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Gender bias lawsuits target white-collar companies

Ellen Pao's high-profile case one of many

Gender bias lawsuits target white-collar companies

The “good old boy'' corporate culture at white-collar firms could allow gender discrimination to continue to flourish, despite employers' efforts to alleviate it.

This is one of the reasons gender or sex discrimination lingers at venture capital, accounting and law firms, among others, experts say.

The problem has recently garnered attention because of national publicity in a San Francisco jury trial in which Ellen Pao, a former junior partner at Kleiner Perkins Caufield & Byers L.L.C. accused the prominent Menlo Park, California, venture capital firm of gender discrimination and retaliation.

On Friday, the jury returned a verdict rejecting Ms. Pao's claims. She had sued Kleiner Perkins in May 2012, alleging the Silicon Valley firm paid men more than women and favored them for promotions. Five months after filing suit, the firm terminated her employment.

Ms. Pao's case is among several similar suits, including one against Facebook Inc., alleging bias on the basis of gender.

“I would not be surprised if (the Pao case) is a galvanizing force” in encouraging more litigation, said Paul E. Starkman, a partner at law firm Pedersen & Houpt P.C. in Chicago.

While gender discrimination cuts across all types of businesses, Ms. Pao's suit highlights issues endemic to professional services firms, experts say.

Gerald L. Maatman, a partner at Seyfarth Shaw L.L.P. in Chicago, said, because of the Pao trial, these issues are being discussed “not only on TV, but around the water cooler.”

Professional services firms' employees are “really very bright people, but that doesn't mean that they act rationally,” Mr. Starkman said. The issues in the Pao case are something “that has been haunting professional services for a while,” and include mentoring relationships and how assignments and promotions are doled out.

“You have the interaction between people not wanting to deal with these kinds of troublesome issues and the fact that there is money involved,'' he said, which “makes it even more of a kind of hot potato.”

Despite strong efforts by the financial services industry to address gender discrimination concerns, firms' structure is one reason the problem persists, said Gregg Lemley, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart P.C. in St. Louis.

For instance, only a minority of employees progress to the partnership track, which may have them wonder whether “something other than merit” led to their failure, Mr. Lemley said. Such claims also can emerge from “that alleged frat boy environment where the guys are just being guys,” Mr. Starkman said.

The frat boy and good old boy mentality has been a problem in the financial services industry for a long time, said Richard B. Cohen, a partner at FisherBroyles L.L.P. in New York.

The financial services industry “has had more than its share of gender discrimination lawsuits filed by women because it has such a long history of exclusion of women and disparate treatment of women,” Mr. Cohen said. It was the last business sector to embrace minority hiring, and it always has worked to protect its privileges, he said.

The challenge in the technology industry, in particular, is that it draws many employees who are recent college graduates, and studies have shown a high frequency of sexual harassment at universities, said Ingrid Fredeen, vice president of online learning content at Lake Oswego, Oregon-based Navex Global Inc., an ethics and compliance consulting firm.

“Kids are coming up through this environment where it's tolerable,” while employers mistakenly assume these young people know better, Ms. Fredeen said.

Although apparently not a factor in the Pao trial, Mary-Pat Cormier, a partner with the law firm Bowditch & Dewey L.L.P. in Boston, said there also is an issue with women who spend less time in the office because they care for a child or a parent.

In industries such as private equity where there are high-profile deals, and you must do many “to be able to earn your stripes,'' how do you reward or advance somebody who is only billing for 1,900 hours when others are putting in 2,400 hours, Ms. Cormier said. “You've got to figure out a way to value diversity.”

Top executives need to act to halt gender discrimination, experts say.

“There's got to be some oversight. You need to do some auditing,'' Mr. Starkman said. “These decisions can't be driven by assumptions that women may go onto the mommy track and men are there for the duration.”

The best defense is an early warning system, robust compliance procedures and rigorous administration of those systems, Mr. Maatman said. It demonstrates that complaints are not falling on deaf ears, he said.