With Corporate Assist, ABA Diversity Initiative Gains Steam

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By Samson Habte

Last year, the chief legal officers of two dozen big companies signed a letter pledging support for an ABA resolution that said corporations should direct more legal dollars to “diverse attorneys.”

The signatories—lawyers at Wal Mart, McDonald’s, Verizon and American Express, among other companies—said they would ask the firms they hire for data that would enable a more “meaningful assessment” of those firms’ efforts to recruit, promote, and staff a diverse roster of attorneys.

How to wrangle that information from law firms was a topic of one panel discussion Oct. 16 at the Association of Corporate Counsel’s annual meeting, which was held in Washington, D.C., and billed as “the world’s largest gathering of in-house counsel.”

Three in-house lawyers at companies that have adopted the ABA’s pledge offered advice on how to champion a diversity initiative within a company and “initiate meaningful conversations with [outside] firms about hiring and staffing practices.”

The two dozen in-house lawyers who signed the 2016 letter said they believed that “as buyers of legal resources, we are in the best position to drive the changes necessary to dramatically improve diversity at all levels in the law firms that provide us with legal services.”

Alex Toribio, a lawyer at manufacturing giant Corning Inc., echoed that sentiment during the ACC panel discussion. “We have the power, and it’s time for us to recognize that and put it to good use,” he said.

The panelists said one of the choices in-house lawyers have to make is whether to adopt a “carrot or stick” approach. They said both approaches have worked.

Toribio illustrated that point by sharing stories he’s heard about how two computing giants—Hewlett Packard and Microsoft—take differing approaches to the ABA resolution.

At HP the data is compiled “at the end of the year, and if you don’t meet the goals that they set out, they will withhold 10 percent of the year-end invoice,” Toribio said. “So if the firm billed a million dollars a year they have to deduct $100,000.”

Microsoft chose to dangle carrots. “They have this bonus structure. If you meet this criteria on some of the numbers they’re looking for, you get a bonus—anywhere from half to 3-point-something percent of the yearly invoice,” Toribio said.

Elizabeth Atlee, deputy general counsel at CBRE, Inc., the world’s largest commercial real estate services and investment firm, singled out DuPont for praise, noting that the chemical giant began subjecting its outside counsel to diversity questionnaires about 15 years ago.

“They didn’t hire you unless you had a certain percentage of partner diversity. Period. You didn’t get on the DuPont outside counsel list at all,” Atlee said.

‘Vendor Scorecard Requirements’

All of the panelists stressed the importance of getting more granular data from the law firms that want their business.

Atlee said CBRE began implementing the ABA resolution shortly after it was adopted, has spent the last year gathering “incredibly in-depth” statistics from its outside counsel, and is now fashioning “vendor scorecard requirements” to alert those firms to CBRE’s expectations with respect to diversity and inclusion.

Atlee said that while that process is still ongoing, it’s possible that her company will make diversity a threshold consideration, when it decides how to farm out its legal work.

“Even if we want to select a certain outside counsel, we’re going to try to make sure that if they don’t meet certain requirements we can’t hire them,” Atlee said. “Or let me put it another way—if they meet our vendor scorecard requirements, we will hire them.”

‘Model Diversity Survey’

Brenna Nava, a director in the legal department of cloud computing provider Rackspace Inc., emphasized the importance of requesting granular data from law firms when implementing diversity initiatives. “Ask for something more substantive than just the RFP [request for proposals] and the shiny marketing materials you get in the beginning,” she said.

Nava said she uses a “Model Diversity Survey” that the ABA developed in connection with its initiative. “I didn’t doctor it, I didn’t adapt it,” Nava said. The model survey, she said, elicits a lot of information that might not be provided if you send firms more open-ended inquiries—like who makes partner.

“It shows you who’s coming in, it shows you attrition, it shows the types of programs that [firms] have to address this issue,” Nava said. “It shows you all of that in much, much deeper detail.”

Diversity Data vs. Fixed Fee Movement

One audience member noted that there is a tension between the desire to demand more granular data from law firms—like how much work lawyers from underrepresented groups are actually doing if they are staffed on cases—and the virtually universal desire to move away from the billable hour as a method of compensating outside firms. “The data that [firms] give regarding spend is related to the billable hour—how many hours are diverse attorneys billing,” he said. “But we’re trying to kill the billable hour at the same time. With fixed fee arrangements—which 90 percent of our cases are now—how do we … then track what the diverse attorneys are working on?”

“Usually what I do is have them keep track of their hours anyway, but that’s because I need to show what the savings from the [alternative fee arrangements] are,” Atlee said.

But there is another option, Atlee said: pick up the phone and call the lawyers—plural—working on a matter. “Call the third name down,” Atlee said.

“I hate to say, but if you kind of ambush them—call out of the blue—they’re not going to be ready,” she added. “I tell people all the time, it’s so easy to send out surveys and send e-mails, but when you pick up the phone and talk to someone you get a lot more information.”

Make a Business Case

Toribio said in-house lawyers who want to implement diversity initiatives must be prepared to make the business case for those programs—both internally, when trying convince their superiors to adopt the initiative, and externally, when they are inevitably confronted with questions about why they just won’t hire “the best firm for the job.”

“Study after study has shown that when you have a diverse set of people tackling a problem you’re going to get a better result,” Toribio said. “The science is out there,” he added, and proponents of these initiatives need to inform themselves because “that question is going to come up and you’d better have an answer.”

To contact the reporter on this story: Samson Habte in Washington at shabte@bna.com

To contact the editor responsible for this story: S. Ethan Bowers at sbowers@bna.com

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

 

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