Money Talks:  The free-market answer to more diversity in law firms

With all the talk about diversity being a good business practice for law firms, it is nice to finally see a client put some pressure on law firms to change. In the November issue of Corporate Counsel magazine there is a short story about General Motors and the demands it makes of its outside counsel to be more diverse.

Earlier this year, [GM] became one of the first companies to link reduced billing rates to diversity goals. ...

In the second quarter of this year, the law department began a pilot program that sets individual diversity goals for six of its more than 500 outside counsel.

If a firm fails to meet its target, GM will get an extra discount [on legal fees].

The article notes that it is the goal of GM to get its outside counsel to be as diverse as its in-house legal department. It also notes that "a few" (of only six, remember) of the firms will miss the target resulting in GM getting total discounts of about $400,000.

The article goes on to praise King & Spalding for already making its 2007 goals. "Over the previous five years, the Atlanta-based firm has more than doubled the percentage of minority lawyers working on GM matters, and done almost as well in boosting the number of women atrorneys working for the carmaker." (I'll put aside the skeptic in me that wonders if K&S hasn't just assigned every woman and every minority to the GM client team because that just wouldn't be a replicable business model.)

So this is the answer that those of us who believe in the power of the free market have been waiting to hear. It is also an answer for those of us who abhor affirmative action.

The proof is in the words of firm chairman, Robert Hays, "We've gotten more work because we've met GM's objectives." Let's face it, law firms are services businesses and are in business to make money. So, we can interpret Mr. Hays' words to say, "We're more successful because we're more diverse." Way to go!

UPDATE: I was recently "educated" that these sorts of demands by Fortune 500 companies are old news and that other household name corporations have been doing this for some time. Regardless, the points of my post are still valid. If you have any information on the success of such programs or on the effects these have on firm hiring or retention, please share.



Just a note to add, according to the article, GM's legal department is 19% minorities and 29% women—not too shabby but also not an impossibly high level of diversity for these firms to meet.

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