Goal IX Newsletter

Summer 2000, Volume 6, Number 3

Making an Investment - Minorities in the Financial Service by: Ron Wood

woodThirteen years into a securities law practice, I remain appalled at the surprisingly low number of minorities in the field. And I have had a fairly broad perspective from which to survey: 2 years in a large firm, 10 years with the SEC, and currently in-house with one of the bulge-bracket investment firms. These years have been spent in some of the most diverse legal communities in the country: San Francisco, Chicago, and Los Angeles. I have also taught at two law schools. Yet, through all these experiences, I estimate the number of minority securities lawyers I’ve encountered at less than 100. In contrast, I have probably encountered an average of 5 majority lawyers a week, every week, for 13 years.

 The easy thing to say is that firms with meaningful securities practices simply have not found a compelling reason to increase the number of minorities within their ranks. As evidence of this, Bill Lann Lee, Assistant Attorney General for Civil Rights, recently noted that the percentage of minority partners at the nation’s largest firms, virtually all of which have securities practices, is a mere 2 percent; and that includes all practice areas, not just securities. Yet, there is also reason to believe that the number of minority lawyers practicing in this area is not as great as the numbers practicing in other areas. Lawyers of color are often unaware of the opportunities and requirements for a practice in securities or broader financial services.

Nonperforming Assets
For example, minority communities traditionally have not significantly used financial services because they have not had the luxury of vast financial resources. That legacy, however, is changing, in part due to higher education among minorities. As a result, more remunerative employment opportunities now exist; the Internet has had a democratizing effect; and societal trends have lowered barriers that previously put routine financial services beyond the reach of most minority or lower middle-income communities.

Yet, another reason minority lawyers have not been drawn to financial services practices is the belief that they need some specialized academic background or preparation to succeed. For sure, some familiarity with business and financial concepts helps. Yet, lack of such familiarity does not preclude success. Many of the practicing securities lawyers I have worked with did not continued on page 6 come with a business or finance background, including one of the most talented— a former art student who ran a gallery and taught elementary school before getting a law degree. I myself come from a liberal arts background. Therefore, minority lawyers and law students harboring even the slightest curiosity or desire should be encouraged and recruited to pursue a career in financial services, irrespective of undergraduate curriculum.

At the same time, however, employers still bear the burden of creating opportunities and environments that make the practice more attractive to minority aspirants. Considering the white-hot business and financial environment we have enjoyed for the past 5 years, how is it possible that minorities represent only 2 percent of partners in major law firms? While I don’t believe that most legal employers are actively excluding minority candidates from consideration, the fact is, employers still are not doing enough to increase the numbers. I have personally observed 2 seemingly innocuous yet recurring practices that have a direct adverse impact on the recruitment of minority lawyers: “affirmative” action and benign neglect.

While it may seem provocative to suggest that minorities can be victims— rather than beneficiaries—of affirmative action, experience reveals it happens far more than one might suspect. In fact, it happens routinely. Consider the employer that finds itself in need of 1 or 2 good lawyers. Typically, the first method of identifying potential candidates is to spread the word among lawyers within the office. A casual remark such as, “We’re pretty busy and could use some help,” is often followed by, “If you know someone who might be interested, let them know.” This casual invitation prompts calls, lunch meetings, and other “affirmative actions” to identify and recruit potential new hires. Those spreading the word are, by and large, white, so, too—at least in the vast majority of instances—will be their recruits.

The second practice I have witnessed working against minority lawyers is the act of benign neglect. “Qualified” candidates are treated with such casual indifference as to not really even be in contention. In one case, several persons with authority to hire interviewed a competent, suitable minority. After the interview, all agreed that the candidate was acceptable and could be an asset. Yet, weeks after the interview, no one had moved any closer toward making a hiring decision. When I inquired of the candidate’s status I learned that none of the hiring lawyers had given him much further consideration. Having sat with these lawyers through numerous inter-views, I knew the minority candidate had been near the top of everyone’s list. Yet, here they were, weeks later, the open position still available but not even considering hiring this candidate.

I was outraged. Ultimately, after some prodding, the candidate was hired. Yet, I wondered, how often during a typical recruiting cycle does this occur? How many minority lawyers every month—indeed, every week—are the subjects of similar benign neglect? Ironically, the candidate-turned-lawyer recently received a prominent appointment that will, invariably, bring honor to the office and, quite possibly, even to the persons who nearly passed him over.

Building a Balanced Portfolio
The answer to increasing the number of minorities in any practice area, including financial services, lies primarily in fostering a belief that they can succeed. This comes, first, from evidence that others like them have succeeded; not just 1 or 2, but enough to diminish the stigma of tokenism and increase the perception that later entrants can have a realistic chance of doing well. To promote this environment, employers must measure minority lawyers by the same standards used to evaluate non-minorities. Employers must encourage and make it possible for lawyers of color to make themselves visible to others by, among other things, attending profes-sional and career seminars and participating in bar and community functions. And, the employers must give them full credit for doing so.

The second element to fostering a belief that minority lawyers can succeed in financial services is for employers, placement counselors, mentors, community leaders, and others to encourage minority lawyers’ curiosity and ambi- tion. Only when these two elements work in concert to invite and encourage— to pull and to push—will the number of minority lawyers practicing in the financial services and other non-traditional practice areas increase to a level that leverages and reflects the wonderful strength of American diversity. Ron Wood is a First Vice President and Senior Attorney in the Law Department of Morgan Stanley Dean Witter In San Francisco, and a member of the California Bar Association’s Ethnic Minority Relations Committee.

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