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Legal Department (aka Clients) Efforts Designed to Drive Outside Counsel Diversity

The following list of activities that legal departments are undertaking to push for greater law firm diversity is curated from public sources, mostly news articles and conferences.  If your company would like to update or correct its listing, or add an initiative to the list, please contact Lisa Kirby, Chief Intel and Knowledge Sharing Officer, at Lisa@diversitylab.com.  

For additional ideas on effective ways that legal departments can collaborate and partner with law firms on diversity and inclusion efforts, please refer to “Strategies & Tactics For In-House Legal Departments to Improve Outside Counsel Diversity” that was generated by Diversity Lab and General Counsel for Law Firm Diversity.

Diversity Incentives/Requirements:

• Facebook: As of 2017, Facebook requires outside counsel to field teams with at least 33% women and ethnic minorities and show they are actively creating “clear and measurable leadership opportunities for women and minorities.” Those opportunities include, for example, serving as client relationship managers and representing Facebook in the courtroom.
• HP: Company will withhold up to 10% of bills from firms that do not meet or exceed HP’s diverse staffing requirements. To avoid this potential fee cut, firms must have at least one diverse firm relationship partner or at least one woman and one racially/ethnically diverse lawyer, each performing or managing at least 10% of the billable hours worked on HP matters.
• Macy’s: Sets diversity objectives for each outside firm and reduces bonuses for failures to meet goals. Failure to meet goals also will result in reduced future work for the firm.
• MetLife: Outside counsel must “make sure that the junior diverse talent has sponsorship among the senior lawyers and that they get the best coaching and nurturing they can provide.” MetLife will evaluate the results in 2018; underperforming firms will then be required to work with the GC on an “accountability plan” going forward. They will then have six months to improve or lose their spot on the outside counsel list. (At least one person on each of the company’s outside legal teams will have to be a minority or female lawyer.)
• Microsoft: Microsoft offers 2% bonuses on the prior year’s fees to its premier provider firms if they meet diversity goals. Additional bonuses are on the table for firms that hit other benchmarks, such as partner and management committee diversity, diversity of relationship partners, and diversity of partners who billed for Microsoft matters as reflected in the number of hours. Over the seven years since rolling out this program, Microsoft has increased the diversity of its outside counsel teams by more than 15%.
• Xcel Energy: In 2017, the company eliminated its detailed outside counsel survey in favor of scoring and ranking its outside firms on several factors, including a demonstrated commitment to diversity and inclusion. In addition to reviewing diversity statistics, the department will assess whether diverse lawyers at its firms have access to meaningful opportunities. Firms can review the standings to see where they rank on each factor. Though the standings are anonymized for the nearly 30 firms on the list, Xcel’s legal group anticipates that the prospect of being ranked against their peers will motivate its lawyers to take the steps needed to move forward on diversity.
• Engage Excellence: The legal departments of DuPont, General Mills, Verizon, and Wal-Mart co-founded this program in 2014. Through Engage Excellence, these legal departments have committed a portion of their legal spend to hire ethnically diverse or LGBT outside lawyers to serve as lead counsel on select matters. They also require diverse teams to work on their outside legal matters and the law firms to certify that the diverse lead lawyer hired receives financial credit as originator of the matter. The goal is that half of the diverse/LGBT lawyers will be women.

“Next Generation” Programs to Connect In-House Counsel with Diverse Outside Counsel:

• 3M: 3M is hosting a career development and advancement program in 2017 for diverse partners from its preferred providers who are in line to become relationship partners in the near future.
• Bristol-Myers Squibb: Legal department lawyers mentor diverse lawyers from four of the company’s outside law firms for a period of one year. These lawyers are also provided with executive coaching and guaranteed work on at least one matter for Bristol-Myers Squibb during the year.
• Walmart Ready: In 2015, Walmart launched Walmart Ready, an outside counsel “onboarding” program. It was designed to educate women and diverse outside counsel about Walmart’s business, legal operations, and corporate culture, while affording them an opportunity to connect directly with in-house lawyers. Walmart has said the goal of the program is to ensure that the legal department is fully utilizing their diverse pool of available outside counsel and enabling them to be successful in handling Walmart matters. Within a few months after the initial onboarding session in 2015, over 25% of the firms that participated had received a legal assignment. The company held the second Walmart Ready event in September 2016.
• GE Capital Americas (GECA): Every two years, GECA GCs recommend diverse outside counsel, mostly diverse non-equity partners and associates from GECA approved firms, to participate in its Project HOLA program. Chosen outside lawyers are paired with in-house lawyers who volunteer to participate. The participating outside counsel have the opportunity to gain an insider view of GE’s businesses and its legal team.
• Verizon: As part of the law firm diversity incentive initiative, Engage Excellence, Verizon has co-hosted dozens of CLE programs throughout the country, giving needed subject-matter exposure of the diverse talent within their law firm population. Each of these CLEs are followed by a ‘meet & greet’ reception to further encourage relationship-building (and business development opportunities) between the corporate in-house teams and the external diverse lawyers.
• Mansfield Rule, Supported by 50+ Legal Departments: In mid-2017, more than 30 law firms signed on to pilot a version of the NFL’s Rooney Rule in the legal profession. Named after the first women admitted to a U.S. bar, the Mansfield Rule asks law firms to consider women and minority lawyers for at least 30% of their candidate pool for leadership and governance roles, equity partner promotions, and lateral hiring. More than 50 legal departments – including 3M, Workday, PNC, PepsiCo, Gap, Target, VMware, Facebook, Abercrombie & Fitch, Mastercard, American Express, Ford Motor Company, BASF, Salesforce, Google, Hewlett Packard Enterprise, and Charles Schwab – have agreed to support the law firms that meet or exceed the Mansfield Rule requirements by meeting and getting to know their newly promoted diverse partners.

In-House/Outside Counsel Fellowship Programs:

• The Leadership Council on Legal Diversity was founded in 2009 to create a more open and diverse legal profession. It now counts over 260 Chief Legal Officers/GCs of major corporations and managing partners of large law firms as members. LCLD’s signature programs, Pathfinders (for early career lawyers) and Fellows (more experienced lawyers), offer development opportunities, including networking, mentoring, and leadership training for participants, who are nominated by their companies or law firms. Programs are hosted and facilitated by in-house legal departments.
• 3M: Through the Twin Cities Diversity in Practice Summer Clerk Rotation, three law students spend part of the summer with a 3M Preferred Counsel Network Firm and the remaining time at 3M, where they are mentored and have the opportunity to observe the work of an in-house legal department at a large corporation.
• Eversource Energy: Eversource partners with Carmody Torrance Sandak & Hennessey LLP on a diversity fellowship. Fellows spend half of the summer at Eversource Energy Legal Department and the other half at Carmody Torrance Sandak & Hennessey, the largest law firm in Western Connecticut.
• GE: GE established the Denniston Fellowship in 2015 to hire diverse lawyers directly from law school. The Fellows work at GE for a year and then interview with the four law firms partnering with GE on this initiative. The firms do not have to commit in advance to hiring a Fellow, but they agree to interview them for an associate position and consider hiring them as their Fellowship concludes. They also invite the Fellow to participate in their first-year training programs. The first Denniston Fellow, after a year working in legal with GE’s Transportation division, accepted an associate position with Sidley Austin. Because she had spent time working on an international arbitration matter while at GE, the company ended up hiring Sidley to represent it on the matter once the Fellow had joined. The company’s goal is that, as the program expands, the Fellows will serve as a force to influence diversity in the legal profession and drive it forward. To further its inclusion goals, the company has deliberately sought Fellows from lower-tier schools as part of this initiative.

Knowledge Sharing:

• In May 2016, Walmart joined with Verizon to host the first ACC Chief Legal Officers Summit on Diversity and Inclusion to share best practices and innovations for retaining and advancing women and attorneys of color within law firms and corporate law departments. They invited selected law firm managing partners to join the discussion and advise how law departments as clients can have more of an impact on diversifying majority-owned law firms, particularly at the partner and equity partner ranks.

Evaluations of Outside Counsel Diversity:

• Accenture: Accenture sends annual surveys and requests quarterly updates from its firms. It tracks the diversity of the firm as a whole and closely monitors the diversity of the teams working on its matters.
• AT&T: AT&T asks the approximately 50 firms in its Preferred Counsel Program to complete an annual survey. The company holds back some compensation for outside firms, and the survey — including the diversity element of the survey — is a factor in the decision whether to hold back funds.
• Bank of America Merrill Lynch: For over 10 years, Bank of America’s legal department has measured how women and minorities are staffed on its matters. In 2012, the Bank expanded its metrics, and it now obtains granular data on staffing, work allocation, and fee distribution. The analysis is multidimensional, looking at number of timekeepers, dollar amounts spent, seniority, and distribution by gender, ethnicity, sexual orientation, and disability. Bank of America’s legal department not only captures what percentage of their work is being handled by diverse attorneys but also tracks the attorney level to determine whether there are retention or advancement issues for diverse or women lawyers.
• BMO: In 2013, the first year BMO requested diversity metrics, 34% of those that responded to the questionnaire collected and disclosed diversity metrics; as of 2014, 97% of firms who responded to the questionnaire now collect and disclose diversity metrics.
• Home Depot: In an annual RFP to outside firms, the company requests diversity information, including asking firms to explain how they put diversity top of mind. It examines the following in evaluating firms: whether the firms are looking at diverse slates when they are filling positions; that the firms ensure Home Depot is introduced to diverse attorneys as they decide how to staff company matters; that they make sure they are exposing the company to the full range of their talent; that they promote diverse lawyers; and that they generally support the company’s efforts to ensure it has diverse suppliers. To the extent outside firms are using local counsel, court reporters, and other vendors, Home Depot expects firms to be mindful of the need to look broadly to bring in the best talent.
• ITW: ITW makes a deliberate effort to funnel work to minority client relationship managers at outside firms.
• MassMutual: Building on its longstanding diversity survey, MassMutual now asks firms for additional data on how the firm itself is structured as an equity partnership with respect to diversity. In response to the survey data, the company sends more work to firms that are meeting its diversity objectives and less to those that are not. GC Mark Roellig meets in person with the company’s primary outside firms on a yearly basis to discuss how things are going, how matters are being staffed, how the firm is doing on diversity, and how the department and the firm can work together to improve.
• Morgan Stanley: Morgan Stanley asks law firms to submit a survey that it also uses as a basis for selecting a diversity award winner.
• NBCUniversal: NBCUniversal’s legal team generates diversity statistics on pending matters on a quarterly basis, not only to hold law firms accountable, but also to hold senior in-house lawyers accountable to corporate diversity goals.
• Northeastern Utilities: NU distributes an outside counsel diversity policy statement that communicates the company’s expectations concerning diversity from its outside counsel. This includes requiring outside firms to provide periodic reports that state: (1) the number of diverse attorneys, paralegals, and staff working on NU matters and the hours they billed; (2) a description of steps taken to enhance diversity within the firm; (3) a description of efforts made within the profession and community to further diversity; and (4) measurable successes in achieving supplier diversity and diversity among temporary employees.
  
• PayPal: CLO Louise Pentland expects outside counsel to field diverse teams, only hiring firms and keeping them if they remain focused on diversity. She has said she believes this leads to the best results for the company. She takes steps to personally evaluate the quality of the interactions between lawyers on an outside counsel team to better understand the dynamics in play.
• PepsiCo: PepsiCo awards points to its outside counsel based on their responses to a robust diversity survey. Last year, it recognized the top 10 scoring firms for their diversity efforts and gave them opportunities to expand their relationship with the company. The survey asks for information about the diversity profile of firms’ US-based attorneys, the diversity of their partnership broken down by equity and non-equity partners, who the PepsiCo relationship partner was, who was assigned to PepsiCo partners, and similar data. The survey also includes narrative questions to probe the substance of firms’ diversity recruitment and retention initiatives. Firms interested in pitching for new matters are also asked to complete the diversity survey.
• Salesforce: Salesforce GC Amy Weaver believes the most effective way to influence outside counsel diversity is to take a collaborative approach. For example, after a meeting with a non-diverse group of lawyers from one firm, she called the managing partner and they had a productive discussion regarding how they could work together to improve their recruitment of women lawyers.
• Shell Oil: Shell Legal requires its strategic partner firms to complete its Strategic Partner Diversity & Inclusiveness Survey bi-annually and grades the firms’ performances based on responses.
• Telstra Australia: Telstra requires the inclusion of at least one woman lawyer on its outside counsel teams. It also asks that firms report every six months on the number of matters in which counsel has been retained, the number of male and female lawyers retained, and the amounts paid to male and female lawyers. In addition, it requests a summary of the policies and practices that the firm adopts internally to encourage equitable briefing and what steps the firm takes to ensure that they identify and actively consider woman lawyers in representing clients. To measure effectiveness, Telstra also requests feedback from the outside firm regarding the extent to which these work-practices support or discourage gender equality and more general diversity in their firm.
• VMWare: VMware’s legal team asks partner firms for annual reports on diversity efforts and scores diversity as part of its vendor evaluation processes.
• Walmart: Walmart legal department’s program seeking and measuring diversity and inclusion among its law firms has been in place for over 11 years. In addition to investing in diversity, the company requires outside counsel to promote and support balanced work arrangements. To measure the effectiveness of its programs, the company uses data and analytics to capture indicators such as legal spend with women and diverse attorneys. Walmart also expects its firms to demonstrate their commitment to diversity and inclusion and actively develop women and diverse attorneys for advancement within their firms. To ensure this is being done, it reviews data including overall law firm demographics, demographics of the firm’s Walmart team, and hours billed by diverse attorneys.

Diversity Awards to Outside Counsel:

• AT&T: Launched in 2011, the AT&T Legal Department Diversity Award annually recognizes one small, one medium, and one large firm nationally for their activities and accomplishments promoting diversity and inclusion in the legal profession.
• Bank of America Merrill Lynch: Established in 2013 at the request of Global General Counsel Gary Lynch, Bank of America’s diversity award recognizes firms that partner with the bank on diversity and inclusion related issues, provide the bank with diverse legal support, and promote diversity initiatives within their own communities. The winner is selected based upon specific criteria, including:
  • internal culture for recruitment, retention, mentoring, and promoting diverse attorneys;
  • external outreach to the community, including work with affinity groups; and
  • the firm’s direct partnership with the Bank to further its diversity goals and mission.
  • Important Note:  Poor performers are not off the hook once not selected for the award. The bank addresses progress on diversity in each firm’s annual performance review. Bank of America works collaboratively with firms to develop performance improvement initiatives when appropriate. The bank has found that firms are motivated to improve their standing when they learn they are falling behind their peers on diversity metrics.

• Coca-Cola: Beginning in 2007, the Coca- Cola Legal Division has bestowed the Living the Values Award to the law firm that best demonstrates its commitment to diversity with creative and innovative solutions that advance company goals. These solutions may include strides in hiring, retention, and promotion of diverse lawyers, initiatives that add value to its internal efforts, creative partnering arrangements with minority and women owned firms, and pipeline/community outreach initiatives.
• Dell: Since 2011, Dell’s Legal Department has honored outside law firms making strides in diversity with the Dell Legal Diversity Award.
• Morgan Stanley: Law firms vying for Morgan Stanley’s Leadership and Excellence in Diversity and Inclusion award complete a detailed survey regarding their commitment to diversity. Four finalists are then selected for in-depth interviews.

ABA Resolution 113 General Counsel Pledge:

• Legal departments joining the pledge certify to: support Resolution 113; ask their existing outside counsel, and any prospective outside counsel, to complete the ABA Resolution 113 Model Survey; and use the Model Survey data as a factor in determining what firms to retain or terminate in providing legal service to their companies. https://www.americanbar.org/diversity-portal/diversity-inclusion-360-commission/diversity-survey.html

Pipeline Partnerships:

• BMO/Dentons: Since 2012, BMO’s legal and compliance group has partnered with Dentons on the Law in Action Within Schools initiative focused on providing academic support and extracurricular activities to high school students that face challenges to academic success.

NAMWOLF and Women/Minority-Owned Firms:

• NAMWOLF Inclusion Initiative
• Coca-Cola: The company’s Straight Talk program, now in its sixth consecutive year, invites principals of minority and women-owned law firms on-site. Coca-Cola provides a one-day orientation to the company and facilitates introductions to employees, with a goal of making the firms part of the delivery of their outside counsel legal needs. To date, Coke’s Legal Division utilizes between 15-20 small, minority, and women-owned firms to support the division in matters spanning from intellectual property, to litigation, transactional work, and other projects.
• Shell Oil The legal department periodically hosts Minority and Women-Owned Business Enterprise Round Robin events where Shell in-house counsel meet and interview minority and women-owned outside law firms.

In-House Diversity Pipeline Programs:

• PepsiCo: The summer fellowship program was named in honor of former General Counsel Larry Thompson, who has been a steadfast champion of diversity and inclusion in the legal profession and a mentor to diverse attorneys. The program is designed to identify talented diverse law students and show them what an in-house corporate law career would look like.
• Walmart: Recently announced a three-year, $150,000 commitment to support the University of Arkansas Law School’s summer prelaw program for diverse college students. As part of that program, the students spend a day at Walmart’s Home Office learning about the legal department and the benefits a legal degree can produce.
• MassMutual: MassMutual’s 1L Diversity Clerkship Program is designed to provide students with valuable, career-enhancing experiences by allowing them to work alongside a seasoned attorney. It is a paid internship that includes subsidized temporary housing during the program.
• Microsoft: In 2015, CELA, working with former Washington Governor Christine Gregoire and the University of Washington Law School, assembled a group of law firms and in-house legal departments in Seattle to launch a fellowship program for law students. Ten “Gregoire Fellows” are selected each year from UW’s class of admitted students. Each receives a substantial scholarship, year-round mentors, and a guaranteed internship for their 1L summer with one of the supporting partners.
• ITW: The legal department at ITW collaborates with the Legal Education for the Advancement of Diversity and Scholarship Fellowship Program to host third-year law students of diverse
• PNC: In 2016, the legal department’s Diversity & Inclusion Council partnered for the first time with Pittsburgh-based Extra Mile Education Foundation to mentor and provide career perspectives to a class of eighth-graders from a local low-income community. This initiative aims to get teenagers interested in law and financial services. It is also a way for students to see the diversity of professionals at PNC.
• Adobe: Participates in a summer immersion program with Girls Who Code.
• Merck and McDonald’s: Participate in Street Law, a program to educate disadvantaged youth about the law.

Updated 7-8-17