With International Women’s Day celebrated across the globe on Wednesday, the legal press has been awash with articles, interviews and opinion pieces about how gender equality can be increased in law.
The majority of these profiled the women who had made it to the top, as practice area leaders or managing partners, but did not address the things that are currently being done to move the needle on gender diversity.
Consistent with this year’s IWD theme, being Bold for Change, we consider how clients are making a stand for greater equality in the legal sector, and the actions they are taking to truly drive the greatest change for women – and other minority groups – in the firms that they instruct.
Legal supplier diversity: The approaches of Microsoft, HP and PayPal
Leading the charge in this respect is Microsoft with its Law Firm Diversity Program. Launched in 2008, the program allows Microsoft’s panel firms the opportunity to earn an annual bonus if they reach a quantifiable diversity goal in relation to the firm’s leadership.
This works by allotting ‘points’ to partner firms for progress in getting women or minority groups into law firm management, leading the firm’s relationship with Microsoft or leading work on Microsoft’s legal matters, and equate to a bonus of 0.5% to 2% on the work the firm had completed that year.
To date, this program has been a resounding success, with over 80% of the participating law firms earning their bonuses annually. Since the program was launched, the percentage of hours worked by diverse lawyers on Microsoft matters has increased from 33.6 percent to 48.2 percent, with Microsoft’s own legal department becoming more diverse over this time period.
There is also circumstantial proof that such an increase in supplier diversity has strengthened Microsoft’s track record, with its litigation teams winning 89 cases and losing only six in the past three years, reducing the corporation’s settlement costs and legal fees substantially.
On the other hand, HP has taken a different approach, announcing in February that it would withhold 10% of invoiced fees from firms who fail to meet or exceed diversity requirements.
The policy states that firms must field “at least one diverse firm relationship partner, regularly engaged with HP on billing and staffing issues” or “at least one woman and one racially/ethnically diverse attorney, each performing or managing at least 10% of the billable hours worked on HP matters”. This applies to all US-based law firms which HP works with, and is to be implemented from 2019 to give partner firms sufficient time to implement the necessary changes.
Finally, PayPal has conducted a wholescale review of the law firms it uses to gather information on the diversity of their workforce, with a particular focus on whether they are supporting up-and-coming female and minority lawyers.
Firms that are unable to show evidence of “meaningful progress in a reasonable time” will not be used by PayPal in future, according to General Counsel Louise Pentland, with the organisation committing to favour work with law firms who genuinely support and advocate diversity.
For PayPal, this review acts as a starting point in gauging whether their partner firms are willing to make changes, especially in ensuring a succession pipeline of women and people of different ethnicities.
What does this tell us?
From the above examples, there are a number of factors that remain consistent. Each policy looks to increase the representation of women within leadership and/or at relationship partner level, to create a sustainable pipeline of change within the law firms with which they operate.
Given the imbalance of diversity within law firm leadership ranks, compared with the composition of firms as a whole, these clients have recognised that change is unlikely to be homegrown and have endeavoured to incentivise it.
Although the success of the policies cannot be compared directly, with the initiatives at HP and PayPal still very much in their infancy, the overriding factor in the success at Microsoft can be attributed to time and commitment: policies such as these, very much like internal law firm diversity and inclusion initiatives, need time to take hold and be constantly monitored and reviewed to produce results.
Law firms ‘success’ in adhering to these policies also relies critically on measurement, and the ability for them to accurately measure the diversity demographics of their own staff. Encouragingly, the polices at Microsoft and PayPal look to assess firms relatively, and award firms for making improvements from a predetermined starting point, rather than set standard for everyone. This equally awards both firms with established D&I policies, as well as those more recently embarking out on them.
Conclusion
In short, it is imperative that law firms match the qualities and values of the clients that they are representing. In a competitive legal market, both in the US and UK, with no shortage of talent, when faced with two teams that produce equal quality of work, why wouldn’t GC’s choose to work with teams they feel represent them better and have been shown by research to be more effective?
With large corporate clients pushing the need for action, the gauntlet now lies with law firm management to be bold and ensure greater gender equality within their firms.
To learn more about our gender initiative at Fides Search, and receive a copy of our report A Path to Parity: Reassessing Gender Balance within UK Law Firms, please contact eclews@fidessearch.com.