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Outside Counsel Guidelines, Operational Changes and Diversity

One of the top three goals of all legal department officers across all industries is to be socially responsible in considering ethical behaviors surrounding ethical sourcing, including proactively enforcing the diversity agenda and pro bono efforts. So it shouldn’t come as be a surprise that 2019 started off with a letter signed by 170 general counsels (GCs) articulating their expectations of outside counsel when it comes to issues of diversity.

The letter was in response to the announcement of Paul, Weiss’ partner class specifically, but only as a signifier of an industrywide problem. As the New York Law Journal pointed out, “Several other elite firms promoted few, if any, women this year.”

The key point — underscored in the GC letter — is not the lack of diversity of all attorneys across all law firms, but the shocking difference between associate class demographics and partners: “We are disappointed to see that many law firms continue to promote a partner class that in no way reflects the demographic composition of entering associate classes.”

This is true and, unfortunately, not new. GCs have hailed upon their law firms to increase diversity in some way or another for over 15 years, which happens to be when the Minority Corporate Counsel Association (MCCA) was formed in order to track such diversity data. Their first survey in 2004 was produced to support a previous call to action from chief legal officers to advance diversity in the legal profession.

Since that time 15 years ago, the annual Vault/MCCA Law Firm Diversity Survey has become an industry-acknowledged tool for the measurement of diversity progress in law firms. More than 220 law firms nationwide participate in the survey each year, representing more than 90% of the AmLaw 100 and a majority of the NLJ 250.

What the Vault/MCCA Law Firm Diversity Survey found at the end of 2018 was that while law firms are bringing in more people of color and women in the associate ranks, demographic changes have been slow to trickle upward as law firm partners remain overwhelmingly white and male. Specifically, 90% of equity partners are white, 70% male and white.

Thus, the 2019 letter cosigned by the 170 GCs concluded with this: “It is not enough to commit your firm to diversity during the recruiting process or to hire a diversity and inclusion officer and expect that person can effect change without the full commitment of each member of the firm.”


Clients have a variety of tactics, in fact, to influence outside counsel — from financial penalties and rewards to stipulating diversity in outside counsel guidelines.




2019: CLIENTS PUT DIVERSITY INTO ACTION

While we tend to think of compliance with outside counsel guidelines as a matter of adhering to billing requirements and other compliance terms, they are about so much more. GCs' renewed commitment to diversity now means that a firm’s hiring practices have a direct impact on the firm getting paid or winning clients.

Clients have a variety of tactics, in fact, to influence outside counsel — from financial penalties and rewards to stipulating diversity in outside counsel guidelines. The GCs of Facebook Inc., Hewlett-Packard and Metropolitan Life Insurance Co. have all announced in recent months initiatives that will require more diversity among their outside counsel — or put those firms at risk of losing fees.

PD Villareal of pharmaceutical juggernaut GlaxoSmithKline has a multitier approach to diversity for outside counsel that includes 10% of a matter RFP, including a diversity score. He then follows this with diversity stipulations in the outside counsel guidelines that are tracked for compliance.

BUILDING OPERATIONAL PROCESSES THAT ENABLE DEEP DIVERSITY

Building the processes that enable deep diversity across the entire spectrum of talent in law firms will require operational change. The evolution of the Mansfield Rule is an example of one, simple operational change. The Mansfield Rule was named for the first woman admitted to the practice of law in the United States and was the output of a 2016 Women in Law Hackathon produced by Diversity Lab. It measures whether law firms have affirmatively considered women and attorneys of color — at least 30% of the candidate pool — for leadership and governance roles, equity partner promotions, and lateral positions. For example, if firm management has identified a short list of five candidates for an opening on the executive committee, under the Mansfield Rule Certification guidelines, two of the candidates would need to be women or attorneys of color.

The Mansfield Rule was inspired by the NFL’s Rooney Rule, which was created by the late Dan Rooney in 2003 and is now supported by his son, Art Rooney II, President of the Pittsburgh Steelers. The Rooney Rule requires every NFL team to interview at least one minority candidate for head coach vacancies. In the years following its implementation, the number of minorities hired to fill head coach positions doubled as a result of this simple change to the operational challenge of interviewing candidates. New research shows that a diverse candidate is about 20% more likely to fill an NFL head coaching vacancy during the Rooney era than before the rule was introduced.

Diversity Lab is tracking data outcomes and has already launched the next iteration, Mansfield Rule 2.0, to include LGBTQ+ lawyers in addition to women and attorneys of color.

Change in law firms need to go deeper, and it needs to trickle up. Clients know it and are hitting firms where it counts — in their wallets and in their contractual guidelines. Law firms are very stable structures, so operational change is slow, but the lack of workplace diversity has existed for far too long. In a world where there are fewer female CEOs than those named David, I hope to see the operational changes that lead us all to #BalanceForBetter.

About the Author

Gabriela Isturiz is Founder and President of Bellefield Systems, a technology company that helps law firms manage outside counsel guidelines, recover more billable time and enable firms to achieve their revenue goals.

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Gabriela Isturiz

President, Bellefield Systems