Wednesday, February 26, 2014

National Association of Women Lawyers Press Release on its Annual Survey



200 LARGEST U.S. LAW FIRMS REPORT ONLY 17 PERCENT OF EQUITY PARTNERS ARE WOMEN, ACCORDING TO NATIONAL ASSOCIATION OF WOMEN LAWYERS ANNUAL SURVEY


CHICAGO - In its eighth year, the National Association of Women Lawyers (NAWL®) and The NAWL Foundation's® annual Survey on Retention and Promotion of Women in Law Firms reveals not much has changed in its findings of compensation, leadership roles, rainmaking, and equity partnership at the nation's largest 200 firms. The data this year revealed the same trend as in previous years: the greatest percentage of women (64 percent) occupy the lowest positions in firms (staff attorneys), and the highest positions in firms (equity partners) are occupied by the lowest percentage of women (17 percent). In comparison, the 2012 survey reported 15 percent equity partners were women and 70 percent staff attorneys were women.

"This year's results reinforce that women in private practice continue to face barriers to reaching the highest positions in their firms - as equity partners and members of governance committees," said Stephanie Scharf, report author, Past President of The NAWL Foundation, and Partner at Scharf Banks Marmor LLC. "It is troubling that women make up the large majority of staff attorneys - those lawyers in the lowest echelon of law firms - at the same time they make up a static minority (on average 17%) of equity partners in BigLaw."

Highlights of the survey include:
  • There continues to be a disproportionately low number of women who advance into the highest ranks of large firms - in spite of a decades-old pipeline of women law school graduates.  Since the mid-1980's, more than 40 percent of law school graduates have been women, but the typical firm reported less than 20 percent of its equity partners are women.
  
  • Lateral hiring at the level of equity partner favors men.  While approximately 66 percent of all new male equity partners are recruited laterally, about one-half of new female equity partners are recruited laterally.
  
  • The large majority of firms will not report data about compensation of their men and women lawyers.  This year, 33 firms declined to participate in the survey although they previously participated in the survey as recently as last year.
     
  • The gender composition of law firm governing and compensation committees impacts the extent of the gender pay gap within a firm.  For the 31 firms with two or more women on these committees, women equity partners earn 95 percent of their male counterparts. In contrast, for the 17 firms without this level of gender representation, women equity partners earn only 85 percent.
  
  • Women continue to lag behind men with respect to credit for rainmaking and client revenue.  Among the nation's 100 largest law firms, women are credited for roughly 80 percent of the client billings credited to men. Among the second hundred firms, women are credited with 89 percent.
     
  • Firms view women's perceived lack of business development and high rate of attrition as the two primary reasons why the number of women equity partners has not been increasing.  Lack of business development was identified as the greatest obstacle by 44 percent of firms. Attrition was an obstacle identified by 31 percent of firms.
     
  • Minority women lawyers are not being advanced consistent with the available pipeline and are advanced less often than male minority lawyers. 
In the 100 largest law firms, female minorities occupy 2 percent of equity partnerships compared to 6 percent male minorities. In the second hundred firms, women minorities occupy 2 percent compared to 4 percent male minorities. 
     
  • Formal succession planning has not been a means of identifying and grooming women leaders.  An overwhelming 95 percent of firms have not identified their next managing partner and 70 percent of firms do not have a formal succession planning process for practice group leaders. 
"The survey has become the gold standard of surveys on retention and promotion of women in the legal profession. The survey captures the progress, or lack thereof, of women lawyers forging long-term careers and attaining leadership roles in large law firms, including the obstacles they face along the way. In addition, it provides important benchmarking statistics for firms to use in measuring their own progress," said NAWL President Deborah S. Froling, Partner at Arent Fox LLP in Washington, DC.

NAWL Foundation Board member and report co-author, Roberta Liebenberg, Partner at Fine, Kaplan and Black and Chair of the American Bar Association Commission on Women, described the survey's results as: "basically showing very little progress, after years of very little progress. Unfortunately, the current statistics are not significantly different from what they were when the first NAWL Survey was released in 2006."

Liebenberg adds: "The paradigm will not change unless and until the country's largest firms make a real commitment to implement more equitable policies and practices for compensation, client origination credit, and advancement to equity partnership and leadership positions. It is clear from our research over the years that when individual women lawyers advance and succeed, so too do their law firms and clients."

Christine A. Amalfe, President of the NAWL Foundation and Director at Gibbons P.C. in Newark, NJ, described the survey as "the only national study of the nation's 200 largest law firms, which annually tracks the progress of women lawyers at all levels of private practice, including the most senior positions, and collects data on firms as a whole rather than from a subset of individual lawyers."

"Every year, dedicated women lawyers who serve on our Survey Committee donate hundreds of hours to this important project. Because of their insight and commitment, the NAWL Survey on the Retention and Promotion of Women in Law Firms continues to exist. We cannot thank them enough for their work," added Amalfe. 

The full NAWL Survey Report can be accessed HERE.

 Since 1899, the National Association of Women Lawyers (NAWL®) has been committed to fostering diversity and advancing women in the legal profession. NAWL is the only national women's bar association with individual and organizational members nationwide, including law firms, law firm attorneys, corporations, in-house counsel, government attorneys, law schools, and law school professors. Please visit www.nawl.org. 

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Friday, February 14, 2014

Proposed discovery limitations could harm whistleblowers

Today, I posted these comments to the Committee on Rules of Practice and Procedure about their proposal to limit discovery.  The Committee was inspired by a conference at Duke University to propose a new doctrine for, "proportionality in discovery." Last year, they released a draft of proposed changes to the Federal Rules of Civil Procedure (FRCP). These proposed changes would reduce the number of depositions, interrogatories and requests for admissions that parties could use.  

My comments point out that the FRCP serve as a model for litigating whistleblower claims at the U.S. Department of Labor (DOL) and the Merit Systems Protection Board (MSPB). "I am particularly concerned that whistleblowers will be put at a disadvantage," I stated.

The Federal Circuit recently noted that, “Congress understood that whistleblowers are at an evidentiary disadvantage in proving their cases.” Whitmore v. Department of Labor, 680 F.3d 1353, 1368 (Fed. Cir. 2012). Employers own and control the information that whistleblowers depend on to prove their allegations about violations of law. Indeed, whistleblowers sometimes suffer termination of their employment precisely because the employer wants to deprive them of access to the information. The employer also controls the information that would establish its deviations from normal practices, and disparate application of its standard of discipline.

My comments explain the wide variety of public interests that are served by whistleblower protections.  Congress has used them in laws governing workplace safety, environmental pollution, nuclear safety, transportation, corporate and consumer fraud, and the safety of pipelines, consumer products, car parts and food.

Discovery is a basic tool that helps to level the playing field in litigation, and whistleblowers need this level playing field as much as anyone.  Of course, other employees with discrimination and retaliation claims will also be affected.  There are already over 1,200 comments posted about these proposed rules. The deadline to submit comments is next Tuesday, February 18, 2014.  You can read the proposed changes, any of the posted comments, and even post your own comments here.

By Richard R. Renner.

Wednesday, February 12, 2014

Fifth Circuit dings Villanueva, but not on extraterritoriality

Today the U.S. Court of Appeals for the Fifth Circuit issued a disappointing decision for international tax whistleblower William Villanueva. The Court held that Villanueva's disclosure that a Core Labs subsidiary was cheating the Columbian government out of lawfully due taxes as no protection under the Sarbanes-Oxley Act (SOX). The Court says that it did not have to reach the issue of whether SOX has any extraterritorial application.  However, it is hard to imagine that the Court would say that a disclosure about a publicly traded company cheating the IRS out of taxes would also have no protection.

I explained Villanueva's case as follows in this prior blog post:

Core Laboratories NV is a publicly traded company based in Houston, Texas.  It provides services to the petroleum industry. For 16 years, William Villanueva worked as CEO of Saybolt Columbia, Core’s subsidiary.

In 2008, Villanueva sent emails to corporate executives in Houston reporting how other company executives were engaged in tax transfer schemes that falsely transferred profits to low-tax Curacao, an island in the Caribbean Sea. He also reported that Core accountants in Columbia were making false claims to evade the Columbian value added tax (VAT). After Villanueva refused to sign a false tax return, Core fired him.

Villanueva filed a complaint with the Department of Labor (DOL) claiming that he was fired in retaliation for raising his concerns. He claimed that his discharge violated the 2002 Sarbanes-Oxley Act (SOX). An administrative law judge (ALJ) granted Core’s motion to dismiss on grounds that Villanueva worked outside the U.S. Villanueva appealed to DOL's Administrative Review Board.  The ARB considered the effect of the U.S. Supreme Court’s decision in Morrison v. National Australia Bank, 561 U.S. ___, 130 S. Ct. 2869 (2010) and held that Villanueva had no protection.

Villanueva appealed to the Fifth Circuit U.S. Court of Appeals. In 2012, I filed an amicus brief in his case.  My brief pointed out how Core Labs's tax fraud violated not only Columbian law, but also U.S. securities law. Villanueva’s disclosures about Core Labs’ obligation to pay Columbian taxes is also a disclosure that its officers planned to file a false report to the SEC about its liabilities. Villanueva’s superiors intended to evade the Columbian taxes by concealing its income. As such, they could not report the known Columbian tax liability to the SEC. Doing so would make the income known to the whole world, including Columbia. The fraud on the SEC was essential to the overall scheme. As Villanueva was raising a concern about this scheme, his actions are protected by SOX.

Sadly, the Court today did not address this reasoning. It did say the right thing about the scope of protection under SOX, affirming the ARB decision in Sylvester:

We agree with the Board that § 806’s “critical focus is on whether the employee reported conduct that he or she reasonably believes constituted a violation of federal law.” Sylvester v. Parexel Int’l LLC, ARB No. 07-123, 2011 WL 2165854, at *15 (ARB May 25, 2011) (first emphasis added). Admittedly, “[a]n employee need not cite a code section he believes was violated in his communications to his employer, but the employee’s communications must identify the specific conduct that the employee believes to be illegal.” Welch v. Chao, 536 F.3d 269, 276 (4th Cir. 2008) (internal quotation marks omitted).

Here is where the Court's opinion errs:

In this case, the “specific conduct” that Villanueva asserted was illegal was Saybolt Colombia’s underreporting of taxes due to the Colombian government. In his reply brief, Villanueva claims that he repeatedly objected to the conduct of Core Labs officials in Houston, sufficient to satisfy Welch’s point about notice to the employer, but the conduct to which he objected was the supposed orchestration of violations of Colombia tax law, not the violation of U.S. mail or wire laws to effectuate those purported Colombian law violations. Consequently, Villanueva has not demonstrated that he engaged in any protected activity, and, given this, we cannot say, as required by Allen, that Core Labs knew that Villanueva engaged in a protected activity that was a contributing factor in the unfavorable actions of withholding his pay raise and ultimately terminating him. See 18 U.S.C. § 1514A; Allen, 514 F.3d at 475-76.

If the Court had read my amicus brief, they would have known that concealing the non-payment of lawfully due Columbian taxes is a violation of SEC law.  If they had read the whole Sylvester decision, they would have known from page 15 that: 

The reasonable belief standard requires an examination of the reasonableness of a complainant’s beliefs, but not whether the complainant actually communicated the reasonableness of those beliefs to management or the authorities. See, e.g., Knox v. U.S. Dept. of Labor, 434 F.3d 721, 725 (4th Cir. 2006).

The issue of whether SOX protects corporate fraud whistleblowers outside the U.S. remains open in the Fifth Circuit and elsewhere.  However, whistleblowers everywhere have one more reason to be concerned that the protections granted by Congress can fall off the edges of an appellate decision.


The case is Villanueva v. U.S. Dept. of Labor, No. 12-60122 (5th Cir. 2-12-2014) (published).

By Richard Renner.


Tuesday, February 4, 2014

EEOC DRAFT REVISIONS TO MD-110 WITH RESPECT TO AGENCY PERSONNEL INVOLVEMENT IN THE EEO ADMINISTRATIVE COMPLAINT PROCESS

A thorny issue over the years has been what agency personnel attorneys, employee relations/labor relations specialists, EEO specialists, management officials, EEO counselors - should or should not be involved in the processing of EEO complaints at the agency administrative level. For example, who should be the agency official with settlement authority; what role do agency attorneys play at the EEO counseling stage, during ADR/mediation, or during the investigation; and what is the role of the agency's EEO office at all stages of the administrative process.

In an effort to provide guidelines to agencies on these matters, the EEOC has issued a draft revised EEOC Management Directive 110 Chapter 1 -specifically § IV "Avoiding Conflicts of Interest," and § V "Delegation of Authority to Resolve Disputes." The EEOC' s draft makes clear that there must be a firewall between the EEO function and the agency's defense against claims of discrimination.

Thus, agency attorneys or representative such as employee relations/labor relations specialists may not participate in the EEO counseling or investigative administrative processes other than to accompany and advise management representatives at the request of the management official. Such representatives may not question witnesses, direct the EEO counselor or investigator to interview witnesses (the representative may make suggestions, however), or be involved in the EEO office's decision to accept or reject a complaint for investigation. On the other hand, the EEOC draft states that the agency representative may review the affidavit of a management official who is the subject of a complaint of employment discrimination but may not tell him/her how to respond to questions asked by the investigator.

The EEOC also for apparently the first time has stated that the agency's official or officials who have settlement authority must participate in all settlement discussions and all ADR meetings and "should not be the responsible management official or agency official directly involved in the case."

As noted above, these and the other revisions to the existing Management Directive 110 are in draft form only and have been circulated to federal agencies for comment.

written by June Kalijarvi