- Increasingly, clients are demanding tangible metrics of law firm diversity, equity, and inclusion programs.
Diversity continues to be a hot topic in our industry. More and more, corporate legal departments regularly select firms that embrace diversity, equity, and inclusion (DEI). These clients continue to push for more diverse staff to be assigned to their matters and have established requirements for working with diverse-owned firms and teams.
It makes sense for law firms to embrace DEI, as a more diverse team helps you to better connect with your diverse clients, witnesses, or juries. A Harvard Business Review article suggests that, “… when at least one member of a team has traits in common with the end-user, the entire team better understands that user.” Understanding and better connecting with your clients mean that you will be able to attract more clients from different cultures and potentially increase business.
In a recent Buying Legal Council webinar on DEI benchmarks for buyers of corporate legal services, Kristina Satkunas, director of strategic consulting at LexisNexis CounselLink recommended that clients should use their eyes: “Is your corporation as diverse as your community? Is your legal department as diverse as your corporation? And are your law firms as diverse as your department?” If your answers are “no,” it may be time to make some changes—for both the client and the firms they hire. Diversity efforts are now often part of clients’ social responsibility initiatives in support of the communities they live and work in or serve.
To advance their efforts, corporate law departments now regularly request diversity demographic information from their law firms. This may include gender, race, LGBTQ+, veteran status, and disability. Many corporate clients now set minimum standards for the in-house legal team to promote working in a diverse environment. They ask to track outside counsel hours worked by diverse timekeepers. They monitor diversity trends of their law firms and require diverse timekeepers to be assigned mission-critical legal tasks, and if necessary, be given opportunities to develop the necessary skills. Some clients offer bonuses to firms that increase diversity; others have started to withhold a portion of their invoices if the firms do not meet their diversity requirements.
Clients ask their firms to include diversity demographic data when completing timekeeper profiles. Invoice information combined with demographics provides rich information about how much time is billed by diverse timekeepers and which tasks they work on. To get an accurate read on meaningful comparisons that affect vendor selection, client-side decision-makers need to be careful about how they slice the data. It is also important to be cognizant of the benchmarks for an industry or geographic region. How diverse is the marketplace? Beyond the metrics, some corporate clients also consider the contributions their law firms are making in their communities—such as lawyers mentoring young people in local high schools, particularly schools in economically disadvantaged areas.
Using DEI benchmarks can help law firms track their progress. As a first step, focus on metrics that are relatively easy to compute, such as the percentage of male vs. female lawyers, ratios of minority-group representation, as well as pay rates.
Adrienne Fox, global procurement—legal services director at Novartis, cautions that firms, “need to understand what their client’s DEI requirements are.” Determine your current DEI situation and set it as a baseline. Then compare yourself to your competitors. How does your level of diversity compare with them? In which areas do you need to improve/change? Next, establish what you want to measure to track your success and how you want to measure it. Do you have the right systems or tools in place or do you need additional/new technology to enable you to measure and monitor?
In requests for proposals (RFPs), corporate clients no longer just ask about a law firm’s DEI policies, but also increasingly require documented proof. For example, your client may require timekeepers that work on their matters to complete a personal profile form that captures relevant DEI data to keep on file. Other information clients increasingly look for include the ratio of diverse hires to attrition of timekeepers. Are diverse timekeepers leaving your firm more frequently than non-diverse timekeepers? Kristina Satkunas warns that “Higher-than-average attrition rates for people of color would reflect poorly on a firm’s performance on equity and inclusion.”
In addition, some law firms and corporate clients now scrutinize the types of legal work as well as the individual tasks that timekeepers work on. “Being given exposure to higher-value practice areas as well as tasks that challenge and increase skills are indicators of greater equity and inclusion and really important to clients,” says Jenita Gillespie, legal operations director at Bon Secours Mercy Health.
But perhaps the most critical measure of equity is to evaluate the categories of lawyers, typically partners, who receive origination credit for the client revenue they generated. Some forward-thinking corporations are even asking questions about who will receive origination credit to incorporate into their law firm DEI evaluations. This metric highlights the concepts of equity (or inequities) in partnership levels at law firms, which contributes to the high attrition of diverse lawyers at top-ranked firms, as they are often overlooked for the partner track, which limits their ability to advance. Improving origination credit and partnership track programs with a diversity lens is one step that can be taken to drive positive change for diversity in the law firm environment.
Dan Ruderman, director of strategic alliances at LexisNexis CounselLink, observed that while corporate clients now increasingly include DEI metrics during the RFP process, he has not seen law firms losing significant existing business due to weak DEI results. However, he is witnessing a continuous movement toward DEI metrics as a deciding factor for new legal work when all other things, such as skill sets, results, and expertise, are equal. “It’s clear, the time to embrace diversity benchmarks is now,” he says.
If your firm is planning to embrace DEI benchmarks, reach out to your corporate clients and have a conversation about how to cultivate DEI in the profession. Some ideas include: