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Microsoft Corp. will announce on Monday a diversity initiative that will give bonuses to outside counsel based on their inclusion of minority and women attorneys. The unique plan applies to Microsoft’s 17 so-called Premier Preferred Provider law firms, which collectively receive about $150 million in fees from the technology giant each year. The plan also enables Microsoft’s in-house lawyers to receive bonuses based on improvements that the law firms make in their diversity numbers. A lack of progress in increasing the number of minority and women attorneys in the legal profession, particularly within large law firms, is the impetus for the change. “It seems we’re still spending an awful lot of time talking about why diversity is important rather than achieving concrete results,” said Microsoft General Counsel Brad Smith. “The focus has been more on activities than outcomes.” Firms that participate in the diversity initiative can make an additional 2 percent bonus, on top of the 3 percent increase that all of Microsoft’s preferred firms are eligible to receive in fiscal year 2009, which started on July 1. The program is voluntary. TRACKING PLANS The plan calls for Microsoft’s preferred law firms to choose by Aug. 15 one of two ways that they want Microsoft to track their diversity progress. Under the first formula, law firms must demonstrate a two 2-percentage point increase in the hours worked by diverse attorneys as a percentage of total hours worked on Microsoft matters, compared with the same period in the prior year. Under the second formula, law firms must show a 0.5 percentage point increase in total diverse attorneys as a percentage of the firms’ total attorneys, regardless of whether they worked on Microsoft matters. Included in Microsoft’s definition of diverse attorneys are women and those attorneys who are African-American, Latino/Hispanic, Asian, Native Hawaiian/Pacific Islander, American Indian, Alaska Native or of mixed race. It applies to partners, associates, of counsel and any other full-time or part-time permanent attorneys, but does not apply to contract attorneys. The definition does not include gay, lesbian or bisexual attorneys, due to confidentiality, but leaves it to the law firms to include those individuals in their diversity numbers. Microsoft will count only attorneys in U.S. offices, and law firms must stay with the formula they choose for one year. The company will pay bonuses either quarterly or annually. The company will review the plan after one year and consider modifying it, including whether to increase the 2 percent incentive. “This is somewhat of an experiment,” said Susan Foster, a partner at Seattle-based Perkins Coie, one of Microsoft’s preferred law firms. She said that although 2 percent provides an adequate incentive, the important point is that Microsoft is willing to pay a higher rate for more diversity inclusion. Some of Microsoft’s preferred law firms are K&L Gates; New York-based Weil, Gotshal & Manges; New York-based Sullivan & Cromwell; Washington-based Arnold & Porter; Heller Ehrman; and Washington’s Covington & Burling.

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