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One of the most interesting (and, from my perspective, unexpected) developments in the legal profession recently has been the enormous focus on diversity. Within the past few years, established and emerging businesses have rapidly implemented diversity programs. Clients and potential clients now seek diversity statistics as part of business development pitches and publicly state their intentions to consider other aspects of law firm business to determine who’s actually walking the diversity walk and not just talking the talk. To those of us women who grew up in an era in which business development seemed to be something mysteriously done by men in bars and on golf courses, the change has certainly been a welcome one. It seemed to herald the promise of an open playing field in which clients recognized that different backgrounds, experiences and viewpoints of outside lawyers brought value to their businesses. As employers increasingly embrace diversity concepts, however, many have implemented their diversity programs on fairly short notice and with little planning. Of course, even diversity programs that have not been well thought out may positively affect an organization’s performance. They may enable companies to win talent wars by allowing them to attract and retain qualified women and minorities. They also can improve public relations, permit businesses to attract new clients or customers with fresh ideas and make it easier for companies to communicate effectively with a wider range of consumers. But there are significant downsides to diversity programs that are hurriedly implemented without careful oversight. In the past few years, murmurs within the legal community have suggested that challenges to diversity programs may soon be mounted by those who disagree with the fundamental premise that adoption of diversity principles is positive — or even lawful. Curt Levey, the conservative activist who helped lead the high-profile fight against the University of Michigan’s affirmative action programs, holds the view that law firms might violate Title VII of the Civil Rights Act of 1964 if they give minorities special preferences in the hiring process. “Whether you are using racial preferences because your clients want you to or you want to, you almost certainly are risking liability,” wrote Levey in a column he published in March in the online version of the Wall Street Journal. Actual challenges to the well-publicized client diversity preferences have not yet appeared in the courts. But diversity programs implemented without planning and legal oversight can give rise to other legal problems. Racial, ethnic or sex-based remarks, which are commonly elicited from participants in diversity training or discussion sessions, interviews or employee surveys, may be used in employment discrimination litigation as evidence of discriminatory intent. Plaintiffs’ counsel may also seek the results of diversity audits or surveys in pretrial discovery to attempt to prove discriminatory animus. Although such efforts are often hard fought on privilege grounds, there is some precedent for requiring production of materials created to enhance diversity objectives in discrimination litigation. One of the key examples occurred in Stender v. Lucky Stores, 803 F.Supp. 259 (N.D. California, 1992). In 1988, the supermarket company sought to determine the cause of the lack of promotions of women and minorities into management positions. As part of its efforts to investigate the concern, the company conducted an in-house diversity training session for managers. As part of a common exercise in that training, managers were asked to discuss a stereotype they had heard in the workplace. Some managers participating in the exercise suggested that they had heard that women are considered the weaker sex and volunteered similar thoughts about stereotypes, with which they did not necessarily agree. Female employees later filed a class action discrimination lawsuit based on the lack of promotions for women and minorities. Lucky Stores was ordered, over its objections, to turn over notes taken from the diversity training sessions. The district court rejected defense contentions that the notes were protected by various privileges. The court subsequently found the notes admissible as “evidence of discriminatory attitude and stereotyping of women” and used the notes as evidence that Lucky’s managers had discriminatory attitudes. Ultimately, the court, after a lengthy bench trial, awarded the plaintiffs more than $90 million in damages. Thus, although the diversity training was initiated to remedy the lack of promotions for women, it ultimately was a factor in the massive verdict on the promotion issue. In addition to seeking notes regarding diversity training or interview sessions, plaintiffs often demand audit reports, diversity commentary by consultants and employee surveys. In Hardy v. New York News Inc., 114 FRD 633 (S.D.N.Y., 1987), the demands concerned an analysis conducted by an equal employment opportunity consulting firm. Issues arose after employees at the Daily News in New York City sent a letter to the publisher complaining of a “general pattern of discrimination against non-white employees.” The letter also stated that employees were forming a caucus in an effort to seek “redress from management in an unified manner.” No litigation was threatened. The caucus later wrote to the publisher proposing a minority hiring plan and stating that the employees would file a discrimination complaint if the plan was not adopted. The company decided to create a long-term plan to address potential equal employment opportunity problems and “raise the consciousness of all the departments” about minority promotions and recruiting. The company retained the EEO consulting firm to prepare an analysis of the workforce, draft an affirmative action plan and provide general EEO guidance. After the employee caucus filed a discrimination charge, the Equal Employment Opportunity Commission sought copies of the workforce analyses and affirmative action plan. The company refused to turn over these materials on the grounds of attorney-client, work-product and self-critical analysis privileges, asserting that the materials were prepared to help it either avoid or defend against litigation regarding its employment practices. The court ultimately required to the company to turn over the materials, finding them not to be protected by privileges. The court rejected application of the “self-evaluative” privilege, ruling that the interests of the plaintiff in gathering the information outweighed the interest in fostering candid self-analysis and voluntary compliance. There was a different outcome in Abdallah v. Coca-Cola Co., 2000 U.S. Dist. LEXIS 21025 (N.D. Georgia, 2001), a discrimination case brought against the company by a group of black employees. The plaintiffs in that case, which was brought under 42 U.S.C. §1981, filed a motion to compel production of documents listed in Coca-Cola’s privilege log regarding the results of an internal investigation by outside legal counsel. Because Coca-Cola’s corporate counsel retained the outside counsel in anticipation of litigation that it expected in the wake of an audit, the court refused to compel the production of numerous potentially damaging documents involving an evaluation of possible liability. Holding definitively that the documents produced for affirmative action compliance fell within the ambit of the work product doctrine, the court held that all documents prepared by outside counsel were privileged. Similarly, in Lewis v. Capital One Services Inc., 2004 U.S. Dist. LEXIS 26978 (E.D. Virginia, 2004), the plaintiff sought production of a diversity recruiting presentation. The presentation was created by in-house counsel and marked as confidential (Capital One’s description explained that it was “designed to provide legal advice and apprise senior management about legal risks associated with diversity issues”). Counsel also sought to avoid waiver of the attorney-client privilege. As the court noted, “The presentation was treated confidentially, and in fact, copies of the presentation were collected after the presentation was made.” The court also concluded that a spreadsheet produced by counsel that outlined “male/female ratios, transfers and voluntary attrition in a particular group” was privileged. Although the results of these cases regarding the use of diversity materials as a litigation sword are mixed, they provide important guidance. There are ways to incorporate diversity programs without having such efforts fly squarely back as evidence in the hands of plaintiffs’ counsel. To avoid the “no good deed goes unpunished” mishaps of the Stender and New York News cases, employers embarking on diversity programs must involve legal counsel in every step of the development of diversity analyses and ensure that all appropriate safeguards are used to protect these efforts from being used by plaintiffs. Lynne C. Hermle is an employment partner in the Silicon Valley office of Orrick, Herrington & Sutcliffe.

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