Demanding Diversity: Corporate clients use carrot and stick approach

By Alan Cooper
Dolan Media Newswires
The word “diversity” appears on the home page of major law firms’ websites.
Business needs may be driving that emphasis, as much as moral imperatives. The large corporations that provide the bulk of the work for large firms are demanding “diversity.”
Some corporate clients aren’t afraid to use the carrot and the stick.
Global giant Walmart recently reviewed the rosters and staffing of the company’s cases by the 100 firms the company used most frequently.
The company stopped doing business with 40 of those firms, according to Jeff Gearhart, executive vice president and general counsel at Walmart. Gearhart spoke to a regional meeting of the Asian Pacific American Bar Association last month in Williamsburg.
“Clients are saying, ‘We are more diverse. We’re doing a better job, and we think you can, too,’ “ said Robert J. Grey Jr., a partner at Hunton & Williams and the second African-American president of the American Bar Association.
These corporations and more and more law firms believe that “having the best talent is having diverse talent,” Grey added. He points to Wally Martinez, the Latino managing partner at Hunton, as “sort of the explanation point” on that concept.
Grey is the executive director of a new organization, the Leadership Council on Legal Diversity, which is composed of general counsel at major corporations and managing partners of many of the country’s largest law firms. Martinez and Thomas Cabaniss, his counterpart at McGuireWoods, are both members.
It is an outgrowth of the commitment to legal diversity that the Association for Corporate Counsel articulated in 1999. That commitment was followed by a “Call to Action” in 2004 promoted by Rick Palmore, general counsel to General Mills Inc., which calls for GCs to evaluate outside law firms’ diversity efforts. According to a 2009 report in the online American Bar Association Journal, more than 100 general counsel have signed on.
Corporations typically submit requests for proposals for legal work as what Scott C. Oostdyk, partner and litigator at McGuire Woods, calls “a means of putting apples against apples.” Those RFPs always include questions about the percentage of partners and associates who are minorities, he said.
Corporate hiring of outside law firms is based much less now on personal relationships between corporate counsel and law firm partners, he said.
The company may still be looking for lawyers with a strong reputation in a legal specialty but the ultimate decision is likely to be based “more on the company you keep than your singular legal skill in a given area,” Oostdyk said.
When corporate attorneys interview representatives from a law firm, it’s a good idea for the firm to send a delegation that isn’t made up completely of white males because “there will be a diverse team on the other side,” he said.
Jeffrey A. Maldonado, vice president and deputy general counsel at Verizon, said about two-thirds of the corporate attorneys hired by the company over the last 18 months have been minorities or women. The percentage has been even higher for those promoted to senior management positions, he said.
Maldonado said Verizon requires all the firms it hires to file an annual report on diversity. The report includes a demographic profile of the firm, information on lateral hiring, promotion and retention statistics, mentoring efforts, leadership positions in the firm held by minorities and women, and the firm’s efforts on so-called pipeline programs, projects aimed at bringing minorities into the profession.
“The firms know that we take this very seriously,” Maldonado said. Almost 60 percent of Verizon’s workforce is women or minorities, and it regularly wins awards for its diversity program.
Verizon is typical of many large corporations in insisting on diversity in their internal legal departments, said Joan C. Williams, a professor at the University of California Hastings law school and director of the Project for Attorney Retention (PAR) there.
A general counsel’s compensation is likely to be based at least in part on the diversity of his or her legal staff, she said. “They don’t see the need to tolerate” anything less from outside counsel, she said.
Next on the horizon? Flexible schedules for better work-life balance.
PAR is encouraging law firms to provide more flexible working models than the 60-hour-per-week grind that prevails at many firms. Studies have shown that many attorneys leave large firms because they want a better balance and that women and minorities leave in disproportionate numbers for that reason, Williams said.
Such long hours “are simply inconsistent with most people’s ideas of child-rearing,” she said.
PAR has developed a list of best practices for firms that want to offer part-time work, including pay that is proportional to the hours worked, a promotion track that is also proportional to hours worked and assignments to challenging projects.
In some cities, 20 percent of the women partners work part time, Williams said, but the percentage of women partners at large law firms increased from only 14 percent to 18 percent in the last 10 years, even though 40 percent of associates who joined firms since 1991 have been women.
Corporate counsel are interested in retention of attorneys because “they get testy about having to train one lawyer after the other” about their legal needs, Williams said.
Law firms that want to work for Walmart should take note. Gearhart has signed on to PAR’s Diversity and Flexibility Connection.
“We evaluate our firms on the basis of performance, cost-effectiveness and diversity,” he has said.
“The research we’ve seen convinces us that viable, user friendly, flex-time arrangements pay dividends for both firms and corporations in all three areas.”