• By Mark A. Cohen

The Legal Industry’s Diversity Problem Why It Matters And What’s Being Done About It


At a time when the rule of law is under siege (Read this article) it is critical that the defenders of our legal system—lawyers and the judiciary—reflect the diverse society they represent. This applies not only to the United States but also to democracies around the world whose demographics have changed dramatically during the last few decades. Diversity is an antidote to parochialism, bigotry, and the perception that the legal system favors one group to the exclusion of all others. That perception undermines the rule of law that is the cornerstone of democracy. Diversity is as important to society as it is to diversity candidates individually. Greater diversity will support sagging public confidence in the equal application of law. Public perception—if not the reality—of a more level playing field is advanced by diversity. Our justice system will be viewed more positively when those charged with its enforcement are more representative of the populace.

Diversity promotes cultural awareness and fosters greater understanding between and among social groups. This is especially important in polyglot democracies whose institutions are being challenged by those who prefer “the old order” and a more homogeneous population. It’s critical that all segments of the population have a vested interest in our justice system and a belief that—however flawed—the legal system is accessible and fundamentally fair. Corporate America recognizes the importance of diversity to advance cultural and business objectives. So it’s not surprising that corporate legal departments have a better diversity track record than law firms. And while many law firms “talk the talk” by creating diversity initiatives, the data suggests that they don’t “walk the walk’ in its implementation. Diversity is not simply about numbers; it is about a commitment to a culture of inclusion. This is true at the individual, corporate, and societal levels. A society where all have a stake and where access to justice and the rule of law extend to the entire population is essential to maintaining democracy.

Law Firms Have A Lamentable Diversity Scorecard

A 2016 survey of more than 1,100 U.S. adults conducted by Repass Research and McGinn & Co., a reputation management firm, found that law firms ranked last among 11 industry groups in the public’s perception of commitment to hiring and retaining diversity candidates. The negative perception is supported by marketplace data. Between 2007 and 2015, for example, there was a decline in the number of black attorneys in large law firms. The Minority Corporate Counsel Association and Vault.com study also found the number of Asian-American lawyers receiving promotions in 2014 was less than in 2007. The senior management statistics for these groups are even worse. No wonder talented diversity candidates are shying away from legal careers.

Women, who now comprise about half of the entering US law school population, have fared only slightly better. Like other diversity attorneys, they confront an incumbent law firm partnership model that was built for (white) men for men. While the gap in pay disparity between female and male attorneys has narrowed during the past decade, the Glass Slipper Report confirms that the playing field is not level. Female attorneys still make only 87% of their male counterparts. Women comprise only 20% of partners at large firms and just 4% of large firm managing partners. The glass slipper is accompanied by a glass ceiling.

Corporate Legal Departments Have A Better Diversity Record—Why?

Diversity candidates fare slightly better in large corporate legal departments than in law firms. The delta can be explained by the traditional law firm partnership model and its emphasis on business origination as the key criterion for reward/advancement. Diversity lawyers are generally neither encouraged to generate business nor are they likely to “inherit” it from retiring partners. They also suffer from a dearth of mentorship (even worse than the general associate population) and client contact—another systemic challenge confronting young lawyers in large firms.

Simply put: BigLaw’s diversity problem is rooted in the traditional partnership model itself. (Read this article) In contrast, large corporations—and their legal departments—have come to realize the many benefits of a diverse workforce. Many now demand that their outside law firms follow suit. A number of different steps taken by corporate counsel and procurement departments reflect corporate commitment to ensuring that their outside legal providers deploy a diverse workforce. It’s worth taking a closer look at some of these measures since they are likely to become standard practice.

It’s A Buyer’s Market, And Corporate Departments Are Exerting Leverage

Most large law firms have diversity initiatives in place. But it’s one thing to adopt a diversity program and another to be aggressive in its implementation. The data confirms that law firm diversity programs have generally been more window dressing than reality. That is likely to change soon as several leading corporations are taking affirmative action--wordplay intended-- to promote diversity among outside counsel.

What began as diversity questions in RFP’s has now morphed into aggressive legal procurement policies. Microsoft, for example, offers annual bonuses to its outside law firms intended to increase diversity in partnership and firm leadership roles.

Hewlett-Packard (HP) has adopted the stick rather than Microsoft’s carrot approach. Kim Rivera, HP’s chief legal officer, recently announced the company’s new get-tough-on –diversity policy with outside counsel. It applies to all US-based law firms with 10 lawyers or more retained by HP. After a one-year phase-in period, HP will impose up to a 10% hold back of firm fees if certain diversity requirements are not met.

To comply, firms must have at least one diverse firm relationship partner regularly engaged on billing and staffing issues or at least one woman and one racially/ethnically diverse attorney, each performing or managing at least 10% of hours billed to HP.

Corporations are committed to diversity because of its positive impact on corporate culture and the bottom line. The corporate performance/reward structure and culture promotes diversity. MetLife’s Global Women’s Initiative is an example of a multi-pronged approach to diversity taken by major U.S. corporations. This is antithetical to law firms whose traditional partnership structure—if not its DNA—has done little to attract and advance diversity candidates.

Why have law firms been so slow to change? Short answer: to effect meaningful change would necessitate making material adjustments to the firm reward structure. It would also require an investment in the firm’s future funded principally by older partners who tend to embrace a “future is now” approach since they have no long-term financial stake in the firm. At a time when profit-per-partner (PPP) is the lifeline (and, paradoxically, the ruin) of firms—enabling them to attract big-book laterals and have the upper hand in mergers—that’s not likely to happen. So, absent the stick approach wielded by HP, it’s doubtful that most large firms will commit to aggressive diversity implementation.

Conclusion

A commitment to diversity is critically important to society at large and to the legal profession in particular. As public confidence in our legal system—law enforcement, access to legal representation, equal enforcement of the law, and the judicial process—continues to erode, a more diverse “face of justice” is essential. It would help to bridge the “we/they” gap between large segments of the population and the legal system as well as narrow the divide between and among different segments of the population. For the legal process to be effective, there must be near-universal buy-in. Diversity is a key element in that process.

Those charged with enforcing, advancing, and interpreting the law should more accurately reflect the diversity of the society they serve. Diversity in the legal vertical—not just numbers but a true commitment to a culture of inclusion-- will restore confidence in our legal system and fortify the vital role it plays in democracies around the globe.

Read more from Mark A. Cohen here.

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