For more than 20 years, books, articles, conferences, workshops, webinars, and even YouTube videos have highlighted and lamented the lack of diversity and inclusion at U.S. law firms. In 2019 alone, a quick Google search calls up numerous articles, such as: “Talent or Token? Lawyers Say Diversity Still Can Be Just for Show,” “Three Diversity and Inclusion Musts for 2019: As Chosen by GCs,” “4 Ideas for Advancing Diversity and Inclusion in the Legal Profession,” “How Law Firms Can Stop Striking Out on Diversity,” and “Will Law Firms Ever Report Their US Gender Pay Gaps?”
In addition, numerous studies have addressed and espoused the benefits of diversity and inclusion at all levels and in all industries, but, like the continued existence of the law firm “billable hour,” in spite of numerous predictions of, and arguments for, its demise, the statistics related to the retention, advancement, and compensation levels of women and minorities in the legal profession are stark reminders of the continued lack of sizable movement of the “needle.”
Law firms have taken action to advance and support diversity and inclusion through women’s initiative committees, LGBT+ and other affinity groups, initiatives related to ethnicity or otherwise—as have local and national bar and other professional associations and groups. Corporations have pushed law firms to promote diversity and inclusion through requirements and bonuses related to the engagement and use of diverse and inclusive firms and individual attorneys; for example, 1) the new iteration of the Mansfield Rule: Legal Department Edition, which will require participating in-house legal teams to consider at least 50% women, minority, LGBTQ+ lawyers, and lawyers with disabilities as applicants for key leadership roles and to consider at least 50% diverse lawyers for outside counsel hires for new or expanded work; 2) the Corporate Equality Index, a national benchmarking tool on corporate policies related to LBGTQ+ employees; 3) The CEO Action for Diversity & Inclusion, which identifies itself as “the largest CEO-driven business commitment to advance D&I within the workplace” with more than 600 CEOs of various organizations as members; 4) an open letter from more than 170 general counsel and corporate legal executives to big law firms expressing their disappointment that “many law firms continue to promote partner classes that in no way reflect the demographic composition of entering associate classes,” stating that the signatory companies will prioritize legal spend only on firms that commit to diversity and inclusion.
As a stick-and-carrot approach, corporate America has implemented—and continues to implement—requirements and rewards for the engagement of diverse and inclusive outside counsel/firms. Companies such as Microsoft have adopted an annual bonus program for its participating outside firms that increased “the overall diversity of their attorney composition or the overall diversity of attorneys who work on Microsoft matters,” but is now focusing on bonus incentives to reward diversity in law firm leadership in the management of the law firm, the law firm’s relationship with Microsoft, and Microsoft’s legal matters. Similarly, Facebook requires that teams on its legal matters consist of at least 33% women and ethnic minorities; HP withholds 10% of its legal spend from any law firm that fails to meet its diversity and inclusion requirements; and Macy’s, Coca-Cola, Met-Life, Verizon and many others have diversity and inclusion requirements related to the engagement of outside counsel, requiring reports and surveys about each firm’s performance and establishing various bonus and/or reputational recognition opportunities.
In spite of all of these requirements and rewards/recognitions, of the more than 80 initial companies that signed on to the pledge for ABA Resolution 113, which urges all providers of legal services, including in-house law departments, to 1) expand and create opportunities at all levels of responsibility for diverse attorneys and 2) direct a greater percentage of purchased legal services to diverse attorneys, only 15% of companies ranked diversity as a medium or greater priority in law firm selection, according to the Legal Tracker Legal Department Operations Index Report issued by Thomson Reuters in October 2017. These statistics suggest that as long as no real consequences are imposed for failing to meet articulated goals, neither penalties nor positive reinforcement through bonuses and recognition will have much impact. A picture is sometimes worth a thousand words, and we continue to see law firm announcements picturing new partners that are not at all diverse or inclusive.
In addition to metrics, various lawsuits filed by partners and associates against law firms related to compensation, leadership, firm cultures, opportunities for advancement and other gender-related matter further illustrate the diversity and inclusion records of various large law firms. Some concerned companies have turned to the National Association of Minority and Women Owned Law Firms (NAMWOLF) to meet diversity and inclusion requirements. NAMWOLF is a nonprofit trade association of more than 155 AV-rated law firms across the nation representing major corporate clients and dedicated to promoting diversity in the legal profession through “fostering successful relationships among preeminent minority- and women-owned law firms and private/public entities.” NAMWOLF was founded in 2001 based on a view that the most effective way to increase diversity in the legal profession was for corporations to increase the engagement and use of minority and women-owned law firms. According to NAMWOLF, data indicates that the traditional way of engaging minority and female attorneys in majority-owned firms has not been very successful. NAMWOLF CEO Joel Stern has noted that, “Minority and women-owned law firms provide a more welcoming environment for ex-BigLaw attorneys unhappy with the lack of diversity at large law firms,” and “give their attorneys opportunities to attract clients frustrated with the legal industry’s race and gender problem.”
On the good news side, as indicated in a recent Deloitte Insights article, corporations and law firms alike continue to confirm and recognize diversity and inclusion as valuable and important goals for any business culture and for law firms to adopt.
Also, a survey of 21,980 publicly traded companies in 91 countries demonstrated that the presence of more female leaders in top positions of corporate management correlates with increased profitability for these companies.
Unfortunately, in spite of all of the external letters, articles, rules, indexes, surveys, calls for action, and the internal steps taken by law firms, including recruiting initiatives; unconscious bias awareness, business development, and other training; mentoring and leadership programs; parental leave policies; concierge services; and a plethora of other programs, events, initiatives, groups, and policies, the statistical needle measuring progress of women and minorities in the legal profession has barely moved.
Does that mean we should all give up? Celebrate the actual changes that have been adopted? Increase the financial and societal pressure on law firms to make more women and minorities equity partners and have significant management roles? Go back to the drawing board for different solutions and/or measurements? Or focus on some combination of the above?
In my legal practice, industry innovation occurs due to, and is driven by, the adoption of far-reaching technological changes to make them more competitive and profitable, including the adoption and use of artificial or augmented intelligence (AI) and other technologies that are and will continue to revolutionize many industries by impacting strategic decision making, product offerings, operations and profit margins.
Most law-specific innovations to date relate to the actual practice of law (such as making contract review and diligence activities more efficient through AI products) rather than its lawyers. Even if law firms look to adopt innovations to drive diversity and inclusion, they may have issues not considered in other industries. For example, since artificial intelligence engines have been found to actually include and perpetuate bias against women and minorities due to the massive amounts of raw data collected containing such biases, law firms embracing this technology should proactively prioritize the creation of non-biased data sets.
California is making a codified push to get more women into board rooms by specific numerical requirements for corporations based there. Is there any guidance to be had, at least from the discussions, articles, and commentary for and against, these requirements—or is that actually a step backward to the controversies surrounding the use of such requirements in other areas—with better options to include fewer CEOs of other companies on boards, changing recruitment procedures, and implementing different metrics?
Even government contracting is focusing on diversity and inclusion. Recently a key federal contracting overseer (Craig Leen, the director of the Office of Federal Contract Compliance Programs [OFCCP]), told industry representatives at a town hall meeting that the scarcity of women and minorities in leading roles at firms is squarely on OFCCP’s radar screen. He noted that “there is evidence of low representation at law firms and financial firms, and our goal is to fix it and work with them to do so.” OFCCP, as part of the Department of Labor, administers and enforces laws that make it illegal for federal government contractors and subcontractors to discriminate in employment on the basis of race, color, religion, sex, national orientation, gender identity, disability, or veteran status. The agency audits companies for compliance and can take enforcement action, up to obtaining monetary relief and terminating government contracts.
Leen noted that the office looks at systemic issues and audits law firms and other entities, with some large and well-known law firms on the current audit list. Questions posed by the government included: “How are firms addressing the low representation rates of women, minorities, and minority women at the partner levels?,” “How do firms review their current level of people with disabilities?,” “How do billable hour requirements accommodate family leave?,” “How do firms ensure men and women are treated the same regarding family leave policies?” and “How can OFCCP address concerns in disclosing information on equity and non-equity partnership numbers for women and minorities to OFCCP?”
As national demographic trends continue to evolve, if the focus is going to remain on the statistics of the number of diverse equity partners at law firms, corporations determined to wield their influence should have a clear understanding of what it takes for attorneys to be in those ranks and to continue to advance, and how they can provide their support for that advancement. Although not the only or most important determinates of success and advancement at big law firms, certain internal firm metrics for associates to make partner and for partners to be included in the equity ranks may include the allocation of credit for originating and expanding matters, as well as the impact of high billable hours and recognition in various rankings—all of which general counsels and other buyers of legal services have at least some ability to influence.
Although no magic bullet will “solve” the diversity and inclusion conundrum, and current programs and initiatives seem to show glacial progress statistically on the diversity and inclusion front, law firms and their corporate clients alike have every reason to continue to refine those programs and initiatives and to develop and target new ones. Firms should be encouraged to apply the ABA’s diversity and inclusion initiative for CLEs requiring a diverse faculty to the many conferences and events outside of the ABA for which law firms provide marketing dollars and support; and to embrace innovative, concrete, and measurable steps to further promote the advancement of diverse and inclusive firms and attorneys.
About the Author
Lynn S. Scott is a shareholder and co-chair of the Health Care Technology & Innovation practice group at Polsinelli PC. Contact her at lscott@polsinelli.com.