The Legal Intelligencer - Hello? It's Your Client Calling. Where Are Your D&I Initiatives?
By Jessica Mazzeo
It has been twenty years since "Diversity in the Workplace: A Statement of Principle" was signed by over 500 general counsels at Fortune 1000 companies. The Statement of Principle, an effort led by Charles Morgan, then-BellSouth Corp. general counsel, said: "In making our respective decisions concerning selection of outside counsel, we will give significant weight to a firm's commitment and progress in this area." This was followed up with the 2004 Call to Action that was developed by Roderick Palmore during his tenure as general counsel of Sara Lee Corporation. The Call to Action stated, in part, that general counsel "will make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms." Both of these were mighty efforts for an industry that has been slow with change and progress in areas where other industries routinely excel. Last year, I wrote about why just 'talking' about diversity and inclusion was not enough to make an impact at law firms. My article focused on statements made about diversity and inclusion that end up being just that - words with no action. However, now it seems that words are turning into action as I know of several firms that have recently had clients say "show us your diversity or we find new counsel".
Earlier this year, it was a slap in the industry's face and a drawback to any progress thought to have been made when mega firm Paul, Weiss shared a photo of its class of newly promoted partners. They say a picture is worth a thousand words and when the photo was released - showing 11 white male faces out of a class of just 12 partners - the announcement drew vast and fierce criticism. But while Paul, Weiss has since been outspoken on realizing it must set better industry examples when it comes to diversity in the profession, the photo seems to have finally struck the cord needed to affect change. Shortly after its release, more than 170 general counsel and corporate legal officers signed an open letter to big law firms stating their companies will prioritize legal spend on those firms that commit to diversity and inclusion. The letter reads in part "We, as a group, will direct our substantial outside counsel spend to those law firms that manifest results with respect to diversity and inclusion, in addition to providing the highest degree of quality representation. We sincerely hope that you and your firm will be among those that demonstrate this commitment." If there were not already enough reasons to develop and sustain a diverse culture in the workplace, having clients take away business will probably (and sadly) be the main driving force behind law firms finally catching up with the times.
The legal industry continuously fails to realize that it is falling behind other professions and industries that have already understood and embraced diverse workforces. In 2010, the National Association of Minority and Women Owned Law Firms (NAMWOLF) created the Inclusion Initiative which is a "collaborative effort of 33 forward-looking companies committed to an immediate and measurable increase in the retention of minority and women owned law firms by Corporate America. Inclusion Initiative companies believe that diverse law firms are a critical part of the solution to the diversity challenge in the legal profession. Since launching the Inclusion Initiative, participating companies have spent over $1 billion on minority and women owned law firms and their total annual expenditures have averaged over $200 million per year for the last six years." Additionally, according to a July 2017 study by DiversityLab, many public companies have already begun implementing policies aimed at ensuring outside legal counsel was diverse and inclusive, including some that have pledged commitment to NAMWOLF's Inclusion Initiative. The study showed that as of 2017, Facebook requires outside counsel working on its legal matters to be comprised of at least 33% women and ethnic minorities as well as provide evidence that the law firm is creating "clear and measurable leadership opportunities for women and minorities." HP will now withhold up to 10% of bills from firms that do not meet or exceed its diverse staffing requirements. Further, the study found that for over ten years, Walmart has reviewed diversity data of its outside counsel including overall law firm demographics, demographics of the team working on Walmart matters, and hours billed by diverse attorneys.
And it is not just corporations making the diversity push either. Here in Pennsylvania, Governor Wolf issued a mandate in 2015 that ensured a commitment to diversity for its outside legal counsel. Until that point, there was no diversity requirement for professional service companies who were responding to the Commonwealth's RFPs for legal work. Since 2015, majority firms seeking to perform legal services for any one of the Commonwealth's approximately 250 agencies are required to partner with a small diverse business as part of the RFP process. And the Commonwealth didn't stop there - firms serving as the prime contractor are now also required to submit a staff breakdown on projects including how many women and minorities will be assigned to each matter.
So what can your firm do if it finds itself in this predicament of potentially losing longstanding clients or even the inability in attracting new ones due to a lack of diversity? Well first, stop thinking of it as a predicament and think of it as an opportunity for improvement. Long gone are the days where the network of similarly looking lawyers retain and reap all the rewards from everyone else's work. Employees want - even demand - employers who have and support initiatives in the hiring and promotion of women and minorities, and now clients do too. If you do not adapt to change - change that should have taken place a long time ago - prepare to lose and lose big. Consider hiring an outside consultant to conduct diversity and inclusion training for your entire firm - not just the lawyers. Take a second - and third - look at your hiring practices and internal handbook policies on diversity and inclusion in your workplace. Recognize the efforts and accomplishments of every individual regardless of their race or gender. By taking these steps you will be on the right path to providing a better work environment for your employees and more well-rounded legal advice to your clients. So what are your waiting for? The phone has already been ringing.
Reprinted with permission from the April 25, 2019 issue of The Legal Intelligencer. © 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.