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August 12, 2008
The issue of diversity in the pool of outside counsel hired by American corporations has probably never received more attention than it has in recent years. There is increasing pressure on the legal profession to become more diverse. Yes, corporations really mean it when they request diverse outside counsel. Probably for the first time in history, law firms are frantic to heed the call.
With the increasing diversity of the national population and globalization of America’s corporations, companies are striving to increase their competitiveness by increasing the diversity of their workforce and that of their suppliers. Both of these factors have resulted in a spotlight being placed on the extent to which women and minority counsel provide legal services to corporate America. A myriad of diversity programs dot the legal landscape as firms and corporations move past acknowledgement that diversity is essential to face the age-old challenge of how to effectively achieve it. One issue raised by the challenge to achieve diversity is whether diversity objectives can be best met by the utilization of women and minority counsel, regardless of the size or composition of the law firm, or from retaining women- and minority-owned law firms. This article presents the case for using both approaches to achieve the goal of diversifying outside counsel.
We will first present some of the current statistics on diversity in the legal profession and report on recent efforts by American businesses to increase this diversity. We will then discuss the particular advantages of utilizing women- and minority-owned law firms as well as some of the challenges these law firms confront. We will close with some suggestions on how women- and minority-owned law firms can best position themselves to succeed and offer a brief profile of one particularly successful women-owned law firm with a significant minority representation, San Diego’s Wilson, Petty, Kosmo & Turner, LLP.
Given the focus on outside counsel retention, this article does not include a discussion of the serious “pipeline” issues that contribute to the diversity problems in the legal profession. The challenges resulting from pipeline issues have led General Motors Corporation, the American Bar Association, and others to institute a number of remedial programs.
The (Lack of) Diversity in the Legal Profession: Corporate America Demands Change
While we have all heard the statistics before, they bear repeating. The most commonly-cited U.S. Census data is that more than 30 percent of Americans are members of minority groups and more than half of the population is female. Statisticians currently predict that more than half of all Americans will be people of color by 2050. Despite this rich national diversity, according to the U.S. Bureau of Labor Statistics and the American Bar Association, the American legal profession is close to 90 percent white and 70 percent male. Indeed, in 2004, the American Bar Association’s Commission on Race and Ethnic Diversity described the legal profession as one of the least integrated of all professions in the United States. The Commission reported that total minority representation among attorneys was 9.7 percent. In comparison, minority representation among physicians, accountants, and college and university faculty was 24.6, 20.8, and 18.2 percent respectively.
Minority and female representation in leadership positions in major law firms is even lower. The National Association of Law Placement reports that, in 2007, 5.4 percent of the partners in major American law firms were minorities, and women made up just slightly more than 18 percent of the partners at these firms.
The aforementioned statistics demonstrate that the legal profession in general, and law firms even more so, are markedly less diverse than the nation as a whole, and they are also markedly less diverse than other professions. As Bob Osborne, General Motors’ current general counsel explained, “in a profession that has justice at its heart, there is a compelling basis for diversity as a core value. A lack of diversity in our own ranks raises the question of whether there are unfair barriers to entry into the profession.”
While law firms have been slow to change their appearance and have been slow to take on the look of America, in the last several years, corporate America has been providing significant motivation for law firms to change. American businesses have increasingly recognized that to become or remain competitive, their workforces must fully reflect the diversity of the customers they serve. As General Motors said in its brief to the United States Supreme Court supporting the University of Michigan in its affirmative action cases:
To succeed in this increasingly diverse environment, American businesses must select leaders who possess cross-cultural competence—the capacities to interact with and understand the experiences of, and multiplicity of perspectives held by, persons of different races, ethnicities and cultural histories. Numerous authorities concur that ‘[c]ross-cultural competence’ is ‘the most important new attribute for future effective performance in a global marketplace. (Brief of General Motors Corporation as Amicus Curiae in support of Respondents, 2002 U.S. Briefs 241 at *9)
Under the leadership of then-general counsel Tom Gottschalk, General Motors was the first corporation to file an amicus brief in support of the University of Michigan cases. Next, he helped to convince over 60 other companies to file briefs with the Court likewise supporting the importance of diversity. That corporate sentiment continues today, as noted by Gregory J. Kenney, counsel for ExxonMobil Corporation: “working to ensure that all segments of society share equally in the benefits of commerce, we have learned, is good business and comes with its own rewards.” The corporate emphasis on diversity is driven in large part by the desire to attract and retain the best talent, which is essential to attain and sustain a competitive advantage. To get the best talent, all segments of the population must be included and considered in hiring, retention, and promotion.
The issue of diversity in the legal profession is not new; it has been ongoing. Attorneys and corporations alike recognized the need for diversity in its outside counsel and initiated efforts to achieve it in the 1980s. One of the leaders was Harry Pearce who, in 1988, as general counsel of General Motors, wrote a letter to the company’s outside counsel encouraging them to increase their diversity. The American Bar Association created the Commission on Opportunities for Minorities in the Profession, which launched the Minority Counsel Demonstration Program in 1988. Likewise, the National Bar Association created what is now known as the Commercial Law Section with the goal of increasing diversity representation in corporate legal services.
With the passage of time, it has become more apparent that corporate America is making diversity a priority in its use of legal services. “Diversity in the Workplace: A Statement of Principle,” written in 1999 by then-general counsel of BellSouth, Charles Morgan, was perhaps one of the major, pioneering efforts by corporate America to encourage diversity among its legal services providers. The statement, signed by more than 500 chief legal officers of American businesses, expressed the corporations’ “strong commitment to the goal of diversity in the workplace” and emphasized the high value they placed on “the perspectives and varied experiences which are found only in a diverse workplace.” As a result, these corporations would “expect the law firms which represent our companies to work actively to promote diversity within their workplace.” Most significantly, these corporations advised outside law firms that “[i]n making our respective decisions concerning selection of outside counsel, we will give significant weight to a firm’s commitment and progress in this area.”
There were several initiatives undertaken to build on the statement. For example, in 2002, General Motors, Ford and Comerica convened the Minority Outside Counsel Networking Conference in Detroit to provide a forum for these corporations and minority counsel to meet to develop relationships.
In 2003, General Motors confirmed that diversity was one of the main criteria it sought in selecting and retaining outside counsel when it established goals for the utilization of women and minority counsel working on its matters. (Other criteria included cost and quality.) These diversity goals, which remain in place today, are that 33 percent of its outside work (measured by the dollar value of the work performed) will be performed by women attorneys and 20 percent will be performed by minority attorneys. The 33 percent and 20 percent goals for women and minority attorneys approximate the composition of the General Motors legal staff. In addition to setting these goals, General Motors closely tracks who is working on its matters to assure that these goals are met through its billing system and has the ability to create reports detailing the utilization of women and minority attorneys on its matters. The performance evaluations for General Motors’ in-house attorneys include an assessment of the attorney’s contribution to General Motors’ diversity initiatives.
This past year, General Motors recognized that, in addition to the goals it established for outside counsel, further steps were needed to create opportunities for women and minority counsel, and, so, it established a mentoring program. General Motors worked with select law firms to identify promising women and minority associates and matched them with General Motors in-house attorney mentors. The General Motors mentor will work closely with the firm to facilitate associate development so that the mentee work for General Motors fits into an overall firm development plan. The goal is to develop lead attorneys that reflect the diverse communities in which General Motors does business and to ensure that General Motors’ external business success translates to internal firm success.
Other corporations have been similarly proactive. In 2005, Wal-Mart began requiring that at least one minority and one woman attorney be among the top five relationship attorneys in the law firms with which it does business and has terminated law firms that have not met its expectations on diversity. ExxonMobil has identified talented women and minority outside counsel across the country and maintains a directory of these attorneys and firms to be used by its attorneys when selecting outside counsel. GlaxoSmithKline (GSK) sends an annual diversity survey to its preferred counsel, which inquires about the diversity of the firm. Score cards are created from the responses for each firm based on the firm’s diversity.
Corporations see advantages in having their outside counsel—whether representing them in a courtroom, to a regulatory agency or in a business transaction—reflect the diversity of their customers and society as a whole. “In the legislative arena, many state and municipal government entities have diverse elected officials. When approaching these entities having diverse representation is a benefit especially since they are keenly aware that the decisions of the entities affect a diverse population,” says Irwin Evans of Los Angeles-based Atkins & Evans, a 30-year-old minority-owned firm.
In litigation, jurors are more likely to trust attorneys with whom they can identify. It does not take a lot of imagination to see the potential pitfalls in having an all-white, all-male trial team defend a corporation in an employment discrimination case with a jury as diverse as the nation at large. Similarly, obtaining a diversity of opinions, experiences and perspectives greatly enhances overall legal representation and provides a greater source of creative ideas and problem-solving. As Greg Kenney of ExxonMobil explains, “defending any large corporate entity entails many challenges so we are constantly searching for high quality legal talent. We have found women and minority legal organizations provide opportunities to identify and retain very talented lawyers.”
Progress: At a Snail’s Place
Despite the innovation and widespread acceptance of the 1999 Statement of Principle and efforts by General Motors, Wal-Mart, Ford, ExxonMobil, DuPont Corporation, Shell Oil Corporation and others, little meaningful change occurred in the profession. In 2004, five years after the statement was issued, in the words of Roderick Palmore, then-chief legal officer of Sara Lee Corporation, “all objective assessments show[ed] that the collective efforts and gains of law firms in diversity have reached a disappointing plateau.” To move law firms above that plateau, in 2004 Palmore issued the “Call to Action,” which has since been signed by more than 100 chief legal officers of major American corporations. In signing the Call to Action, the signatories have pledged to “make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms.” Perhaps the most significant part of the Call to Action is the pledge “to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse.”
In the four years since the Call to Action was issued, many of its signatory corporations have taken substantial steps to implement its objectives. On April 24–25, 2008, a two-day Call to Action Summit took place in Scottsdale, Arizona. The Summit brought together a cross section of general counsels, many of whom represented Fortune 500 corporations and were the managing partners of the nation’s largest law firms. The participants continued the dialogue on diversity in the legal profession to identify "next step" action items, such as recruitment, retention and goals to measure success (e.g., implementing a system of metrics), geared toward improving diversity in the profession. Clearly, bringing these major corporate and law firm entities together at the summit and committing to engage in four ongoing working groups, which is what happened at the summit, is a positive indication that progress will continue to be made in this area; however, identified next steps primarily focused on the issue of diversity at majority-owned law firms.
Retaining Women- and Minority-Owned Law Firms Is the Cornerstone to Achieving Diversity
As discussed above, one way in which corporations have met the challenge of increasing the diversity of outside counsel is by retaining minority or female attorneys at traditional or majority-owned law firms. The other way to meet this goal is by retaining women- and minority-owned law firms. While there has been considerable discourse about a perceived tension between these two choices, the reality is that the best way for America’s corporations to attain diversity among its outside counsel is by utilizing both types of providers.
To this end, in early 2006, under the leadership of DuPont, General Motors, Sara Lee, Wal-Mart, Shell Oil and DuPont entered a “joint diversity venture,” publicly pledging to place, collectively, $16 million in business with minority- and women-owned law firms in 2006. The venture surpassed its goal and in doing so identified additional minority-owned firms with which to do business.
This 2006 joint venture demonstrated that there is room for, on the one hand, majority-owned, and the other hand, women- and minority-owned firms in the legal marketplace and both can prosper without detriment to the other. Indeed, corporations are providing more work to minority lawyers in the aggregate by giving work not only to firms owned by minorities and women, but also to majority-owned firms devoted to increasing internal diversity. Such a two-pronged approach may better promote the overall goal of diversity. Thus, while not the exclusive answer to the lack of diversity in the American legal profession, women- and minority-owned law firms are a key component of the solution.
The Advantages of Hiring Women- and Minority-Owned Law Firms
There are a number of advantages to retaining women- and minority-owned law firms. First, retention of women- and minority-owned firms can promote the corporation’s goals of diversity in ways that the utilization of women and minority lawyers at majority-owned firms cannot. Hiring women- and minority-owned firms provides greater economic empowerment to the very group that diversity programs are intended to benefit because even as the originating or billing partner, a woman or minority attorney at a majority firm may not have a significant ownership stake. Thus, while a corporation may make a significant expenditure on a particular matter, the women or minority attorney must divide that revenue among (many) others. Such economic empowerment is not limited to the lawyers of women- and minority-owned firms. The staff and service providers employed and utilized by such firms tend to be more diverse as well. Thus, hiring a women- or minority-owned firm empowers an overall greater and more diverse cross section of the at-large community.
The economic benefits of using minority- and women-owned law firms do not just flow to the law firms, they flow to the corporations retaining them as well. Minority- and women-owned firms tend to be smaller in size. Smaller firms tend to have lower overhead and, thus, lower billing rates. In this respect, utilization of women- and minority-owned firms kills the proverbial two birds with one stone for in-house counsel since cost is often one of the primary criteria in choosing outside counsel. Belinda Reed Shannon, a vice president with GSK, notes that GSK often receives “high quality legal services at more competitive rates from minority and women-owned firms than can be negotiated at majority firms.”
However, make no mistake about it, the advantages presented by women- and minority-owned firms are more than economic. Greg Kenney reports that ExxonMobil’s “recent experience is that [women- and minority-owned firms] tend to try harder to develop trust and a stronger relationship with the company.” In addition, because “most successful women and minority-owned firms are started after the principals practiced in other firms,” explains Irwin Evans, “when the corporation retains the firm, they will have retained an experienced attorney to handle all aspects of their case.” Women- and minority-owned firms may also use a different style to the benefit of their clients. For example, “women-owned firms set a tone in practice and in courtrooms that many clients find a welcome alternative. The experience of our women litigators has been that collegiality, teamwork, and the ability to engage witnesses and jurors have served our clients well,” explains Beth L. Kaufman of Schoeman Updike & Kaufman, a women-owned firm with offices in New York and Chicago.
The use of women and minority attorneys to represent a corporation in matters in which membership in either group is an issue, or in jurisdictions in which a substantial portion of the population is minority, could tip the balance in favor of the corporation. Similarly, when representing a corporation, outside counsel often serve as something of an ambassador for the company and its products or services. Attorneys in women- and minority-owned law firms tend to be community leaders.
There is also the opportunity to enhance and promote leadership opportunities in hiring women- and minority-owned firms. These lawyers have an opportunity that many others do not: the ability to control and lead an institution of their own. There is a significant difference between minorities and women being allowed to participate in a decision within a majority law firm context and having the authority to actually set policy and make a decision in their own organizations.
Women- and minority-owned law firms have the added benefit of being able to attract and maintain diverse attorneys because they already have a proven track record for women and minority attorneys succeeding. These firms serve as outstanding role models for minority and women students interested in entering the legal profession because these firms already include outstanding, diverse attorneys who are skilled legal service providers. “Having strong women-owned firms provides effective settings for women lawyers to develop their skills and to take leadership roles in their practices and the legal profession,” says Beth Kaufman.
Finally, women- and minority-owned law firms provide critical alternative career paths—alternatives for successful and a fulfilling careers. Many women and minority attorneys who have gone to some of the finest law schools and been trained in some of the finest large law firms opt at some period during their career to make a change. Sometimes the change is simply for lifestyle reasons while at other times these lawyers seek more control over their careers. Many outstanding lawyers opt to practice law in a smaller women- or minority-owned environment where they have more control over their destiny. Women- and minority-owned firms continue to provide valuable career options and rich sources of diverse legal talent.
The Challenges for Women- and Minority-Owned Law Firms
Women- and minority-owned law firms do face challenges, as history shows. With the influx of women and minorities into law schools and then the legal profession in the 1960s and 1970s, the number of minority-owned firms increased substantially. Minority-owned law firms reached their greatest numbers in the mid-1980s. However, since then many of those firms have closed their doors, often as a result of the hiring away of their named partners by majority-owned firms.
As reported in the “Study on The Status of Minority-Owned Law Firms in Today’s Legal Environment,” prepared for DuPont Corporation’s Legal Department and released in March 2004, “in the past 10–15 years there has been a noted decline in the number of successful, minority-owned law firms that have served corporate America, particularly the established African American-owned firms of the late 1980’s, early 1990’s.” Moreover, the DuPoint study found that “it is becoming increasingly difficult for most minority-owned firms to compete in the current legal environment.”
The DuPont study identified five major challenges that contributed to this decline: (1) lack of access to and established relationships with corporate decision-makers; (2) difficulty overcoming the perception that minority firms cannot handle sophisticated legal work or do not have the necessary experience or talent; (3) difficulty arising from the generally smaller size of minority firms; (4) the difficulty such firms experience in attracting and retaining minority legal talent at all levels; and (5) to some degree, effects of racial bias.
The current trends in corporate America of convergence, reducing the number outside counsel, and globalization may exacerbate these five identified challenges. When consolidating the number of legal service providers to reduce costs, corporations often look to large law firms, with multiple offices and greater levels of staffing and technology, to meet their needs. While there are no doubt economies of scale to be obtained from such retention decisions, the practical impact is to reduce opportunities for smaller firms including minority-owned firms. For this reason, corporations such as DuPont and General Motors exempt women- and minority-owned firms from convergence efforts.
It has long been true that smaller firms cannot compete with larger counterparts in terms of compensation, though, many argue, smaller firms make up for the reduced compensation in increased quality of life. Given the generally smaller sizes of women- and minority-owned firms, such firms face a multi-faceted recruitment challenge. Corporate America’s increased emphasis on diverse legal representation has led traditional law firms to actively woo talented women and minorities. Indeed, the DuPont study found that “competition with majority firms for the best minority partners and associates has impacted the closure of many of the larger minority firms of the 1990’s.”
This is not to say such firms are on the verge of extinction. Indeed, a thriving, recently-established organization attests to the vitality of and market for such firms. The National Association of Minority and Women Owned Law Firms (NAMWOLF), established in 2001, in part to ensure the long-term survival of women- and minority-owned law firms, is premised on the view that “the most effective way for corporations to increase diversity in the legal profession is to increase their retention of minority and women-owned law firms.” NAMWOLF currently has 48 law firm members and more than 134 “corporate and public entity partners” who have agreed to spend a percentage of their outside counsel budget on services provided by women and minority-owned law firms. “Minority and women owned firms have historically had greater difficulty competing for corporate business than traditional law firms. One of NAMWOLF’s goals is to level that playing field,” says Yolanda Coly, NAMWOLF’s Managing Director. NAMWOLF, which is intentionally selective, requiring that law firms satisfy rigorous criteria before gaining membership, provides an invaluable resource for corporate counsel when seeking to identify women- and minority-owned law firms.
How Women and Minority-Owned Law Firms Can Succeed
Attorneys in or interested in establishing a women- or minority-owned firm can follow particular strategies to overcome the challenges and avoid the pitfalls that historically have plagued such firms. First, do not attempt to be all things to all people. With the increase of the supersized law firm and corporate concern about the capabilities of smaller firms, women- and minority-owned firms would be well-advised to identify and carve out practice niches. Firms should devote the time, effort and resources necessary to become well-regarded specialists in those areas. It is also beneficial if the practice area has a national or regional scope. Once the firm develops expertise and an established track record, corporate counsel will be far more inclined to retain the firm, regardless of its size or ownership status.
In addition, when identifying key areas in which to specialize, pay particular attention to the practice areas in which cost is a key driver in corporate decisions regarding outside counsel. As already noted, women- and minority-owned firms are often less expensive and more cost-efficient than larger firms. If women- and minority-owned firms can provide the same services at a lower cost, they become more attractive to corporate counsel. Value is particularly important in today’s environment where corporate legal departments are under increasing pressure to reduce costs.
Women and minority-owned law firms also need to develop outstanding marketing skills. Their attorneys should strive to be visible leaders in their local communities, legal and otherwise. Firms should not be reticent about approaching counsel in the legal departments of large corporations to either ask for the opportunity to represent them or to seek larger assignments from their current contacts. “Consider working on a committee for an organization with an in-house lawyer,” recommends Belinda Shannon. This is a very effective way to become known and to begin to develop a relationship. Perhaps most importantly, women- and minority-owned law firms should market their strengths effectively. For example, the concern about small size often expressed by corporate counsel to women- and minority-owned firms can be a marketing strength. A smaller firm can be a more agile and better able to respond quickly to a client’s needs than a larger firm. Remember the old adage that it is easier to turn a speedboat than an ocean liner.
To the extent possible, today’s women- and minority-owned law firms should be truly diverse. The broader their internal diversity, the more perspectives, and therefore value, they can offer corporate counsel.
Finally, remember the general rules for successful marketing: know the practice area, the industry and your clients well; do a great job; be civil; do the right thing; and be patient.
Profile of Success
Wilson, Petty, Kosmo & Turner, LLP (WPKT), a diverse, NAMWOLF-certified, women-owned law firm in San Diego, has utilized the strategies recommended in this article effectively since it was established in 1991. WPKT’s practice focuses on defending businesses in product liability, employment and general civil litigation throughout California. Initially small, WPKT has grown to 23 attorneys, making it one of the 50 largest law firms in San Diego and one of the largest women-owned law firms in the region.
Fourteen of WPKT’s attorneys, including six of its partners, are women. Eight of its attorneys represent various minority groups—African-American, Asian, and Hispanic. Three of the named partners are women and two are African-American. WPKT is a long-standing member of NAMWOLF. Last year, WPKT was recognized for its exceptional diversity by the Earl B. Gilliam Bar Association, the San Diego affiliate of the California Association of Black Lawyers and the National Bar Association; the firm received that group’s Legal Employer Award for Diversity.
While practicing general civil litigation, WPKT has achieved its success, in part, by specializing and developing expertise in particular litigation areas, and as a result, has a substantial practice, in product liability and employment litigation. Despite its growth, WPKT has worked hard to maintain the intimacy of a smaller, boutique firm, which may account for WPKT’s relatively low turnover among its associates. When it does recruit, WPKT has been attractive to a wide range of attorneys, particularly other female and minority attorneys. “I think people see a firm as diverse as ours and sense that it is a place they will be comfortable and succeed,” explains Claudette Wilson, one of WPKT’s founding partners.
Conclusion
Utilization of women- and minority-owned law firms, whether in conjunction with women and minority attorneys at traditional firms or alone, can fulfill corporate counsel’s diversity objectives in unique ways. Retention of women- and minority-owned firms can provide economic empowerment to the diversity community in ways that the retention of women and minority attorneys at majority law firms cannot. Because firms owned by women and persons of color tend to be small to medium-sized, corporations can save costs by retaining them.. Finally, women- and minority-owned firms provide an important alternative career path for attorneys and create powerful firm and attorney role models for future generations.
E. Christopher Johnson, Jr., is General Motors North America Vice President & General Counsel. He acknowledges the contributions of his General Motors legal staff colleagues, Michael Gruskin, Suzanne Miklos, and Damon White. Vickie E. Turner and Meryl C. Maneker are partners with Wilson, Petty, Kosmo & Turner, LLP, in San Diego. Ms. Turner’s practice focuses on the defense of product liability litigation. Ms. Maneker’s practice focuses on the defense of employment and product liability litigation. |
