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Law firms that pack their lower ranks with minorities and women while leaving white men in charge are about to find Wal-Mart a tough customer. The nation’s biggest retailer wants to see diversity at the top. The company’s general counsel has asked its top 100 law firms to submit a slate of three to five attorneys to be considered for appointment as Wal-Mart’s relationship attorneys. The slate must include at least one woman and one minority. Wal-Mart GC Thomas Mars made the announcement last month at an Atlanta conference on legal diversity. Top lawyers at Visa International, Del Monte, Pitney Bowes, and Cox Communications also said they have begun requiring outside counsel to demonstrate that there are substantive numbers of women and minority lawyers in the upper levels of their firms. Mars, whose department spends about $200 million a year on outside legal services, said he realized he had to do something when he saw that 82 of the top 100 relationship partners handling the company’s business are white men. Those firms get $142 million of the company’s business, with individual firms’ fees ranging from $350,000 to $13 million. The goal, said Wal-Mart’s associate general counsel, Samuel Reeves, is to “increase the number of women and minorities directly responsible for the Wal-Mart relationship at our law firms.” Wal-Mart’s move appeared to answer two of the big questions posed at the symposium that drew about 400 lawyers from around the country: Do general counsel at large companies consider the number of women and minority lawyers employed by outside counsel when deciding whom to hire — and will they move business away from firms that remain overwhelmingly white and male? That prospect has become serious since Sara Lee’s top lawyer, Roderick Palmore, issued a “call to action” last year warning that he and the other signatories would consider a firm’s diversity when hiring outside counsel. So far, close to 100 general counsel have signed on, including those from some of the nation’s biggest companies. Wal-Mart’s move, sent in a letter to outside counsel last month, upped the ante. Once the retailing giant gets lists of attorneys from its outside firms, due in mid-July, it will start weeding accordingly, Mars said. “We’ll be making more decisions to retain and terminate firms [at that point],” he said. “We are terminating a firm right now strictly because of their inability to grasp our diversity expectations,” he added. NO LONGER ENOUGH Wal-Mart’s new policy signals a growing determination by corporate legal departments to pressure outside counsel. It is no longer enough, the general counsel at the symposium said, to raise the numbers of women and minority lawyers in a firm’s lower ranks if its upper echelons remain an exclusive club for white men. Although the number of women and minorities running corporate law departments is low, it is far higher than at the top firms. Mars acknowledged that corporate legal departments also have a way to go on diversity. Wal-Mart’s legal department started an effort to increase its own diversity about 212 years ago. “We had 50 lawyers and no particular diversity in the group,” he said. Last year, the company hired 39 lawyers; 15 were minorities, he said. Wal-Mart wants to hold its outside counsel to the same standard. Guy Rounsaville Jr., the general counsel at Visa, said he wants to make sure that the women and minority lawyers are among the client relationship managers. “I get intrusive about who in the firm is getting credit for the relationship,” he said, adding that Visa also asks outside counsel for a monthly diversity report. Del Monte General Counsel James Potter said his company’s requests for proposals always include a question about the firm’s record in hiring and promoting women and minorities — and their likelihood to be assigned to Del Monte’s work. Failing to address that question substantively “dramatically lowers a firm’s chances of reaching the interview stage,” he said. Pitney Bowes’ GC, Michele Coleman Mayes, said she focuses her scrutiny on the firms where her company spends the most money. She looks at a firm’s numbers and talks to its lawyers to gauge how hospitable it is to women and minorities. Not everyone at the symposium thought diversity should be judged mostly by numbers. To find out if firms are fostering what he called an “inclusive environment,” James Hatcher, senior vice president for legal and regulatory affairs at Atlanta-based Cox Communications, asks his outside counsel a lot of questions: “At meetings with firms I’ll ask, ‘Why are there just white males here?’ Or I’ll probe associates to see how it is working there.” Hatcher said his measure is “inclusiveness” instead of “diversity” because he does not want to pit white men against women and minorities.
Meredith Hobbs is a staff writer for the Fulton County Daily Report , the ALM publication where this article first appeared.

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