Business Law Today - The Anniversary of #MeToo: A Time of Reckoning for Law Firms
For the past year the #MeToo movement has altered the landscape of corporate conduct and accountability, not only for senior management but for corporate boards as well, as evidenced by the recent controversy surrounding CBS's former Chairman and CEO Moonves. Since the disclosures last October regarding Harvey Weinstein's conduct, over 100 senior executives, across a variety of industries, resigned or were fired as a result of allegations regarding sexual misconduct. Workplace sexual harassment is prevalent, and until the #MeToo movement, largely silent.
In announcing its Strategic Enforcement Plan for FY2017-2021, the U.S. Equal Employment Opportunity Commission (EEOC) indicated that preventing systemic harassment was one of its top six priorities. In its recent release of preliminary sexual harassment data for FY2018, the EEOC noted a 50 percent increase in the number of sexual harassment lawsuits filed from FY2017.
Though the majority of publicity surrounding the #MeToo movement focused on the media and entertainment industries, the legal industry should consider this a wake-up call as it is certainly not immune from scrutiny nor potential litigation, as evidenced by the gender bias lawsuits filed this year.
Recently, the American Bar Association and the Minority Corporate Counsel Association released a study, "You Can't Change What You Can't See: Interpreting Bias in the Legal Profession". A survey of over 2800 in-house and law firm attorneys found that 25 percent of the women respondents reported some form of unwelcome sexual harassment at work and more than 70 percent of all respondents encountered sexist comments or jokes.
Recently, Aon reviewed the employment practices liability (EPL) claims filed against its law firm clients from 2005-2017 and found that a total of 1,315 charges of wrongful conduct were filed during that period. The most frequently filed charges included retaliation, wrongful termination, and discrimination based on disability, gender, age, and race. On these claims, law firms and their insurers paid a total of $91,101,674 in judgments and settlements, and in excess of $44 million in defense costs, the latter of which Aon believes were underreported due to self-representation by law firms. The primary EPL offenders€”75 percent€”were male lawyers.
EPL should be a priority for all law firms if for no other reason than the sheer economic opportunity cost of misconduct. As a risk mitigation strategy, firms should consider adopting the following best practices as an integral component of their enterprise risk management program:
1. Institute a Code of Conduct if one does not already exist. The Code is the firm's blueprint for the rules of engagement and is a reflection of the tone at the top and the firm's ethical and organizational culture. While policies and procedures are tactical, the Code should set forth the firm's mission, corporate values, and at a minimum, include the following: a) a zero tolerance stance regarding workplace misconduct and b) a clear non-retaliation policy, particularly given that retaliation was the most common EEOC claim filed in FY2017, representing 48.8 percent of the total charges filed. Similarly, retaliation was the most frequently cited of Aon's EPL claims as well.
2. Routinely review, update, and follow firm policies and procedures with respect to workplace conduct. The firm's policies and procedures are the means by which the Code of Conduct is implemented; having policies, however, is not sufficient. In fact, in reviewing selected gender bias lawsuits against law firms, there is a marked propensity to ignore and or fail to follow internal policies. To do so suggests that compliance is not taken seriously, that policies are merely a formality, and/or that management is irresponsible.
3. Take training and discipline for infractions seriously. In the wake of #MeToo, the expectation is that employers will offer anti-sexual harassment training, and in some states, it is legally mandated. Requirements vary by state, with multiple nuances. For example, while the Commonwealth of Pennsylvania currently has a limited policy that requires that Commonwealth employees are "educated in sexual harassment issues," in the state of Delaware, House Bill 360, which is scheduled to take effect January 1, 2019, requires all employers with more than 50 employees to conduct anti-sexual harassment training every two years. Bottom line, law firms need to know the sexual harassment training requirements of the jurisdictions in which they operate in order to be compliant.
Further, training on the firm's workplace policies and procedures should not stop at on-boarding orientation. To be effective, it needs to be mandatory, ongoing, conducted annually (regardless of the legislative mandates, some of which only require bi-annual training), and, preferably, interactive. This is no tan optional exercise and should be applied consistently, regardless of status within the firm. No one gets a pass. Just as important, the disciplinary measures need to be applied consistently as well, which conveys the message that status does not proffer immunity.
4. Understand how far liability extends under state legislation. As with training, coverage protections vary by state. Under the proposed Delaware law, sexual harassment protections extend not only to employees (including those placed by employment agencies), but also to unpaid interns, employment applicants, and apprentices. Other jurisdictions such as New York are even more comprehensive, holding employers liable for instances of sexual harassment involving non-employees, including contractors, sub-contractors, vendors, and consultants, provided the employer knew or should have known that the non-employee was subjected to sexual harassment in the employer's workplace.
Combining these best practices will mitigate, though not totally eliminate, the risk of sexual harassment and other employment practice liability claims. Further, taking these steps demonstrates the firm's commitment to a respectful and non-toxic workplace-a responsibility that employees will continue to hold law firms accountable for well into the future.
Reprinted with permission from the October 17, 2018 edition of the American Bar Association's Business Law Today.