Diversity - Law Firms Paradigm Shifts: Changes In The Structure And Diversity Of Corporate Law Firms

Friday, April 1, 2005 - 01:00

Introduction

In case you hadn't noticed, the paradigm for large corporate law firms has changed. Many say this "paradigm shift" came about as a result of new challenges facing today's legal profession (e.g., advances in new technology, more sophisticated purchasers of legal services, globalization of the practice of law, etc.). Whatever the reasons for this shift, one thing is certain: in order for the legal profession to continue to thrive and serve the needs of an ever changing market, the structure and organization of large law firms must change. And as law firms change, they would do well to take advantage of new and promising opportunities that will accompany change - opportunities such as diversity.

"Stuck In Neutral"

For decades, the legal profession has acknowledged the lack of diversity within its ranks. In the 1970s, for example, there were only 2,000 African-American lawyers in the entire United States.1 Although African-American attorneys now account for approximately 40,000 of the nearly one million lawyers in the United States in 2003,2 with respect to the number of African-American attorneys hired by top, large corporate law firms, the change has been far less dramatic. It seems, indeed, that large corporate firms, collectively, have been stuck in neutral. In 2004, for example, attorneys of color represented only 4.32% of all partners and 15.06% of all associates at all law firms nationwide.3 This figure has not changed much from 2000 when minorities made up 3.25% of all partners and 12.06% of all associates,4 from 1998 when minorities made up 3.2% of all partners and 13% of all associates,5 or from 1993 (the first year that the National Association for Law Placement ("NALP") began tracking this data) when attorneys of color represented 2.55% of all partners.6

Though in-house corporate counsel have led the charge for increasing minority representation in the law firms that handle their work, the representation of attorneys of color among the corporate counsel ranks virtually mirrors the numbers at large law firms. Thus, in 2004, minorities held 5.2% of all corporate general counsel positions among Fortune 500 companies. Among Fortune 1000 companies, only 4.3% of corporate general counsels were minorities. Overall, according to the Association of Corporate Counsel's 2001 Census of U.S. counsel, attorneys of color made up 12.5% - less than half their representation in the U.S. population (30%). A 1999 Chicago Lawyer survey of 13 large Illinois-based corporations found that minorities represented, on average, 14.1% of corporate legal staffs. This ranged from companies having upwards of 25% (e.g., FMC Corp., Abbott Labs) to one company having 0% minority attorneys on staff (i.e., no attorneys of color) - that company shall remain anonymous.

"Getting Into Gear"

Those of us interested in greater diversity in the profession and in our law firms have been saying for years that "something has got to give." So far, in large measure, not much has. Hope, however, is not lost. The paradigm shift underway in the profession presents a new and greater opportunity for substantial progress. Why? Because diversity is becoming more a business necessity than just a nicety.

Today, clients over which corporate firms clamor (Sara Lee, BellSouth, GE, etc.) have not only asked their outside counsel about their commitment to - and progress towards - diversity, but also have challenged their outside counsel to put greater effort into achieving diversity. The Diversity Statement of Principle developed in 1998 by Charles Morgan of BellSouth and signed by over 300 General Counsel around the country was a direct challenge to law firms to invest more in diversity initiatives.

Similarly, the federal government has indicated its disappointment with, and likely enforcement action against, law firm hiring practices. The Equal Employment Opportunity Commission's ("EEOC") 2003 report entitled Diversity in Law Firms , serves as notice that the EEOC is expecting law firms to meaningfully address diversity issues. As the EEOC noted in its report, diversity data on "legal professionals in private law firms has several broad implications for civil rights enforcement."7 And, as recent EEOC-led litigation against prominent law firms shows, the EEOC is not averse to bringing suit against law firms for discriminatory practices. On January 13, 2005, the EEOC filed a class action suit against the Chicago-based international law firm Sidley Austin Brown & Wood for alleged violations of the Age Discrimination in Employment Act.8

Knowing The "Bumps In The Road"

Commentators, members of the profession, and even legal academics have begun zeroing in on the issue of diversity in large law firms and have done an excellent job identifying the major obstacles. For example, David B. Wilkins, a Harvard Law School professor and an expert on the legal profession, has written extensively on the subject of diversity within corporate law firms. In a seminal paper published in 1996, Professor Wilkins cited the five (5) top reasons law firms have failed to diversify:9

1. Improper Structure: Traditional law firm structure ignores the problems facing minority attorneys (e.g., access to assignments and training). Junior minority attorneys have few champions - or mentors - given the sparsity of minorities in the upper escelons of law firms. This lack of mentoring poses a barrier to real diversity.

2. Incorrect Goals: In the past, large law firms identified recruitment of minority attorneys as their main goal. The belief was that once a sufficient number of minority attorneys were with a firm, diversity would be achieved. Recruitment, however, is but one part of the diversity equation and unless the remaining parts are addressed the goal will not be achieved. In short, "critical mass" is not the cure when lack of diversity ails a law firm.

3. One Size Fits All Mentality: Unfortunately, law firms lag far behind corporations and other businesses in recognizing that different employees have different needs. Law firms' failure to recognize the unique needs and challenges of minority attorneys have hindered their diversity efforts.

4. Incorrect Reasons for Diversity: For some law firms (certainly fewer today than in years past), diversity initiatives are only adopted if such initiatives are seen to improve a firm's financial success. Law firms' failure to recognize the intangible benefits that diversity achieves has blinded them from focusing attention on diversity issues.

5. Superficial Solutions: Firms that have attempted to address diversity have used methods that have been superficial and short-lived. Instead of instituting organizational and/or structural changes, law firms have relied more on cosmetic changes, such as adoption of diversity mission statements. These, of course, are steps in the right direction, but by themselves, they lead nowhere.10

"Steering Clear" Of The MistakesOf The Past

In the new paradigm, large law firms will not make the mistakes made by their predecessors. In the new paradigm, law firms will change their approaches to diversity. Specifically, they will mix the following ingredients into their respective diversity strategies:

1. Leadership Buy-in and Development of a Business Plan for Diversity: Law firms have traditionally been governed by a managing partner (e.g., a lawyer within the firm who devotes all, or a portion, of his or her time to the firm's administrative functions). However, firms have not always placed responsibility for their diversity initiatives in the hands of a management partner. Rather, they have delegated that responsibility to a minority partner, associate or "diversity committee." This strategy increases the likelihood that diversity will be placed on the back burner of the firm's yearly goals and initiatives. Only when the firm's leadership "buys into" its diversity program, does the program have a real chance of success. Consequently, a firm's diversity goals must be championed and directed by a senior, managing partner who will not only be held accountable for the success of those initiatives but who will have the necessary authority and resources to implement the firm-wide program. In other words, firms must approach diversity like they approach other important firm initiatives; that is, by developing a business plan and devoting the resources necessary to put the plan into effect.

2. Identification of Diversity Goals versus Diversity Statistics: As previously noted, the belief that simply hiring a sufficient number of minority attorneys creates diversity is too simplistic and has proven to be wrong. As statistics from 1993 to 2004 amply demonstrate, recruiting a specific percentage of minority attorneys is not enough - that approach has led to a net increase of only 1.12% in the number of minority partners at law firms. Thus, law firms must shift away from focusing on recruiting statistics and place greater emphasis on retention initiatives.

3. Diversifying Diversity: Frequently, a law firm's diversity committee, if one exists, is charged with the task of improving the firm's representation of minorities, women, gays and lesbians and those with disabilities. While there are many similarities among these groups, there also are many differences. Part of the retooling necessary to effectively improve diversity in law firms is devising a means of identifying and understanding the distinct features of various diverse groups, and addressing separately the unique issues affecting them. This may require the formation of a number of sub-diversity committees akin to the legal specialty areas found in large firms.

4. Diversity as an Element of the Firm's Business Model: As competition for legal services increases, another of the challenges facing law firms is finding ways to distinguish themselves in the marketplace. Clients select law firms who are best able to demonstrate and articulate their ability to provide specialized and value-added service. Developing a business strategy that fundamentally incorporates diversity as part of the law firm's structure and organization and highlights it as one of the firm's key strengths, is a sure way in which firms can distinguish themselves. Clients who care about diversity select firms whose concern about diversity mirrors their own. Thus, rather than responding to client-initiated diversity discussions, law firms should initiate such conversations and coordinate their diversity initiatives to support those of their clients.

5. Internal Diversity Infra-Structures: Traditionally, law firm diversity committees have been composed of firm attorneys, both minority and non-minority, male and female, who, in addition to their billable hours requirements, are also asked to assist with diversity issues. While their input is useful, this may not be the most effective use of attorney time. Firms should therefore consider utilizing the services of professional diversity directors, whose training and experience may be of benefit, and who can take on the important task of monitoring the implementation, evaluation and follow-up of the firm's diversity program.

Conclusion

Law firms are at a pivotal point in their collective development. The traditional law firm model is shifting. The firms that keep pace with this change will be the ones that excel in the future legal environment. And those that are able to integrate diversity as a fundamental aspect of their business strategy will lead the profession.

1 Zac Williams, Blacks Used By Law Firms; Prof. Says, The Daily Free Press, Feb. 14, 2003
2 Id.
3 Nat'l Assoc. of Law Placement, National Directory of Legal Employers, Women and Attorneys of Color at Law Firms (2004).
4 Scott Mitchell, Law Firm Diversity Best Practice, www.MCCA.com.
5 Id.
6 Nat'l Assoc. of Law Placement, National Directory of Legal Employers, Women and Attorneys of Color at Law Firms (1993).
7 Diversity in Law Firms, The U.S. Equal Opportunity Commission (2003).
8 EEOC Charges Sidley & Austin With Age Discrimination, www.eeoc.gov/press/1-13-05.html.
9 David B. Wilkins & G. Mitu Gulati, Why Are There So Few Blacks In Corporate Law Firms? An Institutional Analysis, 84 Cal. L. Rev. 493 (1996); Scott Mitchell, Law Firm Best Practices, www.MCCA.com.
10 Another commentator, Scott Mitchell, cites other impediments to effective diversity programs:


  • Myth of meritocracy: Assuming that an associate's success is a function of his or her innate abilities without acknowledging the impact of informal networks that favor non-minority attorneys;

  • Negative stereotypes: Assumptions about the ability and work ethic of minority attorneys can become self-fulfilling prophecies; and

  • Limited Recruitment: Emphasis on entry-level recruitment instead of seeking lateral minority attorneys and partners who can serve as effective role models and mentors to more junior minority associates.
  • Scott Mitchell, MCCA Presents its Recent Research Findings: Law firm diversity, Diversity and The Bar (Dec. 2001).

    Gerald L. Pauling II is a Partner in the Labor and Employment Practice Group of Seyfarth Shaw LLP in Chicago, Illinois. Karen K. Harris is Of Counsel in the Business Practice Group of Seyfarth Shaw LLP in Chicago, Illinois.

    Please email the authors at gpauling@seyfarth.com or kharris@seyfarth.com with questions about this article.