Client Loyalty Post #21: Are you delivering on diversity the way your clients expect you to?

This is the twenty first in our bi-weekly series of posts that provide excerpts and tips from our recently published book, Building Enduring Client Loyalty: A Guide for Lawyers and Their Firms. Click here to save 15%. Enter code ‘AUTHBEC’ at the checkout.

The legal industry, like many others including financial services, accounting, and engineering, traditionally have been white, male-dominated fields.  While many firms have focused on and made progress in hiring, retaining and advancing women into leadership roles in firms, the numbers are still strikingly low and even more so when one looks at the number of equity partners and top rainmakers in firms.

The percentage of other diverse attorneys – those who are of color or LGTBQ+ status – is dramatically lower even than women in law.  Even when firms are able to recruit diverse lawyers, they often see higher rates of attrition.

Diversity as a Component of Client Loyalty

Clients are again trying to assert themselves with law firms to demand greater effort and transparency around their efforts to hire, retain and assign diverse lawyers to their matters.  In 2020 after the George Floyd protests, 127 law firms formed the Law Firm Antiracism Alliance.  Too often these efforts have enabled in-house departments and law firms to “check off the box” and pay lip service to trying to improve diversity and equity without being held accountable, but some companies really are trying to change the status quo by demanding more diversity and equity.  These companies have mandated diversity as an important criteria of loyalty:

• Intel initiated its IntelRule which is described on their website: “Beginning Jan. 1, 2021, Intel will not retain or use outside law firms in the U.S. that are average or below average on diversity. Firms are eligible to do legal work for Intel only if, as of that date and thereafter, they meet two diversity criteria: at least 21% of the firm’s U.S. equity partners are women and at least 10% of the firm’s U.S. equity partners are underrepresented minorities (which, for this purpose, we define as equity partners whose race is other than full white/Caucasian, and partners who have self-identified as LBGTQ+, disabled or as veterans).”
• Microsoft designed a program to support and reward its strategic partner law firms using key metrics measuring diversity at the firm, diversity in leadership positions and diversity on their legal matters. It now awards a 2% bonus to firms that meet specific diversity metrics.
• Facebook instituted a requirement in 2017 that their outside legal teams must be comprised of at least 33% women and ethnic minorities and demonstrate specific and measurable opportunities for leadership.
• HP initiated a 10% hold-back of fees if its firms didn’t have at least one diverse relationship partner or attorney billing comprising at least 10% of the billing on their matters.
• MetLife requires its firms to provide sponsorship for its diverse talent; firms are measured annually for improvements and if placed on an “accountability” alert, must work with the General Counsel on an improvement plan or risk losing a place on their preferred provider panel.
• AT&T also holds back a portion of a firm’s fees and it is paid out only after data in an annual survey confirms the firm has improved in its metrics
• Xcel Energy has developed a preferred panel firm peer ranking matrix. While the firms are not identified, each panel firm can see how it compares to its peers relative to diversity criteria.
• Engage Excellence is a program co-founded by DuPont, General Mills, Verizon and Wal-Mart in which the legal departments commit a percentage of their outside legal spend to firms that demonstrate diverse teams that serve as lead counsel on their matters.

A number of other in-house departments are strengthening their resolve to hold law firms accountable for progress in building and supporting diverse legal teams.  This commitment and the resulting requirements of law firms who serve these companies is likely to serve as the starting point for law firms that want to earn client loyalty in the future.

RainMaking Oasis provides consulting and coaching services to law firms and lawyers in the areas of client loyalty and development, business development and growth strategy, collaboration and innovation and succession planning. Please contact Susan Duncan at [email protected].