Judge's Unusual Order Revives Law Firm Diversity Issue

Nate Raymond

New York Law Journal

After 16 years of observing scores of litigation teams from his seat on the Southern District bench, Judge Harold Baer Jr. has strong views about what is lacking in many law firms: diversity.

A stir recently erupted in the securities class action bar after Baer issued an order in a case against Gildan Activewear Inc., directing two of the largest firms in the field, Labaton Sucharow and Robbins Geller Rudman & Dowd, to "make every effort" to put at least one woman and one minority lawyer on the case. The ensuing press about the order caused Edward Labaton, a senior partner at his firm, to make a rare court appearance earlier this month to publicly state that his firm was committed to equal opportunity (See Labaton's letter to Baer).

In a follow up order last Friday in In re Gildan Activewear Inc. Securities Litigation, 08 cv 5048, Baer said his initial order "was not intended to be critical in any way" of how the two firms promote diversity or prosecute and staff a case. But he said the diversity considerations "were goals I would urge be met in similar cases that come before me."

Plaintiffs lawyers interviewed said they had not heard of other judges making similar orders. Baer has at least once before cited diversity as a criteria in approving of counsel. But the order in Gildan came two years after the firms had already been approved as lead counsel and after Gildan agreed to a $22.5 million settlement in that case and two related ones in Canada.

Baer in an interview said he has become concerned by the lack of minority and female lawyers at law firms generally and saw the counsel approval process as a tool at his disposal to address a persistent problem at firms.

"They are behind where they should be," he said.

Lawyers at both Labaton and Robbins Geller say they already take diversity into account. "Our firm has great respect for diversity and we do everything we can to promote equality within our firm," said David Rosenfeld, a partner at Robbins Geller who is involved in Gildan.

Lawyers at other plaintiffs firms, such as Milberg and Bernstein Litowitz Berger & Grossmann, likewise said they try to recruit and promote men and women of various ethnic backgrounds. They acknowledge, however, that as with the rest of the profession, they face challenges.

"Diversity is an issue in the legal profession in general, and I don't think there are any issues unique to the plaintiffs bar" that are not also faced by the defense bar in New York, said Max W. Berger, a partner at Bernstein Litowitz.

Reliable statistics on the demographics of the securities class action bar are hard to come by. By contrast, the make-up of defense firms are tracked and scrutinized by an array of groups and publications. Women made up 32.4 percent of all lawyers nationally in 2009, according to the U.S. Bureau of Labor Statistics. Another 11.6 percent were black, Asian or Hispanic, bureau statistics show.

Many of the more prominent plaintiffs firms have initiatives aimed at boosting minority and women lawyers, like diversity committees and flextime policies. For example, Ariana Tadler, a partner at Milberg on its executive committee, said her use of Milberg's flextime policy to start a family never impacted her advancement.

"I had the ability to juggle what a full-time mother needs to have," she said. "I never felt limited in what I could do here because I had a family."

PRESSURE FROM CLIENTS

Also not unique has been pressure from firm clients, Berger said. Public pension funds, which are typically represented by class action firms, have for some time asked for information on the diversity of legal teams.

"It's not just the diverse backgrounds of the lawyers and staff in the office but also who services the cases," Berger said.

Last November, for example, Robbins Geller, under its then-name Coughlin Stoia Geller Rudman & Robbins, included diversity information in its submission to the Florida State Board of Administration in response to a question by the agency reviewing firms as counsel on securities litigation.

Robbins Geller noted that women comprised 38.4 percent of its 190 lawyers and 20.8 percent of its 72 partners. The firm, which was the largest to submit to the scrutiny, also said 14.2 percent of its attorneys were minorities as well as 9.7 percent of its partners.

At Labaton, 15 of the firm's 80 lawyers are minorities, or 18.75 percent, a spokeswoman said. Another 26, or 32.5 percent, are women, the spokeswoman said.

Baer, 77, in an interview said that in addition to fewer women and minorities in the ranks of firm partnerships, he is also concerned by statistics that show a lack of minority students in law school. Research by Columbia University School of Law professor Conrad Johnson has found that from 1993 to 2008, the number of black students entering law school fell 7.5 percent.

By encouraging the firms to diversify their legal teams, Baer said he hoped it would lead to more women and minorities getting exposure in court. In his view, "there is a lack of successful mentoring" by law firms, which may explain the lack of diversity in partnership ranks.

Baer's order in Gildan cited one from a class action against JPMorgan Chase & Co., J.P. Morgan Chase Cash Balance Litigation, 06 cv 732, appointing Schiffrin & Barroway; Kirby, McInerney & Squire; and Keller Rohrback as lead counsel. In his 2007 J.P. Morgan ruling, Baer said the class included "thousands" of participants in a bank's retirement plan who were "both male and female, arguably from diverse racial and ethnic backgrounds."

"Therefore, I believe it is important to all concerned that there is evidence of diversity, in terms of race and gender, of any class counsel I appoint," Baer wrote.

Based on the biographies of the three firms, he said, "it appears that gender and racial diversity exists, to a limited extent, with respect to the principal attorneys involved in the case." As a result, Baer said they met his "diversity requirement" that "at least one minority lawyer and one woman lawyer with requisite experience at the firm be assigned to this matter."

PUBLIC REACTION

Of concern to Labaton was the way in which Baer's order in Gildan was reported, resulting in Baer's clarifying order last week. Labaton, 78, who told Baer at an Oct. 7 hearing that he rarely makes court appearances anymore, expressed concern that some members of the press interpreted the order targeting the two firms, "as a criticism in suggesting that we were somehow lax in practices of equal opportunity and seeking to establish equal opportunity," according to a transcript.

"Since my name is on the firm and since I think I had something to do with establishing the culture of the firm which embodies at least that principle, I would hope that your Honor could write something that would clarify that," Labaton said.

Some class action attorneys said that while diversity is a noble goal, Baer is going too far in directing firms to take gender and race into account when staffing a case. Stuart Grant, founder of class action firm Grant & Eisenhofer, said Congress did not intend for judges to use their counsel approval powers to focus on law firm diversity when it passed the Private Securities Litigation Reform Act in 1995.

"I think the judge's heart is in the right spot, but I don't think he has the authority and I don't think he's going to accomplish the goal he's trying to achieve," said Grant, who is based in Wilmington, Del.

But Baer said he has wide authority to decide what factors are important in appointing class counsel. In the J.P. Morgan opinion, Baer wrote that in addition to knowledge, expertise, resources and experience, judges "may consider many other factors relevant to counsel's ability to represent the interests of the class."

In the interview, Baer said he saw no reason why diversity could not be taken into account.

"This never seemed so outlandish to me," he said.