The Corporate Legal Department: Diversity & Inclusion - Priori

The Corporate Legal Department: Diversity & Inclusion

INTRODUCTION

Diversity within the workplace has been a concern of organizations for decades. Since the Civil Rights Act of 1964 made discrimination in employment unlawful, companies have struggled to ensure equity among their ranks. 

The legal profession gets poor marks for both racial and gender diversity. Black and Hispanic students are underrepresented as law students and lawyers relative to the general population, and women and lawyers of color in all ethnic and racial groups struggle against inequality and inequity in attaining leadership positions in firms and corporations.

In May 2020, the killing of George Floyd by Minneapolis police officers spurred nationwide protests on race relations and brought renewed awareness of racial equality issues to corporate America. Shortly after, the Association of Corporate Counsel released a statement, pledging to “work with our members and partners to establish opportunities for the in-house community to...promote racial understanding and diversity.”

Following the killing of George Floyd, the Association of Corporate Counsel pledged to “work with our members and partners to establish opportunities for the in-house community to...promote racial understanding and diversity.”

Ensuring a diverse lawyer workforce is multi-faceted. This page will provide information to in-house counsel concerned with diversity, focusing primarily on racial, ethnic and gender diversity because of the prominence in popular discussion of these types of diversity in the legal profession. The American Bar Association, National Association for Law Placement and other data sources collect and report data on additional diversity characteristics, including LGBTQ status, disability and veteran status.

From the law school pipeline to law firm promotion structures to in-house legal departments, there is still much work to be done to achieve equity in the legal profession.

Calls for in-house legal departments to drive diversity in the legal industry are becoming more common. In-house legal departments increasingly must pay attention both to the diversity of their full-time attorneys and their outside counsel.

Disparities in the legal profession start with law school admissions. 

“According to AccessLex Institute’s Legal Education Data Deck, the overall law school admission rate … has slumped for all groups since 2014, from 78% that year to 70% in 2019,” Dan Roe wrote for Law.com.

The admissions rate for Black law school applicants declined from 57% in 2014 to 48% in 2019; Hispanic applicants’ admissions rates dropped from 72% to 61% over the same period. In 2019, the admissions rate for white students was 78%, down from 85% in 2014.

According to ABA data from 2019, Black law students were 7.94% of all law students, Asian students comprised 6.36% of law students and Hispanic students made up 12.7% of law school classes. Women accounted for 53.31% of law students in 2019. Blacks make up 13.4%, Hispanics comprise 18.5% and Asians are 5.9% of the general U.S. population. Women are 50.8% of the general U.S. population.

Law Student Population by Race Gender vs. Overall U.S. Population (2)

Law firms seeking to attract diverse legal talent are often met with challenges, Roe noted in the Law.com piece. "[T]he pool of Black and Hispanic law students is shrinking,” just as law firms are searching for diverse associate talent.

There are also disparities in employment rates for Black and white law school graduates. For jobs requiring a J.D., the employment rate of white candidates is 79.8% versus 62.4% for Black applicants, according to 2019 NALP data. NALP did not make data publicly available on employment rates for other minority law graduates in J.D.-required positions.

Law firms—including some of the nation’s largest and most prestigious—are often highlighted for lacking diverse attorneys and for failing to advance women and people of color to partner.

A 2020 survey of 233 large law firms by the Minority Corporate Counsel Association and Vault found that Black lawyers made up 5.13% of associates and only 2.03% of equity partners. Hispanic lawyers were 6.01% of associates but 2.72% of equity partners. Asian attorneys comprised 12.08% of associates but 3.99% of equity partners. White lawyers made up 72.25% of associates and 89.85% of equity partners.

Women attorneys made up 47.25% of associates and 22.31% of equity partners, the MCCA/Vault survey found. Women of color (those belonging to Black, Hispanic, Asian, multiracial and other ethnic or racial minority groups) comprised 15.23% of associates and only 3.31% of equity partners.

Associates vs. Equity Partners in Major U.S. Law Firms by Race_Ethnicity Gender (1)

“Representation of attorneys of color continues to grow, as more attorneys of color are hired and promoted and serve in positions of leadership. However, retention remains a significant issue, as attorneys of color leave their firms at a disproportionately high rate,” MCCA noted.

The National Association for Law Placement has slightly different data that bears out the same story: people of color and women have made small gains in representation, but far fewer women and people of color navigate the path to partnership relative to their white, male peers. 

People of color (those belonging to Black, Hispanic, Asian, multiracial and other ethnic or racial minority groups) made up 26.48% of law firm associates in 2020, according to NALP, and women accounted for 47.45% of associates. At the partnership level, people of color made up just 10.23% of partners and 25.05% of partners were women. Women of color comprised 15.17% of associates but only 3.79% of partners, according to NALP.

“The representation of Black women at the associate level has increased by just one-tenth of a percentage point over 11 years,” James Leipold, NALP’s executive director, noted. 

Many of the top U.S. law firms have implemented diversity initiatives. In 2020, 233 firms responded to the Vault/Minority Corporate Counsel Association Diversity Survey, which asks respondents to outline their diversity initiatives and goals.

But criticisms remain about the effectiveness of these firm diversity initiatives.

The legal industry may be entering a new era in which continued public awareness will require more assertive moves by law firms to champion diversity.

“Corporate America has by-and-large been content to sit on the sidelines or remain behind the scenes when it comes to politics. The same goes for Big Law, which is cautious by nature and has studiously avoided getting into politics for any reason. In the current environment, however, that position is becoming more untenable,” wrote Michael Gordon, a strategic communications consultant for law firms, for Bloomberg Law.

"Big Law...is cautious by nature and has studiously avoided getting into politics…. In the current environment, however, that position is becoming more untenable."

In addition to law firms’ internal policies to promote diversity, firms can opt in to a number of external diversity initiatives. 

The New York City Bar Association released a statement of diversity principles to which firms and corporate legal departments can become signatories. 140 law firms, including many of the nation’s largest, have signed.

Law firms can also become Mansfield Rule certified. The Mansfield Rule measures whether law firms have affirmatively considered at least 30 percent women, lawyers of color, LGBTQ+ lawyers and lawyers with disabilities for leadership and governance roles, equity partner promotions, formal client pitch opportunities and senior lateral positions.

100 law firms are Mansfield Rule 3.0 certified, meaning they have participated in the program for three years since its launch in 2017. 117 law firms are participating in Mansfield Rule 4.0 certification for 2020/2021.

Diversity Lab, the incubator for the Mansfield Rule programs, cites results such as: 

  • 94% of participating firms reported that their candidate pool for pitch teams was more diverse following the adoption of the Mansfield Rule;

  • 79% of firms reported that their lateral partner hiring pool was more diverse, and 76% said their equity partner promotions pool was more diverse;

  • 92% of firms reported an increase in formal diversity discussions regarding succession planning for leadership and governance roles, and 85% increased formal discussions for lateral partner hiring;

  • 57% of participating firms elected or appointed a higher percentage of diverse lawyers into Office Managing Partner roles; and

  • Prior to participating in the Mansfield Rule, only 12% of firms tracked their candidates for leadership roles and 25% tracked their candidates for lateral partner hiring; now, 100% are tracking these candidate pools.

Corporate legal departments, like law firms, must be conscious of hiring and promoting diverse attorneys.

As of 2020, there were 59 Black general counsel or chief legal officers in Fortune 1000 and Global 1000 companies, according to the Black General Counsel 2025 Initiative. Hispanic lawyers made up 2.2% of the general counsel of Fortune 1000 firms in 2019. Black general counsel comprised slightly more than 5% of Fortune 1000 general counsel and Asian Americans represented about 4% of Fortune 1000 general counsel, according to the Minority Corporate Counsel Association. Women represented 29% of Fortune 1000 general counsel in 2019, according to MCCA.

In-house legal departments are increasingly seen as a driver to improve diversity issues in the greater legal industry through outside counsel hiring. Organizations such as the ABA and the MCCA have encouraged corporate legal departments to ensure their teams are reflecting diversity.

In-house legal departments are increasingly seen as a driver to improve diversity issues in the greater legal industry through outside counsel hiring. 

The idea that corporate legal departments should be pushing for diversity among their full time employees and in their outside law firms is fairly new. 

In 2019, law firm Paul Weiss announced an all-white 12 partner class that included only one woman; other law firms had made similar announcements around the same time. More than 170 general counsel and chief legal officers signed on to an open letter calling on law firms to “improve diversity or lose our business.”

According to Corporate Legal Operations Consortium (CLOC) data from 2018, 35% of legal departments make outside counsel or law company hiring decisions based on diversity. 44% of legal departments make internal hiring decisions based on diversity characteristics, according to CLOC data.

Legal Departments That Consider Diversity in Full Time Outside Counsel Hiring

And, according to CLOC’s 2019 report on the state of the industry, in-house legal departments ranked diversity characteristics seventh in importance when evaluating outside counsel, after experience, cost effectiveness and other service delivery-focused metrics.

Priori’s 2021 Legal Departments Survey found that only 16% of in-house respondents said that diversity was one of their top three considerations when selecting outside counsel. In-house counsel were more focused on metrics like expertise, cost, personal relationships and firm reputation.

 Legal departments ranked diversity characteristics seventh in importance when evaluating outside counsel, after experience, cost effectiveness and other service delivery-focused metrics, according to CLOC.

Numbers like these that reflect consideration of diversity factors will likely increase, as corporate legal departments are still in the nascent stages of creating processes to ensure they are working with diverse teams.

Several companies have been at the forefront of this drive for diversity in legal.

Coca-Cola’s general counsel Bradley Gayton announced in January 2021 that the company’s outside counsel guidelines would require 30% of billed time to be for work performed by diverse attorneys, and of those amounts, at least half had to be done by Black attorneys. Coca-Cola’s outside firms must report on the diversity of their teams quarterly. Failure to meet the company’s benchmarks will result in a 30% reduction in payments for legal fees.

“As a consumer of legal services, we believe that diversity of talent on our legal matters is a critical factor to driving better business outcomes,” Gayton wrote. “Quite simply, we are no longer interested in discussing motivations, programs, or excuses for little to no progress—it’s the results that we are demanding and will measure going forward.”

In 2019, Intel announced “The Intel Rule,” which indicated the company will not retain or use outside U.S. law firms that are average or below average on diversity. Firms are eligible to do legal work for Intel only if at least 21% of the firm’s U.S. equity partners are women and at least 10% of the firm’s U.S. equity partners are underrepresented minorities, which Intel defines as equity partners whose race is other than full white/Caucasian and partners who have self-identified as LBGTQ+, disabled or as veterans.

Coca-Cola’s and Intel’s approaches garnered headlines for their assertiveness. But consciousness of diversity in outside counsel hiring is a growing trend, and many other companies are implementing creative policies.

“Mid-level and senior members of in-house legal departments often have latitude to select outside legal teams,” Veronica Pastor, deputy general counsel at the Association of Corporate Counsel and Conchita Valenzuela, deputy general counsel of the Confie companies, wrote for the ACC Docket. “It is time for in-house lawyers who are committed to advancing D&I goals to ‘claim their power’ by taking concrete and determined action.”

“It is time for in-house lawyers who are committed to advancing D&I goals to claim their power by taking concrete and determined action.”

But just how do in-house legal departments “claim their power” and hire diverse outside counsel teams? It starts with having basic information about a law firm’s composition of diverse associates and partners and the hourly rates of those individuals.

The ABA recommends that in-house counsel collect a volume of information when engaging new outside attorneys, including:

  • Percentages of: 

    • firm attorneys; 

    • partners; 

    • equity partners; 

    • non-equity partners;

    • counsel and non-partner track attorneys; 

    • associates; 

    • incoming classes of associates and their rates of progression through the firm’s partnership process relative to non-diverse associates;

    • partners leading practice groups; and

    • partners serving on firm management, compensation, and other leadership committees

  • Hourly rates, including how those rates compare to similarly situated and qualified non-diverse attorneys.

  • Compensation statistics, including gender and minority pay-gap information

The ABA also indicates “[t]he law department should collect additional data from its majority-owned firms [firms led and managed by white males] to supplement the information on the firms’ diverse attorneys, including information regarding the firms’: 

  • Publicly available D&I statements.

  • Commitments to and performance against external diversity benchmarks, such as: the Diversity Lab’s Mansfield Rule 3.0; and American Bar Association (ABA) Resolution 113: Promoting Diversity in the Legal Profession.”

Relying on certifications such as the Mansfield Rule and on data collected by the ABA’s Model Diversity Survey can be a good starting point. And law firms have made commendable efforts to provide this information to their clients. Unfortunately, requesting this information from law firms on an individual basis can be both onerous and insufficient, as discussed below. 

Compiling information about a law firm’s composition of diverse attorneys at the outset of a lawyer-client relationship is important, but is no longer enough. Corporate legal departments are increasingly looking to gather continuous, granular data on whether diverse attorneys are advancing through work on a company’s matters.

The ABA advises on techniques for promoting law firm equity on an ongoing basis in its report “Power of the Purse: How General Counsel Can Impact Pay Equity for Women Lawyers.” The report is aimed at gender diversity, but many of the same principles apply to promoting racial and ethnic diversity.

 “The single most critical factor in a lawyer’s success and advancement is to be fairly credited with and compensated for contributions to the client’s selection of and loyalty to the firm,” according to the ABA.

The report advises that in-house legal departments should communicate with their outside law firms about their values and goals around diversity. “Law firms should not have reason to think...that clients are only interested in diversity data when they call upon their firms to provide such information in the context of an RFP or a related pitch for business,” the report states.

Legal departments should certainly be gathering diversity data and informing law firms of their desired diversity metrics during the RFP and other due diligence processes, according to the ABA. But they should also be inquiring more deeply into how work is credited within law firms.

“The single most critical factor in a lawyer’s success and advancement is to be fairly credited with and compensated for contributions to the client’s selection of and loyalty to the firm,” the ABA states.

Below are a couple of tips for ensuring your legal department is promoting diversity within its outside law firms on an ongoing basis. 

  • Go from macro to micro. Ensure the overall firm composition is diverse, using guidelines like Mansfield Rule certification and other data sources. Then ensure the team you’ll be working with is diverse. 

    • Who are the timekeepers that the team anticipates using routinely.

    • What’s the diversity composition of the team that will be actively working on your matters?

  • Track timekeepers. Develop a regular cadence for checking in on the diversity composition of timekeepers on your matters. Coca-Cola’s general counsel established a quarterly check-in on the diversity of their law firm teams. The ABA recommends in-house departments should gather data on “number of hours spent on the organization’s legal matters, including hours spent on substantive tasks, to confirm that diverse attorneys are performing meaningful work for the organization.”

To effectively track the diverse staffing of a company’s work, the ABA recommends that legal departments gather data on:

    • work performed for the client by diverse attorneys categorized by equity partners, non-equity partners, counsel, and associates; and
    • number of hours billed to the client by diverse attorneys, analyzed by equity partners, non-equity partners, counsel, and associates
  • Consider origination credits and relationship partners. Legal departments can inform their outside counsel that they want to be involved in decision making about transferring relationship partner status once an originating partner is no longer the point of contact on a matter. Women and minority lawyers are often overlooked in informal transfers of origination credit, according to the ABA. 
    • The ABA recommends that in-house counsel gather data on the percentage of diverse attorneys, analyzed at least by equity partners, non-equity partners, and counsel, who:receive origination or billing credit by matter;
    • who serve as the relationship partner to other firm clients; and 
    • who have assumed a succession role for client matters (that is, who have previously inherited work). 

(Adapted from Power of the Purse: How General Counsel Can Impact Pay Equity for Women Lawyers

As legal departments are being called on to push the legal industry toward more inclusive practices, they are increasingly being met with management and data challenges.

Gathering data, benchmarking firms on diversity characteristics and reviewing diversity data at regular intervals are all relatively new workstreams for corporate legal departments and present a management resources challenge.

Gathering data, benchmarking firms on diversity characteristics and reviewing diversity data at regular intervals are all relatively new workstreams for corporate legal departments and present a management resources challenge.

While law firms have made huge strides and grown accustomed to reporting some top-line diversity metrics, going forward, diversity reporting will require more frequent reporting of more specific data.

"Expect to see initiatives like [Coca-Cola’s] truly take root within the next year, as diversity data collection becomes more of an operational need within legal," Zach Warren wrote for Law.com. "As the drive for legal diversity becomes an imperative, so too does figuring out the nuts and bolts of how to collect and examine this data."

Increased detail and scrutiny of diversity details will be a challenge for the in-house departments requesting data and the law firms responding to requests. In addition to the administrative burden, there is a lack of uniformity in the diversity metrics being sought and in the formats for collecting, disseminating and analyzing this data.

Furthermore, the legal industry has not allocated who bears the responsibility and costs of increased demand for diversity data. So far, in-house-focused organizations have offered limited resources on methods for requesting and analyzing diversity data, and a standard, recommended approach has not yet emerged.

Technological solutions can assist with this challenge. Billing and invoicing software assists organizations with closer tracking of timekeepers and provides some data on diverse staffing of legal teams, although often this data is analyzed after legal work is completed rather than considered as part of the initial engagement.

There are also tools that help with the process of seeking diverse outside counsel. NAMWOLF, the National Association of Minority and Women Owned Law Firms, also offers a firm finding tool for legal departments seeking diverse outside counsel.

Priori’s platform collects diversity information about our lawyers, which makes it easy for legal departments to connect with diverse outside counsel. The billing and invoicing functionality on our platform also facilitates monitoring diverse timekeepers to ensure diverse attorneys are being given opportunities to tackle high quality work.

Legal departments, like law firms, can seek external certifications of their commitments to diversity and inclusion. 

The Mansfield Rule Legal Departments 2.0 certification requires that legal departments consider at least 50% historically underrepresented lawyers for 70% or more of the leadership roles and activities, such as: External hiring and/or promotions for top role(s), management and lawyer positions, hiring for interns and temporary lawyers, and high-visibility opportunities. The rule also mandates written and transparent job responsibilities for mid- and senior management roles and written processes for advancement opportunities.

The 50/70% rule also applies to certified legal departments’ hiring of outside counsel for new and existing matters.

“The overall goal of the Mansfield Rule: Legal Department Edition is to increase the representation of diverse lawyers in leadership by broadening the pool of women, LGBTQ+ lawyers, lawyers with disabilities, and/or racial/ethnic minority lawyers who are considered for legal department job openings, high visibility opportunities and promotions, and outside counsel representation,” according to Diversity Lab.

54 legal departments are participating in the Mansfield Rule: Legal Departments 2.0 program for 2020-21.

Accenture

Albany Molecular Research Inc. (AMRI)

Axiom Global Inc.

BASF Corporation

Bloomberg L.P.

Bloomin' Brands, Inc.

Booz Allen Hamilton Inc.

Chime

City of Austin Law Department

City of Philadelphia

CN

Compass Minerals

DaVita Inc.

Delta Dental of California

Discover Financial Services

Eaton

Elevate Textiles, Inc.

First National Bank of Pennsylvania

Ford Motor Company

Gap, Inc.

Hillrom

HP Inc.

IHS Markit

Jacksonville Jaguars

Kentucky State University

LendingClub Corporation

Lincoln Financial Group

MassMutual

McDonald's Corporation

Memorial Sloan Kettering Cancer Center

Micron Technology, Inc.

Millicom

NetDocuments Software, Inc.

Nokia

PayPal

Pfizer Inc.

Planet Labs

St. Jude Children's Research Hospital, Inc.

SurveyMonkey

TCF Bank

Teva Pharmaceuticals USA, Inc.

The Scoular Company

The University of Texas System

ThredUp Inc.

Turo

Twilio

Uber Technologies, Inc.

Union Pacific Railroad

U.S. Bank

US Foods

VF Corporation

Voya Financial

Zendesk Inc.

 

The NYC Bar Association’s statement of diversity principles includes law firms and corporate legal departments. 23 corporations have joined the NYC Bar Association’s statement of diversity principles.

Altria Group Inc.

American Express Company

Bloomberg LP

BNY Mellon

CBS Corporation

Credit Suisse

Deloitte Financial Advisory Services LLP

Estée Lauder Companies

General Electric Company

Goldman Sachs

Honeywell International

JPMorgan Chase & Co.

Merck

MetLife, Inc.

Morgan Stanley

New York Life Insurance Co.

Northwestern Mutual Financial Network

OppenheimerFunds, Inc.

PepsiCo

PricewaterhouseCoopers LLP

Prudential Financial Inc.

The Rockefeller Group

Viacom Inc.

Are corporate legal departments required to ensure diversity in outside counsel hiring or internal promotion? Put simply: No.

While diversity initiatives still have not been cemented as a requirement, promoting a diverse legal department and working with diverse outside counsel should not be considered by in-house legal departments to be optional.

The ABA has adopted rules and issued guidance that provides a baseline for minimum conduct with respect to discrimination. And ABA initiatives are in progress with the aim of increasing diversity in the profession.

The American Bar Association House of Delegates in 2016 adopted Rule 8.4(g), which states that: “It is professional misconduct for a lawyer to: ...(g) engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status in conduct related to the practice of law.”

Not all jurisdictions have adopted Model Rule 8.4(g), however. The ABA’s Center for Professional Responsibility, as part of its Diversity, Equity and Inclusion 3-year plan, has a stated goal of more widespread awareness and adoption of 8.4(g). Even where Rule 8.4(g) has been adopted, it requires that attorneys refrain from discrimination; it does not mandate the active promotion of diversity.

The CPR is also aiming to increase awareness of ABA Goal III, adopted in 2008, which is to: “Promote full and equal participation in the association, our profession, and the justice system by all persons” and “Eliminate bias in the legal profession and the justice system.”

In 2016, the ABA House of Delegates adopted Resolution 113, which has the following goals:

  • Increase diversity at all levels within the legal profession which will make the legal field a more appealing profession for diverse individuals;

  • Increase in the number of diverse attorneys and remediate the issues of implicit bias in the legal profession; and

  • Encourage corporate clients to use a Model Diversity Survey in procuring and evaluating legal service providers.

The ABA’s Model Diversity Survey asks corporate legal departments to pledge to support Resolution 113 and request that the law firms that do most of their work complete the survey yearly.

While diversity initiatives aren't a legal requirement, they are increasingly becoming imperatives for the legal industry, and practical implementation is a growing market problem.

There are a number of benefits to engaging diverse outside lawyers and hiring diverse attorneys, as the ABA notes. Among them: increasing the quality of legal services, enhancing a law department’s reputation, improving law departments operations and contributing to company-wide D&I initiatives.

There are a number of benefits to engaging diverse outside lawyers and hiring diverse attorneys, as the ABA notes, such as increasing the quality of legal services, enhancing a law department’s reputation, improving law departments operations and contributing to company-wide D&I initiatives.

Legal departments will increasingly need to be attentive to their reputations and records on diversity and inclusion as the public gains more insight into the world of outside counsel hiring. For example, the Lincoln Project, an anti-Trump Republican organization, asked its supporters and Twitter followers to attack the law firms supporting former President Trump’s efforts to overturn the 2020 election. The Lincoln Project also said it would target the corporate clients of firms who were representing Trump.

While 2020 was a politically volatile year, it’s possible that public awareness of law firm relationships with large corporate clients will require that legal departments become even more sensitive about their outside counsel affiliations.

Legal departments now have an opportunity to get ahead of the curve, embrace the current thinking on diversity and push for more diverse hiring practices, both within their legal departments and in outside law firms.

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