Appeal for Diversity

To better serve their multicultural customer markets, corporations are putting pressure on the law firms they hire to diversify. But advocates say minorities have made only moderate gains in the legal profession.

July 18, 2008

Law firms that want to work for DuPont have to do more than show the breadth of their legal knowledge or trumpet the successes of their various practice groups. They must also put a priority on increasing the number of women, African-Americans, Asian-Amer­icans, Native Americans, Hispanics and openly gay lawyers in their ranks, and fill out a nine-page survey every year to report their progress.

    "We not only encourage it, we require it," Andrew Schaeffer, DuPont’s managing counsel, operations and partnering, says of diversity.

    Women and minorities are the primary contact with DuPont for 12 of the 40 firms that work for the chemical maker. That milestone has been reached on a road that started in 1992, when the company winnowed its network of hundreds of law firms to a few more than three dozen.

    As companies like DuPont compete in domestic and global markets imbued with an array of cultures and colors of consumers, they want their suppliers—including those that provide legal advice—to be similarly diverse.

    They also want the best value for the millions of dollars they spend on legal fees. Adding more races and ethnicities to the outside-counsel mix stimulates creative thinking and results in better case outcomes, according to company officials. Companies appear to embrace that approach as well. Observers say that internal corporate legal departments are way ahead of law firms when it comes to diversity.

    But the business community isn’t applying enough pressure on the firms it hires to achieve substantial diversity gains, advocates say.

    In 1999, Charles Morgan, then general counsel of BellSouth Corp., wrote "Diversity in the Workplace: A Statement of Principle," which was signed by nearly 500 corporations.

    Disappointed with the outcome of that effort, Roderick Palmore, then executive vice president and general counsel of Sara Lee Corp., issued "A Call to Action: Diversity in the Legal Profession" in 2004.

    That document, signed by 126 companies, states in part: "In an effort to realize a truly diverse profession and to promote diversity in law firms … we pledge that we will make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms."

    Four years later, Palmore, now executive vice president and general counsel at General Mills, is prodding companies to do more. In late April, he hosted a Call to Action Summit in Scottsdale, Arizona.

    The meeting was designed to get prominent corporate general counsels and law firm managing partners in one room to address the challenge of increasing diversity in the legal profession and outline plans to achieve it. The fact that the summit had to be called demonstrates a high level of concern about results.

    "There has been modest improvement in the numbers overall," says Veta Richardson, executive director of the Minority Corporate Counsel Association. "But the general-counsel community is not entirely satisfied with the level of progress that has been made with respect to diversity in firms."

    Richardson was encouraged by the demographics of the conference, which attracted more than 100 attendees. As she looked around the room, she noticed that the majority of them were white—a first for diversity conferences she has attended—and represented a substantial amount of billable hours. It was a signal to her that law firm leadership was taking diversity more seriously than ever. "That is very, very unusual," she says. "It was blow-away impressive."

Long way to go
    Translating philosophical support into concrete results, however, is likely to continue as an "arduous" journey, to use an adjective found in the introduction to a white paper released before the summit.

    "There is no easy, pinpointable reason as the cause for why things haven’t improved to date," says Richardson, whose organization has teamed with to establish the Law Firm Diversity Database.

    The online tool provides statistics on diversity at more than 200 law firms. It was developed with the help of Accenture, Bank of America, Microsoft, PPG Industries, Sara Lee and Wal-Mart and was launched at the Arizona summit.

    An analysis of recent diversity numbers by the Law Firms Working Group demonstrates how far the legal sector is from achieving a level of integration that reflects society. The organization is a joint research project of the American Bar Foundation and the Indiana University School of Law.

    Using data from the 2005-06 National Association for Law Placement directory, the group looked at 613 law firms in 108 metropolitan areas that hired 6,020 entry-level associates and 1,049 judicial clerks in 2004.

    It found that the "pipeline to partner" is blocked for women and minorities. Women constituted 49 percent of summer associates, 44.2 percent of associates and 17 percent of partners. African-Americans represented 7.6 percent of summer associates, 4.2 percent of associates and 1.4 percent of partners.

    William Henderson, professor of law at Indiana University and director of the Law Firms Working Group, says that diversity doesn’t rank at the top of the list of a company’s demands when it decides whether to hire or retain a law firm.

"The general-counsel community is not entirely satisfied with the level of progress that has been make with respect to diversity in firms."
—Veta Richardson, executive director, Minority Corporate Counsel Association

    "Cost management is much higher than diversity," he says. "It’s just a matter of priority. The data I’ve seen suggests that diversity is less likely to be the reason for a firm getting fired."

    Although Wal-Mart has ended relationships with two law firms because of their lack of diversity, such dramatic action is not common. But it is always a threat.

    Companies like General Motors have worked with some law firms for a generation or more. Yet close ties don’t guarantee that GM will acquiesce to foot-dragging on meeting diversity goals.

    "Just because you have a 60-year relationship doesn’t mean it will become a 65-year relationship," says Damon White, a GM attorney in the office of general counsel at Detroit headquarters.

    The specter of losing GM’s business has spurred cooperation. In 1988, when GM first surveyed its approximately 1,000 outside law firms on diversity, only one responded. In 2006, the work of all firms hired by GM was staffed by 16.1 percent minority and 28.6 percent female attorneys.

    Companies can flex their financial muscle in ways other than threatening to terminate a contract.

    In 2004, Eaton Corp., a Cleveland industrial equipment manufacturer, added law firms to an initiative it had launched in 2001 to make the companies in its supply chain more diverse.

    Eaton keeps track of how many minorities and women that law firms put on company projects. The results could affect their bottom lines.

    "We haven’t fired a law firm, but we make work allocation decisions based on how they’re doing against our goals," says Lisa Sutton, Eaton senior counsel for environment, health and safety.

Motivated by business
Coca-Cola is beginning to develop law firm diversity criteria. The company won’t mandate targets, but it will assess the progress that firms make in recruiting, retaining and putting minorities and women in leadership positions, according to John Lewis, the company’s senior managing litigation counsel.

    As the company puts its diversity rubric in place, that issue will become increasingly influential as Coca-Cola decides who to put on retainer.

    "Technical competence alone is not going to be a point of differentiation," Lewis says.

    Diversity will distinguish them because Coca-Cola, Eaton and DuPont emphasize diversity within their own workforces. Although everyone agrees it’s the right thing to do, altruism is not the primary motivating factor for the corporation. It is market share and sales.

    Coca-Cola generates 80 percent of its revenue outside the U.S. and does business in 200 countries. Domestically, it also must be responsive to diverse markets. For instance, sales of Sprite tend to be high among urban males, many of whom are African-American and Hispanic.

    In order to connect with a variety of consumers, Coca-Cola itself is diverse, with 65 nationalities represented on the Atlanta headquarters staff. It wants to foster that inclusive attitude among outside counsel.

    "The lawyers who represent the company have to reflect that same level of diversity," Lewis says.

    Practitioners and outside experts agree that law firms remain far from achieving that outcome.

    "There’s a real cultural problem within law firms in terms of trusting minority lawyers and wanting to bet on them in terms of human capital," Henderson says.

    Although firms need to improve getting African-American, Hispanic and Asian lawyers in the door, that’s only where the challenge begins.

    "It’s retaining them that’s so damn difficult," Henderson says. Females and minorities leave firms at a higher rate than white males.

    Henderson cites structural reasons, including a lack of mentors for minority associates. White males and females and minority females tend to select mentors from within their demographic group.

    Minority males pair with minority females as mentors. Only 8 percent of white males are mentors for minority males, and just 4 percent of white females are mentors for minority females, according to an American Bar Association study adapted by the Law Firms Working Group.

    Henderson found that the strongest draw for a female or minority lawyer to join a firm is having partners who look like them. African-American partners attract African-American associates; female partners attract female associates; and so on.

    "It’s easier to follow in someone else’s footsteps than to break the barrier yourself," Henderson says.

Expanding opportunity
    Many law firms are trying to tear down those barriers. Richardson says she has seen a substantial increase since 2001 in the number of firms that have established affinity groups, made diversity gains a factor in partner compensation, and appointed an experienced attorney to head diversity efforts.

    "Seven years ago, it was rare to have a dedicated professional address diversity in a law firm," Richardson says. "Now, it’s a lot more commonplace."

    Patricia Butler, a partner and chair of the diversity committee at law firm Howrey in Washington, says her firm established a diversity task force in 2001 but was working on diversity issues for a decade before that.

    Howrey provides career development programs for minority associates and sponsors monthly lunches and networking and mentoring opportunities. To recruit, it hosts campus receptions designed to reach out to minority students.

    "Howrey has adopted diversity as a core value," Butler says. "From very early on, the [firm’s leadership] got on board and put our resources behind it."

    Another Washington firm, Akin Gump, has been recognized by the Minority Corporate Counsel Association for a "sustained commitment to improving the hiring, retention and promotion of minority attorneys."

    As is the case at Howrey, the firm’s executives put a priority on ensuring that minority associates stay on board. From giving them challenging assignments to inviting them to monthly lunches, partners make sure they know they are valued.

    "We have regular contact with our associates of color," says Michele Roberts, an Akin Gump partner.

    Climbing the law firm ladder to partner is a grind that requires countless night and weekend hours. "It’s hard being an associate, no matter what color you are," Roberts says.

    That challenge is multiplied for minorities, who often head for the door before they’re promoted to a corner office. In order to increase its number of minority partners, Akin Gump has modified the traditional law firm practice of only promoting from within.

    Roberts is an example of a partner who was hired at that level from another firm. "Akin is not squeamish about lateral acquisition," she says.

    Such moves help law firms tap the best legal talent available and satisfy calls for diversity from their corporate clients.

    Roberts says that pressure has been crucial is spurring law firms to take action on diversity.

    "On a scale of one to 10, it’s an 11," she says. "We listen to what our clients say to us. The Call to Action has made all the difference. It’s gotten people thinking about diversity, talking about it and meeting about it."

    Yet, she adds, "There is undoubtedly still room for improvement."

    Further gains will require more demands from corporate clients, according to those who gathered in April at the Call to Action summit in Arizona.

    Law firm managing partners in attendance said the specter of losing work over the lack of diversity would crystallize the issue.

    "It would help them to make a stronger business case with the many members of their firms," Richardson says. "Law firms are reactive toward clients, not proactive toward clients."

Workforce Management, July 14, 2008, p. 31-36 -- Subscribe Now!