6 Ways In-House and Outside Counsel Can Advance DEI in the Legal Industry

Wednesday, August 28, 2024 

Posted by: Georgie Palm

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Moving Beyond Checking the Box: 6 Ways for In-House and Outside Counsel to Collaboratively Advance DEI in the Legal Industry

The legal industry continues to lag compared to other professions and industries in achieving diversity, equity, and inclusion (DEI) even after decades of commitments and efforts, and progress within corporate law departments and law firms is slow. The American Bar Association’s (ABA's) “Increasing Law Firm Diversity” article says, “Although there are many notable exceptions, women and minorities are often underrepresented at law firms and corporate law departments, particularly in leadership positions. They also often receive lower compensation than non-diverse attorneys and are excluded from, or overlooked for, other important law firm and law department roles, opportunities, and benefits.”

Bolder and strategic actions are needed, and those actions cannot solely focus on the talent lifecycle. They should include how DEI is integrated in the organizational business strategy and culture, including internal operations, product/service portfolio, communications, community engagement, and the supplier ecosystem.

In an analysis of a Fortune/Deloitte survey of 125 CEOs, the Managing Director of Deloitte's Chief Legal Officer (CLO) program discusses the importance of evolving conversations about DEI to include equity."91% of chief executives said they’re investing in their talent lifecycle within the workforce sphere to drive DEI initiatives.

But only 22% said they’re investing in DEI within their product or service portfolios, and fewer than half are prioritizing equity within supplier relationships. Equity needs to be more than just about talent.”

Additionally, general counsels (GCs) are not always aligned with the priorities of the CEO and the organization. A recently released study, "2024 State of the Corporate Law Department,” by Thomson Reuters, identified a worrisome mismatch between GCs and the rest of the C-suite on what big issues they think will impact legal departments in the future. It noted, for instance, that at least 20% of C-suite respondents expect transformational change in these three areas: an increasing focus on ESG and DEI issues and working with purpose (24%); the millennial generation moving into leadership roles (23%); and the emergence of artificial intelligence, also known as AI (22%).

GCs were asked about the same topics. Far more GCs believe AI will be transformational (42%), but the percentage expecting transformational change topped 10% in just two other areas: explosion in data volumes (14%) and the millennial generation moving into leadership roles (10%). The GC’s perception is often what is relayed to outside counsel.

This article explores some of the persistent challenges related to achieving DEI in the legal profession and six effective tactics for how in-house and outside counsel can align and collaborate to advance DEI efforts, enhance service models, and accelerate industry progress.

Key Challenges

We are in a turbulent landscape and climate, with DEI work coming under increased scrutiny from social, political, and legal arenas. Following the U.S. Supreme Court’s decision to strike affirmative action in higher education, a trending area of focus in the legal industry (and other industries) has been centered around risk mitigation and compliance and less so on strategy development, implementation, and progress assessment.

A Harvard Business Review article “What Needs to Change About DEI and What Doesn’t” by one of my favorite DEI strategists, Lily Zheng, states: “Concrete DEI goals and targets are still elusive for nearly 60% of companies. Fewer organizations have DEI budgets or DEI strategies.”

Many organizations are in an evaluation stage, examining their communications to ensure the appropriate messaging is being conveyed and information is properly being disseminated. We have also seen public messaging toned down out of fear of backlash. In addition to risk mitigation measures, in-house and outside counsel should develop and implement strategic plans with defined objectives and key performance indicators (KPIs) similar to other areas of the business or refine current strategies and monitor progress.

Another major challenge is the lack of enforcement, meaningful measurement, and accountability. Every year, law firms receive a significant number of survey requests, requests for information, and requests for proposals from corporate legal departments asking about their DEI efforts.

At a recent DEI summit, I attended along with around 600 other people, including legal department leaders, law firm relationship partners, and legal DEI and talent leaders, it was noted that data shared often doesn't lead to any meaningful action, but rather gets ignored or stored away without being used in a meaningful way. Efforts are being made by different companies and organizations to address this issue, but it is still an issue, nonetheless.

A recent Law.com article, “Why Progress on Law Firm Diversity Is 'Minimal at Best'", discussed the Association of Corporate Counsel June 2023 report which "showed little change in recent years in legal departments’ use of metrics to measure outside counsel diversity. The 21% of departments gathering diversity data in the latest survey was unchanged from 2022 and up 3 percentage points from 2021.

The 2023 study, based on an online survey of 449 legal departments, found that just 28% of legal departments had their own internal diversity metrics. That was down from the 29% reported in 2022 and 2021. There has been little movement in these numbers over the past three years despite the increased attention and desire to establish a more inclusive and equitable environment within the legal profession.”

A third challenge is related to prioritization and demand. DEI is often still seen as  “nice to have” or a recreational activity, rather than being integrated into day-to-day job responsibilities and the overall culture of corporate legal departments and law firms. DEI is not always given the same importance as other corporate priorities such as finance, business development, and technology.

Case Studies and Tactics - How to Foster Collaboration Between In-House and Outside Counsel on DEI

“We’d rather work together and collaborate and try to drive diversity for the benefit of the broader legal profession.” – U.S. Bank General Counsel Jim Chosy, “Why Law Firm Diversity is Minimal at Best”

Below are six tactics exhibiting how in-house and outside counsel can collaborate to advance DEI in the legal industry:

Tactic 1: Reward, Recognition, or Incentive Programs

These types of programs are an excellent way to boost DEI efforts. They motivate inclusive behavior, demonstrate commitment, attract and retain diverse talent, foster collaboration and innovation, ensure accountability, and build a positive organizational culture. For both in-house and outside legal counsel, these programs are essential for creating a more diverse, equitable, and inclusive legal industry.

For example, public utility company Exelon’s DEI Honor Roll recognizes business partners that “are prioritizing diversity, equity, and inclusion not simply because it’s good for business, which it is, but because it’s the right thing to do,” says Exelon Executive Vice President and Chief Financial Officer, Jeanne Jones. “When we demonstrate the transformative value of including women and minority workers and leaders, we are changing the face of business and creating a better future for all.” Exelon highlights organizations that meet or exceed certain metrics.

Similarly, Microsoft’s Law Firm Diversity Program (LFDP) is a robust reward and recognition program. The LFDP is an incentive-based program that provides bonuses (2 to 3%) to participating law firms, calculated as a percentage of their annual fees, for achieving and/or exceeding diversity representation goals.

Every year, Microsoft reviews and iterates on the ALFDP diversity goals to enable and ensure continued progress. Since the program was established in 2008, there have been three significant changes to the program:

• In 2015, Microsoft shifted the focus of the program to tracking progress in leadership, namely partner diversity and diversity on law firm executive and management committees.

• In 2020, Microsoft expanded the number of firms in the program to include not only those firms in their strategic partner program but also those firms who do a substantial amount of work for the company in the United States. In that same year, they also put a greater focus on increasing diversity in leadership.

• In 2021, Microsoft increased partner-level growth objectives for all categories within the program to include diverse representation of women, racial and ethnic minorities, LGBTQ+, veteran, and disabled lawyers.

• The most recent changes in 2020 and 2021 reflect an urgency to advance diversity in the legal profession overall. For too long, the pace of growth in diverse representation has been too slow and not at pace with the diversity of the clients and communities the profession serves.

  
  

The strongest area of performance in the program continues to be increasing diverse representation on teams that work on Microsoft matters. The company continues to see gains year over year. All law firms in their strategic partner panel met the benchmark[1] goal of 50% diverse representation on their matters or increased growth year over year. For all other firms in the program, 76% met these goals as well.

Tactic 2: Track and Report on the Progress of DEI Strategy

Organizations should make data-informed decisions and commit to outcome/evidence-based measurement of progress. To mitigate risk, there should be an action plan to manage data and privacy first. Your organization or team must have a strong data culture to be well-positioned to make the most of DEI data/insights.

To do this effectively, organizations need to leverage the right technology in an integrated way; have the right people in place to manage and monitor data; and have policies and protocols to collect, store, share, and protect data.

In-house and outside counsel should move beyond vanity metrics and inputs/activity and focus on result/evidence-based metrics such as outcome, progress, and process-based metrics.

Outcome metrics (e.g., demographic data) can help with baselining by indicating potential problems. It can help with determining bias, which is necessary to identify and evaluate the effectiveness of various interventions. Progress metrics can be used to assess the efficacy of implemented initiatives and programs so your organization can determine what could be refined or phased out. Process metrics can pinpoint problems and biases in talent processes such as hiring, evaluation, promotion, development, compensation, sponsorship, and succession planning. 

As an industry, we are working through standardization challenges, with various organizations creating and implementing interventions and solutions. For example, as a member of ALFDP, we have been working tirelessly in collaboration with the ABA to enhance and evolve the ABA Model Diversity Survey originally designed and rolled out in 2016 to implement Resolution 113 and assist in-house counsel and outside counsel analyze DEI progress. The enhanced ABA survey launched in the first quarter of 2024.

Another organization focused on enhancing tracking efforts is Diversity Lab, a legal incubator for innovative ideas and solutions that boost DEI in the legal profession and leverages data, behavioral science, design thinking, and technology to further develop and test ideas, measure the results, and share the lessons learned.

Additionally, Pirical is an information services and software company helping the legal sector make smarter and fairer people decisions. Their market-leading products use data to deliver meaningful solutions to data-driven law firms. The company’s Pirical on Demand (POD) tool is analytics software that enables People Leaders to self-serve HR, rewards, and diversity data and compare against peer firms, providing firms with the insights they need to advise their practices and help their attorneys thrive.

Some law firms are even creating their own tools internally using Microsoft Power BI and other software. Other tracking tools include report cards, action plans, and performance reports, which are useful for reference in check-in/evaluation meetings and can be used to identify gaps, areas for improvement, and opportunities to collaborate.

Tactic 3: Monitor Equity Actions

Questions in surveys and other data inquiries can vary from organization to organization. They range from asking about DEI programming to the presence of a DEI leader, and even how firms evaluate origination credit and link it to DEI efforts. However, without industry standardization, some of these evaluation points may be too generic to effectively identify inequities and exclusionary practices. This lack of specificity can hinder progress within the industry. The focus should be on implementing effective monitoring and evaluation systems for talent, finance, performance management, as well as assessing business practices, operations, and policies at different organizational levels, functional levels, and by geography.

Tactic 4: Attend and Participate Jointly in All-Hands Meetings, Professional Development Programs, Summits, and Networking Events

These activities can provide opportunities for collaboration, relationship building, and the promotion of DEI progress. When in-house counsel invites outside counsel to their all-hands meetings, the outside counsel can learn more about the business’s priorities and objectives and how the outside law firm fits into that equation from a DEI perspective. The same goes for summits and networking events where the law firms and/or legal departments are sharing progress for their DEI strategy. It strengthens the business partnership and enables both parties to identify additional areas on which they can collaborate and pinpoint tailored solutions.

Curated networking events are also effective because in-house counsel can strengthen relationships with attorneys that are working on their matters and develop new relationships with attorneys who are not yet working on their matters in areas of interest and need. Law firms often have more training and professional development opportunities and resources. Inviting in-house counsel to participate in DEI/CLE professional development opportunities is a way to provide additional value and deepen the relationship.

Tactic 5: Conduct Check-In Meetings and Create an Action Plan

When data is collected and analyzed by the in-house team, whether that is done internally or through a third-party, the data should be discussed with outside counsel per a set cadence (e.g., bi-monthly, quarterly) and collaboratively the in-house and outside counsel team should create a roadmap or action plan with goals and key indicators of progress.

Tactic 6: The Relationship Partner Should Serve as a Thought Leader, Relationship Manager, and Value Ambassador

The relationship partner (RP) should have a solid understanding of their full service and value offering/position and be well-versed on what the firm is doing from a DEI perspective, just as they are equipped to discuss rates, matters, and expertise. The RP should partner with their DEI leader and in-house DEI champions to proactively learn about what in-house counsel and their organizations value from a DEI perspective, what is happening in the market, and how the firm is progressing in DEI. The RP and DEI leader can work together to identify opportunities to collaborate with in-house counsel and present tailored solutions.

Additional Ways to Collaborate and Advance DEI Within the Legal Industry

In-house counsel and outside counsel looking to advance DEI industrywide should be creative and find new ways to collaborate. Organizations such as the American Bar Association, Association of Law Firm Diversity Professionals, Diversity Lab, Leadership Council on Legal Diversity, Institute for Inclusion in the Legal Profession, Minority Corporate Counsel Association, National Association of Law Placement, Seramount, and the Society for Human Resources are sources for knowledge sharing and thought leadership if looking for additional ideas on how to collaborate.

Within our respective organizations, we should develop and socialize repositories with case studies, tools, testimonials, and templates to support our efforts and improve efficiency. Continued and increased industry collaboration is a way to accelerate DEI progress for the betterment of our industry.

Krystal Studavent Ramsey is based in Houston and a member of the State Bar of Texas Office of Minority Affairs - Minority Counsel Program (TMCP) Steering Committee and co-chairing the TMCP Houston Save-the-Date Reception.

[1]  For purposes of this article, benchmarking does not refer to a quota or standard used in hiring, nor is it to be considered either a ceiling or a floor for the employment of particular groups.