The diversity dividend, which can be described as the business case for diversity, has been an ever-growing trend for Fortune 500 companies and their outside legal counsel. Some have even posited that the diversity dividend is a new emerging business model. Research has clearly found that diverse companies have a more competitive advantage than their less-diverse competitors and, as a result, the more diverse companies are financially outperforming their less diverse competitors. For example, research has shown that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians and companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians. Research has also shown that diversity has a positive impact on many key aspects of company performance such as hiring the top talent, retaining the top talent, improving decision-making and increasing employee satisfaction, all of which positively correlate to increased financial returns. Moreover, diversity fosters innovation and creativity through a greater variety of problem-solving approaches, perspectives and ideas.
As a result of the quantitative and qualitative business case for diversity, corporate clients are increasingly implementing diversity initiatives within their companies, as well as requiring outside legal counsel to implement certain diversity initiatives. The diversity dividend takes many shapes and forms. For example, Fortune 500 companies go so far as to pay “diversity” incentives to outside counsel for achieving certain diversity benchmarks, while corporate general counsel and in-house counsel have changed and even terminated their relationships with outside counsel if certain diversity metrics and objectives are not achieved by their outside counsel. Many of the most successful law firms recognize the diversity dividend and are diversifying within their firms to reflect the same values of their clients and potential clients. The potential of losing clients due to the lack of diversity is a stark reality that many law firms now face. With the threat of losing substantial business, a louder call to action to diversify within law firms is tantamount to financial survival. While this call to action has been successful with many Fortune 500 companies and the top players within the construction industry, research indicates that diverse outside counsel continue to be under-represented in the practice of law and even more so in the construction law practice.
