By Roy Strom
As chief diversity and inclusion officer atHinshaw & Culbertson, Leslie Richards-Yellen receives all kinds of work proposals from clients and would-be clients who request information on the firm's diversity metrics.
These requests can range from inquiring about the number of female and minority attorneys to asking about firmwide diversity trends, inclusion efforts and progress, she said.
Then, some companies take it a step further.
"'Are you, firm, willing to tie a portion of your compensation to achieving diversity staffing commitments?'" Richards-Yellen read from a work proposal she received last year.
By creating a financial incentive for law firms to include diverse attorneys on work projects, clients can encourage firms to do more than create a "diverse bench," she said.
When "the diverse players and women players aren't played, it's not all that effective for changing" the demography of law firms, she said. "This is actually getting diverse players playing."
The 2012 Chicago Lawyer Law Firm Survey shows that much work remains before the ranks of partners at Illinois' largest law firms reflect the demographics of the wider population.
Of the top 10 firms in the 2012 Chicago Lawyer Law Firm Survey, the average percentage of female partners came in at 23 percent. The 2001 Chicago Lawyer Law Firm Survey, the magazine's first survey, says that number stood at 19 percent.
Minority partners made up on average 6 percent of Illinois partners at the 10 largest firms in 2012, the survey says. That number came in at 3 percent in 2001.
Some in-house and outside lawyers say one way those numbers might improve comes through an increased push from some of the biggest companies in the U.S. to work with law firms that value diversity — and to shy away from those that don't.
For example, the Leadership Council on Legal Diversity (LCLD) provides tools and programs for its members — some of the biggest U.S. companies and law firms — to foster an increase in diversity and help diverse attorneys permeate all levels of their organizations. That organization and its members espouse programs that move beyond requesting and tracking diversity metrics at law firms.
Outside counsel from McDonald's Corp., General Mills Inc., Exelon Corp. and Illinois Tool Works Inc. discussed how they work to encourage diversity within firms that goes beyond asking for a number. Partners in charge of diversity efforts at Hinshaw & Culbertson, McDermott Will & Emery and Perkins Coie laid out how they partner with clients to increase the number of diverse attorneys and those in higher positions at their firms.
Defining the business case
Robert Johnson, managing counsel of the workers' compensation practice group at McDonald's, said his company believes it should take steps to incentivize the law firms it works with to increase the prevalence and importance of their female and diverse attorneys.
"The question of it being the right thing to do has kind of faded, and it's now a business imperative," Johnson said.
Companies like McDonald's, with employees and customers around the globe, need to develop a workforce that matches that profile, he said. Furthermore, they want to work with law firms that share the same objective.
"Until more companies make that sort of a focal point, it's going to hamper the law firm's ability or the legal profession's ability to really diversify the profession," he said.
The issue, then, becomes what do clients need to do to encourage law firms to step up their diversity and inclusion efforts? How far should they go?
Companies need to make diversity initiatives impact law firms' bottom lines, Johnson said.
"Until it becomes sort of an issue of viability or survivability or profitability, then the incentive is not there" for law firms to make extra efforts in hiring and promoting diverse attorneys, he said.
Several law firm lawyers said client demands can only be considered as one aspect in creating more diverse law firms, and, in turn, a more diverse profession.
Theresa Cropper, chief diversity officer at Perkins Coie, where women comprise 24 percent of the Illinois partnership and minorities make up 7 percent, said companies don't necessarily "drive" diversity within law firms.
"They can be part of the engineering staff," she said.
For example, she points to a Microsoft program that adds a small percentage to the firm's bills based on meeting diversity employment and staffing goals measured quarterly and annually.
"They measure it, and in addition to that, they have people assigned as law firm liaisons on law firm diversity," she said.
"It's an extra set of eyes, but it's also an extra set of hands, because we share the same values."
Robert Grey, executive director of the LCLD, said the traditional model that companies use to encourage law firms to hire and promote diverse attorneys involves providing their expectations of the firm and then using surveys to chart their progress.
Using that model, large corporations and law firms "seem to have reached a plateau," Grey said. He said the idea of "collaborative governance" will lead to better results.
"There needs to be more discussion (between law firms and clients) along this path about ways in which we might achieve this success together," he said.
While a company cannot force a firm to improve its diversity, it can take its business elsewhere.
Maria Green, the general counsel at Illinois Tool Works (ITW), said her firm wielded that stick in at least one instance.
The firm employed a large firm in the United Kingdom and developed a strong relationship with the only diverse associate, a Pakistani woman, in an office of 520 attorneys, Green said.
"There were no people of color in the firm other than her," Green said.
ITW started working with the woman on transactional work as a second- or third-year associate and continued to work with her until she came up for partnership.
"She had done excellent work for us, and when she came up for partnership we let it be known that we were strongly behind her becoming a partner," Green said.
The firm, however, decided not to make her a partner.
"We told them that we consider our relationship to be built on the lawyers that we work with more so than with the firm," Green said. "Because we had such a strong relationship with her, if she left the firm, she was going to take our work with her."
Sure enough, Green said, when the associate joined another firm as an equity partner, ITW transferred its work to her new firm.
"I think that's the strongest statement that we take our commitment to diversity very strongly," Green said.
But that scenario proves to be the exception rather than the rule, Green said. For the most part, because firms know ITW values diversity in its law firms and in the composition of staffing on its matters, Green said she sees results.
The Exelon model
Despite efforts by some general counsel to standardize how corporate legal departments measure diversity in law firms, many departments developed their own programs long ago. That leads to diverging tactics among companies.
Darryl Bradford, general counsel of Exelon, said his company instituted a diversity program in 2005, under then-acting General Counsel Bill Von Hoene, called "AAA: Awareness, Action and Assessment."
For the awareness portion, the company asked its law firms to provide diversity metrics including how many lawyers of color and female lawyers work in the firm.
"And then we asked them to start tracking those statistics for Exelon matters," he said.
"How many partners of color? How many women partners? And what level are they at?"
At the end of each year, Exelon completes "a report card" that tracks each law firm's composition in terms of diverse and female attorneys.
"One of the keys of driving this is that clients have to let the law firms know that it matters and we have to get to a point where we start agreeing on some metrics and tracking toward it," Bradford said.
Exelon refrains from assigning quotas to its law firms, but Bradford said part of the AAA program includes a public "honor roll" for the firms that excel in bettering their diversity metrics and their staffing of diverse attorneys on Exelon's matters.
In past years, the company hosted a meeting with its law firms to publicly recognize those on the honor roll, Bradford said.
"Because the firms (are competitive), they want to do the right thing," he said. "They're not recalcitrant on this, at least consciously, but that seems to drive it pretty well."
In contrast to the honor roll lies an implied "stick" wherein Exelon can stop using a law firm because of its failure to better its diversity statistics.
"If firms are not responsive to our value of diversity, then we'll talk to folks about that, and we have a good conversation, but, ultimately, like quality of work, like efficiency, it is a factor that goes into our decision of where we're going to send our work," he said.
So far, Exelon never stopped using a law firm because of poor diversity performance, he said.
"The firms are very responsive," he said. "I think it's a law firm's nature — they're professionals, they want to do a good job, and they're responsive."
In addition to tracking its outside firms' diversity metrics, Exelon provides firms with its own numbers on how much it spends on minority law firms and whether or not it's working with a "diverse and inclusive pool of lawyers."
Rick Palmore's take
In 2004, Rick Palmore, then general counsel of Sara Lee Corp., authored, "A Call to Action, Diversity in the Legal Profession." The letter to the profession discussed the idea of clients holding law firms accountable when it comes to diversity and inclusion.
"We intend to look for opportunities for firms we regularly use which positively distinguish themselves in this area," the letter says. "We further intend to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse."
At least 120 general counsel from U.S. companies signed it. Today, Palmore works as general counsel at General Mills and is the LCLD chairman.
He said his legal department requests three-year rolling assessments of its law firms' diversity metrics.
"We don't want a rifle shot approach," Palmore said. "We want to know what the arc of your performance is."
Lawyers from the company then discuss that performance with each firm and point to areas where they made progress or where more work must to be done, Palmore said.
Finally, each firm gets placed into one of four tiers of diversity performance.
"So what we say to the top tier firms is we're pleased with your performance, and all other things being equal, … we will try to get more business to you than you otherwise might see based on your performance," he said.
"And to the bottom-tier firms, we tell them that our expectation is that … you will see less business from us than you otherwise might see. And that in the course of the next year, if your trend continues to be down, your relationship with us is at risk."
A firm's reaction to being placed in the bottom tier depends on how much legal work they get from the company, he said.
"I don't mean to be cynical, but that's the reality," Palmore said. "If this is a firm that gets a large amount of money from General Mills, we generally get their attention. But some respond better than others. Some genuinely get it, and some don't."
The law firm perspective
When asked if clients drive diversity within law firms, partners in charge of diversity at Perkins Coie, McDermott and Hinshaw said law firms respond to client requests for increased diversity staffing.
But they also said their firms share the same set of values as their clients and typically work in tandem with them to achieve greater diversity in the legal profession.
Cropper, from Perkins Coie, said the corporate push for diversity leads to introspection at her firm.
"This is a part of client service," she said. "And if you continue to give the same information year after year … how can you say that's good client service? So, for us, what we do, is we start to study these things."
She said she reports the firm's diversity numbers broken down by committee and practice group and tells the firm leaders where they need to improve.
"If we tell these people that we're serious about it, and these are the questions they're asking, we need to study this and see if we are improving," she said.
More recently, diversity programs between law firms and clients focus on helping diverse or female attorneys build relationships with in-house counsel that grow their ability to succeed at bringing in business for a firm, they said.
For example, Lisa-Marie Monsanto, a partner at Katten in Washington, D.C., said she received an opportunity to build lasting relationships with in-house lawyers through a LCLD diversity fellowship program.
The fellowship consists of a year's worth of networking events with in-house counsel who value diversity, she said. But the motto of "Once a fellow, always a fellow," means she will continue to benefit from events with the complete alumni list even after her year in the fellowship ends, she said.
The program seeks to develop relationships between in-house counsel and diverse attorneys to prevent those attorneys from "flat lining" in the midst of their career as business development becomes crucial to further success.
"It's definitely geared toward helping diverse attorneys with business development in a very creative way," Monsanto said.
Law firms in the LCLD appoint one fellow a year, while legal departments send two fellows into the program.
Richards-Yellen, from Hinshaw, pointed to a secondment program that Hinshaw participated in with Allstate Insurance Co. where a high-potential diverse attorney spent three months working in the insurer's legal department.
"The women or diverse attorney sits in-house, gets to build the relationship, understands how the relationship works and understands how the client operates," she said.
"That kind of program makes the attorney stronger when they come back to the firm. They are able to monetize, hopefully, their experience in a way that propels them to a higher level in their firm."
Lydia Kelley, chair of McDermott's Diversity and Inclusion Committee, said her firm works with clients who request that the firm follows "the Rooney rule." That rule comes from a NFL hiring practice that requires NFL teams to interview a diverse coaching candidate before making any hire.
In a law firm setting, Kelley said the program means that managers consider a broad range of attorneys for any new work they receive as opposed to consistently handing work to the same employees. That helps ensure that law firms consider diverse and female attorneys for new work they receive.
"I think that the Rooney rule, or a hybrid of it, is a really great approach," Kelley said. "It sort of forces that accountability."
Room for improvement
A 2011 survey by The Institute for Inclusion in the Legal Profession (IILP) shows that the majority of legal departments do not take the "assessment" step in Exelon's strategy.
"Corporate clients, at best, use diversity as one of many criteria in selecting outside counsel and rarely implement strategies to reward in-house counsel for choosing diverse outside counsel or bestow more business upon those firms that are succeeding in their diversity endeavors," the report says.
For example, the survey of 52 Fortune 500 companies found that only 12.5 percent of respondents actually changed their relationships with law firms based on poor performance against their company's diversity metrics or objectives.
Cropper, from Perkins Coie, said some companies don't ever respond or react to the minority surveys they request.
"We continue to comply," she said. "But … we don't know what noncompliance or special compliance gets us.
"I think the standard of excellence is those who read the material, hold you accountable for it, incentivize you and continue to engage you."
On the flip side, the IILP survey shows that the aggregate financial incentives in place for law firms do not add up to particularly large amounts.
About 73 percent of firms receive 0 to 5 percent of their gross revenues from clients who ask about their diversity, it says.
Bradford, from Exelon, said the biggest driver of change in the legal field comes from documenting progress.
"What matters gets measured, and if it doesn't get measured, it doesn't really matter," he said.
"You can have a lot of talk about this, and if you don't have a … group of energized lawyers pursuing it with you, it's just going to continue to be a conversation."