Law firms lack of diversity

An article in the Wall Street Journal by Sara Randazzo (“Law Firms’ Clients Want Proof of Diversity”), reports that some companies, such as Microsoft and Intel, are asking their outside law firms to detail how many diverse lawyers they employ and whether those lawyers handle meaningful work.  The numbers are not good, showing little progress in law firms in backing up their talk with action.  For example, some of the nation’s largest firms have no black partners;  Cravath, a firm with 500 lawyers, has had only one black partner in its entire history.  

But things may change now.  Companies are tying their financial arrangements with law firms to the firms’ results.  Novartis, for example, withholds 15% of legal fees if diversity goals are not met. The Novartis chief legal officer makes an important point: “What gets done is what gets rewarded.”

A couple lessons from this.  One is that incentives matter.  When incentives are involved, people go from making excuses to finding ways to accomplish things. It is true in this area, just as it is true in compliance efforts in general. (see Murphy, “Using Incentives in Your Compliance and Ethics Program” (SCCE; 2012),  https://assets.hcca-info.org/Portals/0/PDFs/Resources/library/814_0_IncentivesCEProgram-Murphy.pdf  ) 

A second is that law firms often see themselves as “different” from other groups.  Thus, law firms still do not typically have effective (or any) compliance programs, lack compliance officers, and do not even try to follow the Sentencing Guidelines standards.  So when it comes to diversity they need to move from talking to figuring out what will work.