The message has been heard loud and clear. That is, if the number of people reading our story today about 170 general counsel warning law firms to diversify or lose business is any indication, law firms are reading every word.
The lack of diversity in the legal industry has been a pervasive problem for decades and discussions of how to rectify the problem have grown more intense over the past few years … and, for that matter, over the past few hours. The New York Times published a piece Sunday afternoon highlighting the lack of diversity in Paul, Weiss, Rifkind, Wharton & Garrison’s new partner class as emblematic of a broader problem in Big Law. And leaders of legal departments in some of the world’s largest companies responded with a pact to direct work away from firms that don’t improve those numbers.
I have to admit that as powerful as it is to see that number of CLOs band together, my first reaction was one of skepticism, both of the firms and the GCs. Haven’t we written this story so many times before? In fact, a timeline we ran in the 2017 Diversity Scorecard Report shows that back in 1999, again in 2004, then in 2005, 2015, 2016 and a few times since, we have covered similar calls to action. But, according to our 2018 Diversity Scorecard report, the numbers don’t budge much. And a report earlier this year from NALP tells a similar story.
Legal departments, as it turns out, have been dealing with a similar struggle. In 2018, for example. the Black GC 2025 Initiative was launched with a goal to increase the number of GCs in Fortune 1000 companies from 38 to 50, or 5 percent of the Fortune 1000, by the year 2020, and from 50 to 100 by the year 2025.
Certainly the news has prompted Paul Weiss to think really hard about these issues. And law firms in general have increased the staff they have dedicated to diversity and inclusion. The American Lawyer and others have been writing for years that the newest initiatives by GCs are the ones that are going to now make the big difference. And to some degree they absolutely have. There has been incremental change that, over the years, adds up. And I know of examples of firms that have lost work over a lack of diversity (though that group is small). RFPs are now pushing the issue, too, thanks even more to the ABA Model Diversity Survey.
But there was a line in the Times’ piece—the last line—that caused the Negative Nancy in me to come out. It was from one of the architects of the open letter to law firms, Michelle Fang, the CLO of software company Turo.
According to the Times’ story, when asked whether she would fire a firm that employs a white male partner she has long relied on if the firm were not diverse enough, Fang said, “I trust him so much. I can’t see walking away.”
There is nothing wrong with Fang’s comment. It’s completely understandable in a profession that relies so heavily on trust and relationships. And I don’t even think it’s necessarily counterintuitive to her goal of improving diversity. But it highlights that there are two sides to a problem that has proved difficult for the industry to solve. Both law firms and legal departments need to be willing to make changes, but those changes come with consequences to existing relationships.
Despite my initial cynicism, I do think more may come of this letter than the ones before it. As industry observer James Bliwas mentioned on LinkedIn today, this comes as part of a larger groundswell of discussion around diversity that is becoming increasingly difficult for law firms to ignore. But even more than that, the target here seems different to me.
In earlier letters, general counsel were first seeking increased diversity among broader firm ranks, then it was about pitch teams, then it was about making sure credit for work went to the actual diverse teams that were pitched. Hiring diverse lawyers has improved, but retention has remained a problem. Now, however, the call to action is tied to one of the most sacrosanct decisions made in law firms: partnership promotions.
If law firms are forced to think differently and with eyes wide open about who they let into their equity partnership, ensuring pals of their partners aren’t the only ones being considered for a piece of the pie, that is a game-changer. And when I say partnership, I mean equity partnership. And I hope the GCs do, too.
So, to law firms and GCs alike, prove the Nancy in me wrong. I’m rooting for you.