UK law firms need to follow the US lead as diversity becomes an increasingly important issue for clients

The news that Barclays is set to follow US-style trends for corporate responsibility and demand staff diversity statistics from every law firm it uses for external counsel is both important and inevitable. Barclays is understood to be the first UK company to take the step, but in fact it is just the first to go public.

The time has come for law firms to get with the project. If partners and fee-earners are unable to articulate the case for diversity and know what initiatives are ongoing within their organisations, then, quite simply, they will end up losing business to law firms where diversity is valued and where partners and fee-earners are able to expand upon the question: “What are you doing within the diversity field?”
Many financial institutions place a high premium on diversity and inclusive workplaces as a part of their core values and principles, and for several years have been looking into ‘supplier diversity’. It is not at all surprising to learn that Barclays is now demanding diversity statistics from its legal suppliers. If a bank regards diversity as important, it will inevitably decide to do business with likeminded parties.

Some major law firms – largely US ones – have been getting their diversity house in order for a while now. Having established diversity initiatives and policies ‘back home’, they are now looking to raise awareness internally on diversity issues in a UK-sensitive way. It would probably be disastrous to take a US diversity training programme and expect a UK law firm to buy into the messages at all levels and look at internal culture and behaviour.

However, the trend is growing for financial institutions, the public sector, and increasingly FTSE 100 companies, to ask their suppliers for both statistics on diversity and searching questions at the pitch stage, often via a checklist.

In the US it is becoming very commonplace. A global head of diversity at a US firm recently revealed that the firm spends a large proportion of its week responding both to diversity and inclusion queries from new and existing clients. The questions clients are asking do not simply centre on visible diversity such as gender and race. Increasingly, clients request that the teams which works on their deals are culturally diverse as well.

The diversity head of a major international company also revealed that the company does not “believe that white male heterosexuals have the monopoly on creative, innovative solutions and legal acumen”, and instead need diversity of opinion and culture to get the best results. Sara Lee Corp general counsel Roderick Palmore turned up the heat recently by saying diversity would be a factor in hiring and retaining outside counsel. As of 30 June 2005, the general counsels of 81 other companies had signed on to Palmore’s challenge.

Last June, Wal-Mart’s legal department pressured its outside counsel for more diversity by asking its top 100 firms to submit more women and minorities as candidates for the relationship partner role. Wal-Mart general counsel Thomas Mars made the move when he realised the liaisons at 82 of Wal-Mart’s 100 top firms were white men.

On the flip side, exhausted fee-earners and associates are often resentful if a client lists diversity as one of their core values, but still demands the work on their desk first thing in the morning, requiring yet another all-nighter. Where is the work-life balance respect there?
Law firms will resist the changing climate at their cost.