Goal IX Newsletter

Summer 2001, Volume 7, Number 3

Direct Accountability at GM by: E. Christopher Johnson Jr.

Editor's Note: In our Spring 2000 issue, we published "More Than Words: Update on Diversity in the Workplace," which provided a follow-up on some of the actions taken regarding the Diversity in the Workplace Statement of Principle. Once again, we are examining actions taken following corporate America's most recent pledge to support diversity. The following article sheds light on efforts by the law department at General Motors to obtain quantifiable data on its outside counsels' commitment to diversity.

E. Christopher Johnson Jr.

General Motors' (GM) commitment to diversity in the legal profession has a long history. The company's first African American vice president was Otis Smith, who served as general counsel from 1977 to 1983. In 1987 one of Smith's successors, Harry Pearce, began the company's close association with the ABA Commission on Racial and Ethnic Diversity in the Profession's (Commission) Minority Counsel Program. In the early days of the program's inception, Pearce met with then Commission chair Dennis Archer and pledged GM's support. One of its lawyers, David Collins, served on the Commission in its early years. More recently, GM lawyer Charles Fairfax served as the Minority Counsel Program chair from 1996 to 2000.

 The famous "Harry Pearce letter," written by Pearce in 1987 to GM's then-900 outside counsel, stands as a milestone in the company's effort to increase the use of minority attorneys. In the letter, Pearce stated that he was disappointed with the slow progress made by minorities in the legal profession. He went on to say that not only was it acceptable for minority lawyers to work on GM matters handled by the firms, it was expected that minority lawyers would be assigned to such work. Pearce later sent the company's outside counsel a similar letter concerning the assignment of women to company matters. Pearce's successor, and current general counsel, Tom Gottschalk, has continued these policies. Under Gottschalk's leadership, GM filed amicus briefs in support of the University of Michigan's position in cases that attacked the University's use of minority status in undergraduate and law school admissions.

GM's commitment in the legal area is no different from its commitment to diversity in all aspects of its business: The company considers diversity not only the right thing to do but also a business imperative. As stated in the University of Michigan brief:

In General Motors' experience, only a well-educated, diverse workforce, comprising people who have learned to work productively and creatively with individuals from a multitude of races and ethnic, religious, and cultural backgrounds can maintain America's competitiveness in the increasingly diverse and interconnected world economy. . . . General Motors now maintains major market presences in more than 200 different countries throughout the world, including Europe, Asia Pacific, Latin America, and the Middle East. General Motors' employees, customers, and business partners could scarcely be more racially, ethnically, and culturally diverse.

Although success in selling vehicles to this diverse customer base is relatively easy to assess, measuring success in increasing opportunities for minorities and women in the legal profession is more elusive. To address this gap, GM instituted an accountability system whereby outside counsel would disclose the gender and ethnicity of all lawyers working on GM matters. The company compiled this information and compared it with the database containing billing records to measure the amount of work being done by women and minority lawyers.

Most firms complied with the request, but the system was only as good as it was current. Staying updated proved difficult, because more than 900 firms reported the requested information. Also, unless the data submitted by the firms exactly matched that in the billing database, inaccurate reports resulted. Despite these technical problems, GM did see an increase in the utilization of both minority and women lawyers in its legal matters. However, these data were never fully validated due to data compatibility issues.

In 1998, Gottschalk directed the company's legal staff to upgrade its information management systems, including those used to monitor outside counsel billings. In order to be paid for legal work under the new system, GM counsel complete timekeeper forms for each legal matter. The information discloses, among other things, the gender and ethnic background of each professional submitting a form. Each professional is assigned a unique timekeeper identification code, which is stored in the outside counsel database with all billing information submitted by each firm. Reports are able to identify who is actually doing the work or how much work a particular person is doing.
The ability to measure the amount of work done by women and minorities, therefore, has been incorporated into the data collection system; it is part of the mainstream of data about each firm compiled and analyzed in-house. The report is used to track the use of minorities and women by all outside counsel. Unlike the company's earlier system of the 1990s, for which diversity reporting had to be compiled in a separate set of reports, the current system incorporates all aspects of the reporting.

Many of GM's relationships with outside counsel currently are under review as a result of a mandate to significantly reduce legal expenses this year. Diversity is a critical element in determining whether a firm will gain or retain the company's business. The database information will help in making these determinations.

In addition, GM now accepts competitive bids on some legal work-again, to help reduce costs. The requests-for-proposal used in these competitive procurements routinely state that utilization of a diverse workforce is required. Recently, a firm won a national contract on the basis of diversity although others, including one of GM's leading outside counsel, had submitted similar financial proposals. The firm's winning submission—made by a minority-led lawyer—listed the largest number of minority and women lawyers who would perform the legal work.

The database also details which lawyer on the GM legal staff was responsible for retaining each firm and, within that firm, each lawyer. The diversity report thus can also be used to identify the lawyers on GM's legal staff who utilize minority and women lawyers—as well as those who neglect this priority. GM's performance management process requires each legal staff lawyer to come to an agreement with management on goals and objectives for the year, which enables the company to specify diversity within lawyer's objectives.

GM's experience in the 1990s demonstrated that such dual monitoring is a way to keep everyone, in- and outside the company, focused on diversity. The company is confident that the new system will be more effective in achieving its goals. Many corporations want to increase opportunities for minorities and women in the legal profession. Yet the exigencies of hiring counsel—combined with the imperative to reduce costs that faces many corporate legal departments—could leave diversity as a distant goal unless the corporation keeps it in the forefront.

GM has committed to diversity by firmly establishing it as one of the qualifications for a firm to receive its business. By continuing to place diversity in the mainstream, GM keeps the focus on that goal for all outside counsel.

color="#990000">E. Christopher Johnson, Jr., is assistant general counsel, global policy and planning, office of general counsel at General Motors. The author gratefully acknowledges the contributions and assistance of GM staff attorneys Charles Fairfax and Damon White in the preparation of this article.

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