More Gender Diversity Among General Counsels By Cynthia Dow and Lloyd M. Johnson Jr.
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1 More Gender Diversity Among General Counsels By Cynthia Dow and Lloyd M. Johnson Jr. First, the good news: The number of women appointed to general counsel jobs in the Fortune 500 increased sharply again in The even better news? The way women are hired for the GC role appears to be changing a development that could accelerate the number of women leading legal departments in the years to come. For several years, Russell Reynolds Associates has been collecting and examining data on Fortune 500 in- house hiring and how women are faring as candidates for the top legal jobs at those companies. In 2012, our numbers showed that Fortune 500 companies filled 24 percent of their open general counsel positions with female candidates. In 2016, 35 percent of those jobs went to women an increase of nearly 50 percent over the course of five years. Even more encouraging are changes in the way women are being hired for the GC role. Traditionally, more women have ascended to the general counsel job as internal candidates promoted from inside a company. Prior to 2014, 28 percent of women appointed to a Fortune 500 GC position were internal candidates. Just 19 percent came from outside the company. During the last three years, however, the number of women moving from external positions has rocketed up a remarkable 63 percent. Now, as many women are being hired for the GC role from external sources as those who are being appointed internally.
2 At the same time, the nation s largest companies are hiring GC candidates with previous in- house experience at an even more rapid clip than in years past. Before 2014, 67 percent of the external candidates hired for Fortune 500 GC jobs had an in- house background. Since 2014, that number has climbed to 83 percent. Put another way, four out of five external candidates hired by the Fortune 500 in the last three years have come to the job with legal department experience. In the past, companies made a third or more of external GC appointments from the top partner ranks at law firms a factor that helped shrink the pool of female candidates available for general counsel positions. Among the Am Law 200, just one in five equity partners is a woman, according to data from The American Lawyer magazine. An even smaller percentage of women work in the law firm positions that have been the most fertile hiring grounds for companies: firm managers and practice group leaders in areas like mergers and acquisitions or corporate finance. But law firms have been declining as a source for general counsel appointments. Since 2014, the number of Fortune 500 general counsel appointed from law firms has slid by nearly 50 percent. Though more men continue to be hired from firms, hiring has dropped for both genders. Fewer than 10 percent of the women and just 21 percent of the men have come from firms in the last three years. Pre- 2014, 21 percent of the women and 36 percent of men were appointed from firm roles.
3 Meanwhile, the number of candidates hired with previous general counsel experience has grown sharply. Since 2014, 91 percent of women hired from an external source came to their new job with in- house experience, and a strong majority had served previously as general counsel (61 percent). In simple terms, companies are hiring more frequently from a candidate pool that includes a rapidly increasing population of women. The result: Women are taking a greater percentage of the overall appointments, and a larger number of them are coming to the GC role with previous in- house experience.
4 Bench strength is one factor driving growth in the number of women appointed. So, too, is the ongoing dialogue about diversity in the C- suite, which has raised awareness and prompted boards and CEOs to make a concerted effort to hire more women for the general counsel role. And on a subtler level a larger number of women in the candidate pool may be helping fight unconscious biases in the hiring process that have largely favored men. An April 2016 article in the Harvard Business Review highlighted the results of a study on unconscious bias by a trio of academics from the University of Colorado. The study found that if there is only one woman in a pool of candidates for a job, there s statistically no chance that she ll be hired. The odds of hiring were 79 times greater when another woman was in the finalist pool no matter the size of the pool. When there is only one woman, she does not stand a chance of being hired, the researchers wrote. But that changes dramatically when there is more than one. Though progress on diversity is being made, most boards and C- suites are dominated by men. (As the article notes, there are more CEOs named David than there are CEOs who are women.) And while overt bias is relatively rare, people are wired to prefer the status quo. The researchers asked: Why does being the only woman in a pool of finalists matter? For one thing, it highlights how different she is from the norm. And deviating from the norm can be risky for decision makers, as people tend to ostracize people who are different from the group. For women and minorities, having your differences made salient can also lead to inferences of incompetence.
5 We see another critical development driving an increase in hiring among women especially those with previous experience: the changing nature of the general counsel role itself. General counsel are increasingly the fulcrum around which pivots a series of critical business issues, from political, regulatory and litigation risk in the United States and abroad to globalization issues and strategic M&A. This increasing complexity is why Fortune 500 boards and CEOs are looking for candidates with an in- house background. They re seeking a GC who can essentially plug and play that is, who can step right into the role of leading a large legal department and quickly tackle the host of business issues facing the enterprise. We expect the trend to continue. And with a greater number of women gaining legal department experience and competing for the GC role, the news about their hiring prospects should continue to improve as well. - - Cynthia Dow leads the Legal Officers Practice at Russell Reynolds Associates, and is also a member of the Consumer and Board & CEO Sectors. She focuses on general counsel, chief legal officer, chief compliance officer and other Board and corporate governance assignments across a broad range of industries. Lloyd M. Johnson Jr. is the Women s In- House Counsel Leadership Institute s founder and executive director.
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