INTRODUCTION
“Diversity and Inclusion” is a ubiquitous topic these days, especially in corporate legal departments and law firms. In the recruiting context, its meaning and impact is well established – law firms intentionally seek out diverse law students for job openings and summer associateships. Law firm recruiting committees that review resumes and conduct interviews are used to considering diversity as a normal part their evaluations. This focus has led to increasing numbers of diverse attorneys in the associate ranks in recent decades. According to the 2020 Vault/MCCA Law Firm Diversity Survey Report (“2020 Survey Report”), in 2007, attorneys of color comprised 20.78% of associates; in 2019, that figure rose to 26.75%.[1]
But the representation of attorneys of color drops off significantly between the associate and partner ranks, while at the same time increasing for Caucasian attorneys. In 2007, Caucasian attorneys represented 78.96% of associates; in 2019 they represented 89.85% of equity partners. Contrast that with attorneys of color. In 2007, they represented 20.78% of associates; in 2019, they represented only 9.78% of equity partners. Diversity and Inclusion (“D&I”) efforts therefore have gone beyond recruiting and tried to become more intentional regarding retention and promotion. In the law firm context, an important part of being retained and promoted is an attorney’s ability to bring in business. A mentor once told me, “The money is the money.”
D&I is mentioned frequently in the business development (“BD”) context. Corporate legal departments say they want diverse teams handling their matters and/or diverse attorneys as the relationship partners. Law firms have, in some instances, become more mindful about presenting diverse teams to clients, but it is far from the norm. I have heard more than one in-house attorney remark something akin to “you’d be surprised at how many firms send me an RFP response with a proposed team that has zero diversity.” This push by corporate legal departments and firms has led certain organizations to develop programs geared towards D&I focused on BD. For example, the Leadership Council on Legal Diversity has a Fellows program that trains senior associates and junior partners on business development and creates networking and mentorship opportunities with general counsel and deputy general counsel.
Yet despite a lot of discussion and initiatives, the numbers of diverse partners have not changed considerably. There are many theories about why this remains the case. This article relays some of the lessons I have learned regarding D&I in the BD context based on 15 years in Big Law (as an associate, a partner and now a Practice Leader), and based on discussions over many years with friends at other firms and in-house. What do corporate legal departments say about D&I? What do corporate legal departments actually do about D&I? How does BD work in a law firm and how does D&I play a role in that? How can diverse attorneys develop business?
LESSON 1
D&I is not top of mind on big matters.
The prevalence of D&I discussions and initiatives has not changed the way that legal departments choose outside counsel for important matters. Legal departments think of their outside counsel in tiers. Single plaintiff employment cases rarely go to the same firm that handles a putative nationwide class action. The former typically go to a smaller firm with lower billing rates. The latter typically go to a big firm due to manpower requirements and experience handling such cases. Likewise for deal work – a $10 million deal typically does not go to the same firm as a $1 billion deal. This is logical. It is also logical that bigger matters receive attention from the general counsel, C-Suite and Board of Directors.
I have spoken with a few general counsels about this issue. Several noted that it is easier to hire diverse attorneys at small and mid-size firms. On matters, however that are big enough for them to brief the C-Suite or Board, when asked how often their leadership asks them about diversity in choosing counsel, they responded, “never” or “almost never.” Executives and board members ask about the firm chosen to lead it (name brand is important), the lead attorney is, and what the strategy is to win. The cold hard truth is that executives and board members have a fiduciary duty to shareholders to protect the corporation, and diversity is not a fiduciary factor. As discussed below, it can have the opposite impact.
That is not to suggest that diverse attorneys do not handle such matters. We do every day. During my first year as a partner, I was asked by the general counsel of a publicly traded company to defend a nine-figure pension litigation. The matter was receiving significant press attention. I flew to corporate headquarters to brief the CEO, CFO and other senior leaders of domestic and overseas subsidiaries, and then lead the matter through trial. My race (African American) did not prevent me from getting the work. But I don’t think it is a coincidence that the general counsel who hired me was an African American woman.
LESSON 2
Ground-breaking D&I efforts can bump up against less vocal yet powerful opposition.
The ubiquity of D&I initiatives, conferences, publications, etc. can lead to a sense that it is a priority for every law firm and legal department. Despite these efforts, diversity at the highest levels of the legal profession has not materially increased. This has understandably led to a collective feeling of frustration, which has fueled attempts to devise programs that assertively go beyond the typical D&I initiatives. Such ground-breaking programs have bumped up against less vocal yet powerful opposition that has either ended or significantly curtailed these efforts.
The most recent and visible example of this kind of peril of the early adopter in D&I occurred when Coca-Cola general counsel Bradley Gayton (in January 2021) penned a letter to “U.S. Law Firms Supporting the Coca-Cola Company” regarding “Commitment to Diversity, Belonging, and Outside Counsel Diversity.” Gayton expressed frustration that, despite decades of discussions and “[D&I] scorecards … summits … and written action plans,” the number of diverse equity partners remains unacceptably low. “These [D&I] efforts are not working. I’m reminded of this by the alarming number of new partner headshots that continue to be proudly published with an obvious lack of diversity and when I read that Black equity partners will not reach parity with the Black U.S. population until 2391.”
Gayton mandated that firms comply with forceful metrics regarding diverse attorneys working on Coke matters. Firms had to commit that at least 30% of associate and partner time on new matters be billed by diverse lawyers (with at least half of these billable hours going to Black lawyers). For firms that could not meet that metric internally, Coke expected them to partner with other firms in order to constitute a team that met the standard. Failure to do so would lead to that firm no longer working for Coke.
Just three months after his letter, Gayton resigned, and the program was significantly modified. Not long after Gayton departed, it was reported that investors had threatened a lawsuit over the policy. The unnamed investors claimed that Gayton’s new policy violated, among other things, the Civil Rights Act and the Americans with Disabilities Act and thus breached the Company’s fiduciary duty to shareholders because it exposed the Company to litigation.
Another example of assertive diversity efforts leading to litigation has occurred in California where state laws have mandated that public companies diversify their boards of directors. Plaintiffs claim that such requirements harm pensioners and shareholders by reducing the shareholder value. And corporations that have adopted similar assertive diversity efforts have been attacked from the other side – i.e., plaintiffs bringing derivative shareholder suits claiming that the companies’ lack of director and c-suite diversity fail to comply with anti-discrimination laws and fail to live up to the companies’ public commitments to diversity.
LESSON 3
It is imperative to learn the BD rules and culture at your firm.
Law firms are unique places. They are partnerships in the truest sense. There are few professions where job applicants are interviewed with an eye towards “do I want this person to someday co-own the business with me?” It was not long ago that firms were organized along racial, ethnic or religious lines. Fortunately, those bright lines do not exist anymore, but make no mistake that fit and culture remain important. As such, law firms run according to a lot of written and unwritten rules.
BD is one such area where learning the written and unwritten rules is important. A firm with an “eat what you kill” model will operate differently than one with a collaborative model. The former typically has a “points” or “credits” formula based on who brought in the work, who did the work, etc. Formula suggests objectivity. But disputes occur. It is important to learn how those disputes get resolved. Do they go to a committee or to the managing partner for that office or some other resolution? One friend (“Sam”) told me that they served on their firm’s “comp committee,” which was tasked with settling these disputes. Often before those meetings, friends would pull Sam aside and ask, “you’ve got my back, right?” Sam would “win” some and “lose” some for those friends. The friends for whom Sam had “lost” would be mad for days or weeks, and even not send business Sam’s way.
You can see how such a process could impact a new partner who doesn’t know the rules. I thought of Sam’s comments when I spoke to another friend (“Pat”) recently. Pat is a diverse attorney who made partner in Big Law firm recently. I congratulated Pat and asked how compensation works at the firm and how BD fits into that. Pat did not know even though Pat is actively working to show that they belong as a partner by trying to bring in business. It is not hard to imagine Pat bringing in work that is not in their practice area, so Pat hands it off to fellow partner (“Kris”) who practices in that area. If Pat doesn’t know the rules, Kris may claim more points than they otherwise should. Or if there is a dispute and Kris knows what committee handles these disputes and knows that Sam is going to that meeting, Kris can make their case to Sam before the meeting so that Sam can advocate for Kris in that meeting. Pat will have no advocate.
Firms with a more collaborative model evaluate BD more subjectively. There are no points or origination credits. Rather, the emphasis is on broadening and deepening client relationships by introducing your partners in other practice areas. In essence, are you a team player?
Regardless of the model, BD is an important part of each lawyer’s evaluation and compensation, so it is important to know the rules. But you must ask. Those who know the culture and rules will tell you if you ask.
LESSON 4
Pitches require a lot of work; help is appreciated and rewarded.
BD usually begins with a “pitch” or responding to a request for proposal (“RFP”). RFP responses have changed significantly in recent years. Senior partners like to reminisce about the “good ole days” … tales of (two) martini lunches, Friday golf, and institutional clients continuously feeding them work. Clients are now more likely to put out an RFP instead of simply handing out work.
As part of the RFP response, clients want to discuss (sometimes on initial calls about the matter) the substantive law involved, views on opposing counsel and the judge, potential theories of the case, and budgets by phase. Preparing all of this requires significant time, and usually has a short turnaround. The heavy lifting for such tasks typically falls on the junior partner or senior associate who will be charged with staffing the case. Accordingly, a great way for associates to get involved with BD—especially diverse associates who may not have a social relationship with that senior associate or junior partner—is to volunteer to help prepare RFP responses. Those associates will learn the process and the client. And the chances are that the associate will be invited to attend the pitch call and be on the team if the firm lands the matter.
LESSON 5
There is plenty of data; what corporate legal departments do with it varies greatly.
Many corporate legal departments tell firms that they want diverse attorneys on their matters and as their relationship partners. And to suggest that they are serious, they send surveys to their law firms that ask about the demographics of the attorneys who work on those matters – e.g., title (associate, counsel, partner, etc.), race, gender, and role on the team. Law firms rush to respond, then (many times) hear nothing back. So, I started asking. The responses varied.
One general counsel of a publicly traded corporation told me that their legal department sends out such surveys. When I asked what they do with the responses, the response was “not much … we are still trying to figure that out.” Contrast that with an experience I had recently with a tech company. They not only analyzed firms’ responses, but also compared the responses to the time keeping data on invoices. They also schedule quarterly calls with firms to review the data and discuss plans to improve. They task the firm with coming up with detailed plans and timelines to improve. The implication is that if firms do not improve, they are less likely to receive additional work.
Most corporate legal departments fall somewhere in between these two examples. In any event, law firms should not be afraid to ask their clients what they do with this data. That knowledge will help the firm respond in a way that is helpful to facilitate an honest conversation about the role diversity plays in hiring outside counsel.
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These lessons suggest a few things. First, most corporate legal departments want to see diverse attorneys on their matters. They may not be intentional about tracking it or immediately holding firms accountable, but they are thinking about it. They appreciate when firms take the initiative on this issue so that they do not have to push. Second, for D&I BD initiatives to be meaningful and sustainable, they must become part of the firm’s culture in the same way recruiting committees consider diversity when putting together a class of summer associates. Attorneys leading RFP responses should be mindful of the team they put forward, even if the RFP does not expressly mention diversity as a factor. Third, when firms are intentional about D&I in BD, it provides diverse attorneys more opportunities for significant client contact. In turn, diverse attorneys should be intentional about developing BD skills so that they can approach those interactions not simply with a mindset of “I want to do good legal work on this case” but also “I want to cultivate this relationship so that this in-house lawyer thinks of me the next time they have a matter.”