compensation is likely to be.

It used to be that in-house departments required a minimum of four or five years experience and that is being pushed down to one to three years experience.

“What we’re seeing is that legal departments are growing and when they are looking to add lawyers as they grow they are hiring more and more junior lawyers,” says Bhathal. “It used to be the requirement was four or five years experience minimum. That’s being pushed down now to two or three years. As that is happening we find that the [gender wage] gap at the junior level is not as great as at the senior level.”

So, although the gap is closing, Bhathal says, the big gap at the top remains and it seems little is being done to address that disparity.

“There is this huge issue where you’ve got the gap at the senior end for work that is equivalent. That gap is still occurring and the respondent pool of candidates at the senior end is more men than women. Until we see all these junior people funnel through, and provided females are exposed to the same opportunities along the way, it’s going to keep occurring.”

At the same time, comparing positions can be difficult as, at the senior end, positions for lawyers can vary and the roles and responsibilities according to title vary.

“You may find there is a senior legal counsel performing a role not dissimilar from an AGC role but the compensation is different and the senior legal counsel is a woman and the AGC is a man because that promotion was there and she may have taken some time off,” says Bhathal.

Other findings of the survey include that 80 per cent of respondents identified as Caucasian, six per cent as Chinese, five per cent as South Asian and four per cent as African-Canadian/African/Caribbean compared to 83 per cent, four per cent, three per cent and two per cent, respectively, in 2016.

There was no change in respondents self-identifying as First Nations; however, there was a one-per-cent increase in respondents who identify as Métis (to two per cent from one per cent).

Financial services and insurance companies continue to be the sector most represented by in-house counsel, followed by oil and gas and government.

Overall, the majority of in-house counsel surveyed reported an increase in the size of their legal departments.

The survey was sent to about 8,500 in-house counsel on Oct. 4, 2017. A total of 904 respondents took part, representing a response rate of 11 per cent.