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Early last year, the Shell Oil Co. sent word to law firms it had worked with in the past that it was hosting a beauty contest. The company planned to select a group of “strategic partners”�a nucleus of firms that would handle most of the legal work for the Houston oil company, an affiliate of Royal Dutch/Shell Group. At the time, Shell used hundreds of law firms. But it believed that it would be better served by a small number of firms that had a deeper understanding of Shell’s business and that could share information and work cooperatively. Many companies have launched similar strategies�E.I. du Pont de Nemours & Co. being one of the first and best�known proponents of this less-is-more approach. Shell asked prospective strategic partners to submit information about their expertise and geographical reach. Soon, word circulated that Shell’s business was up for grabs, and firms deluged the company with business pitches. Shell’s in-house legal department culled the data and then gathered its own intelligence about firms’ strengths and weaknesses. In the spring of 2003, Shell invited a select number of firms to Houston to be interviewed. The firms’ representatives gathered in a Shell auditorium, where they donned nametags and listened to presentations by General Counsel Catherine Lamboley and Associate General Counsel Carla Powers Herron. The Shell lawyers laid out the criteria that they would consider in choosing firms. Quality, cost-effectiveness and professionalism were key factors. No surprise there. But the fourth and last factor was a little more unusual. Shell wanted firms that were committed to diversity: The applicants would all have to report the number of women and minorities at their firms. Lamboley is a very vocal advocate of diversity. “When you use people with diverse backgrounds and different ways of looking at things, you get to a better solution,” she said. Companies are particularly fond of having multihued legal teams when they head to court; they obviously want lawyers who look and think like jurors. But Lamboley said it is also vital to staff corporate work diversely. “It is critical that you have new thinking on deals,” she said. After Lamboley and Herron sketched out their vision for the strategic partner program, each firm was sent to a designated room to be interviewed by a team of Shell lawyers. The interviews generally lasted no more than two hours and involved discussions on a range of matters, from diversity to strategies for escaping the tyranny of the billable hour, say lawyers involved in the process. Some firms were called back to Houston for a second round of interviews. In the summer of 2003, Shell selected the winners. The company won’t disclose the names, but Herron said Shell chose 27 firms. They include Bracewell & Patterson, King & Spalding, Haynes and Boone, Vinson & Elkins, Fulbright & Jaworski, Thelen Reid & Priest, and Debevoise & Plimpton. These firms all rank at least in the top half of the diversity scorecard published by The Minority Law Journal, a sister publication of The National Law Journal. Broader work Lawyers at the winning firms happily report that they are now landing much more Shell business. Lamboley said that the company will continue to send much of its routine and complex work to its strategic partners. The goal is eventually to send the vast majority of Shell work to these firms, added Herron. “The level of Shell work has increased, and it has become much broader,” said Jennifer Kuenster, the Thelen Reid partner in charge of the Shell account. She said, for example, that her firm is now handling labor and employment work for Shell, which it had never done before. “We do contract disputes, litigation, nonlitigation,” Kuenster said. “In the last nine months, there have been a lot of new [Shell] matters.” As with every beauty contest, there were also losers. The Houston bar, for example, is abuzz with the fact that local powerhouse Baker Botts is not on the strategic partner list. The firm has done litigation and transactional work for Shell in the past, and, more embarrassingly, it is headquartered at One Shell Plaza in Houston. Firm partner Maria Boyce said that she doesn’t know why the firm was not selected. “We strove to be on that list in light of our diverse body of lawyers, many of whom are in leadership positions,” she said. Indeed, on the MLJ’s diversity scorecard, Baker Botts ranks as high as, or higher than, some of the winning firms. Shell will not comment about the firm. Baker Botts may not have been ousted for lack of diversity. But that was nonetheless a key factor for at least one firm that had worked for Shell in the past and that Herron said was bounced simply because it did not have the right stuff on diversity. (She declined to name the firm.) Moreover, seven of the 27 winning firms, such as El Paso, Texas’ Delgado, Acosta, Braden & Jones, have partnerships in which racial or ethnic minorities and women outnumber white men. Shell’s strategic partners, in fact, have come to learn just how serious the company is about diversity. It hosts annual diversity seminars for its outside counsel; last year’s event was held at Minute Maid Park, where the Houston Astros play. The several hundred attendees gathered in a conference room, overlooking center field, where they discussed strategies for retaining and advancing minority lawyers. Shell also asks its strategic partners to break down their invoices according to the race, ethnicity and gender of the billing lawyers. Shell then drills deeper to ensure that women and minorities aren’t relegated to handling only junior-level tasks. Once a year, Shell sends out report cards, which show how its firms stack up, as to their diversity, against other Shell outside counsel. The reports, for example, detail what percentage of each firm’s Shell fees were generated by women and minorities. The reports then compare that percentage with the comparable percentage at other firms. To drive the point home, the reports feature bar graphs illustrating the amount of fees generated and hours billed by female partners, female associates, minority partners and minority associates. “The report card is unusual in the sense of being so organized,” said Marcia Backus, the lead Shell attorney at Vinson & Elkins. “This [report card] makes you think about [diversity] when you put together teams for [Shell] matters.” Lamboley said that if a firm does not show at least gradual improvement in its diversity efforts, she will ask the firm to submit an action plan about how it expects to advance the ball. Eventually, if a firm continues to lag, it will be cast aside. “If a law firm is not serious about diversity,” said Lamboley, “I would have a hard time going forward with that firm.”

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