Why Goldman Sachs Prefers Arbitration
When Goldman Sachs was sued (in 2010) for gender-discrimation, the bank sought to settle the dispute through arbitration rather than through the court system. The present rules of arbitration do not favor women, employees or consumers.
The advantages of arbitration for Goldman are:
1) “the women are not likely to win in arbitration;”
2) the culture of Wall Street is predominantly male and the Old Boys’ Network is alive and well;
3) powerful law firms represent “the stronger and wealthier party;”
4) there are limited avenues for appeal;
5) discovery can be more limited;
6) arbitration awards “are not directly enforceable;”
7) arbitration may cause “huge legal expenses;”
8) incentives “to rule against the consumer or employ
Goldman Sachs won a huge victory last week. A federal court ruled that Lisa Parisi, a former managing director, must take her gender-discrimination lawsuit against the firm to arbitration.
With the ruling, Parisi — who had sued Goldman in 2010, along with two other women — can kiss her chances of victory goodbye. Arbitration is where plaintiffs’ dreams go to die, which is probably why it was in her Goldman Sachs employment contract.
These plaintiffs aren’t renegade feminists. They’re mainstream financial types who played by the rules and hoped to reap the rewards. The men who fought them are simply corporate types who prefer to keep Wall Street an old boys’ club.
Some of the allegations in the suit are straight out of “Mad Men.” During their work at Goldman Sachs, the women were subject to sexual banter, which is what passes for conversation among traders, as well as to come-ons and sexual assaults. They were passed over for promotions and bonuses, excluded from some male outings and included in others designed to embarrass them. A celebration for new managing directors was held at a topless bar. Afterwards, a married male colleague pinned one of the plaintiffs to a wall and sexually assaulted her.
Male values dominate the business world because males dominate the business world. As Facebook Chief Operating Officer Sheryl Sandberg points out in her book “Lean In,” women account for only about 4 percent of Fortune 500 CEOs. At Goldman, the New York Post reported in 2010, women were 29 percent of vice presidents, 17 percent of managing directors and 14 percent of partners.
Women do best when they play nice and go along with the dominant male culture, even if it includes smiling at a strip club. When Yahoo Chief Executive Officer Marissa Mayer sniffs at maternity leave as if it’s for sissies and ends women-friendly policies such as the ability to work from home, it’s because that attitude was rewarded on her way up the corporate ladder — even in enlightened Silicon Valley.
In her book, Sandberg illustrates the problems women face. Business-school students received identical profiles of a venture capitalist — identical except for one detail: In half she was called Heidi, in the other half he was called Howard. The students rated both equally competent but found Howard much more appealing.
The Goldman lawsuit is as much about discriminatory pay as about discriminatory attitudes: It alleges that women at Goldman are underpaid compared to men in similar positions. This kind of information can be hard for female employees to learn, since talking about salaries is the last taboo. At the office, you are more likely to hear people talking about their sex life than about their paycheck.
The Goldman women are not likely to win in arbitration, and what they are asking for on the culture side may come about only when the dominant culture becomes female. As for pay, there’s more hope. We can’t outlaw corporate parties at strip clubs. But we can at least make it illegal to pay the women less than men for comparable work. The women forced to attend these parties shouldn’t make less money than the horndogs who organize them.