2 things you can do to track your outside law firm diversity

Lauren Jennings | May 5, 2021 | Articles

Over the past 11 years, there has only been a 3.9% increase in minority representation in top law firms, according to the 2020 Diversity Scorecard. Moreover, recent surveys have found that only 25% of attorneys are women, and only 10% are Black or Latino.

Psychological barriers such as the bystander effect, loss aversion, status quo bias, and bias lock-in—phenomena that observe people are less likely to come to someone’s aid when others are around and a preference for situations to remain the same—have made it difficult to move the diversity, equity, and inclusion (DEI) needle in the legal industry. For change to occur, industry leaders, firm management, lawyers, and general counsel must encourage concrete action to challenge the status quo and make decisions based on future long-term gain rather than perceived short-term loss.

Corporate legal departments are overcoming these psychological barriers by placing significant weight on their outside law firms’ commitment to providing a diverse staff to perform legal services across all practice areas. In fact, more than a third of CLOC (Corporate Legal Operations Consortium) members said their legal departments hire outside counsel based on law firm diversity metrics, according to a survey of more than 200 consortium members earlier this year.

If your legal department is looking for ways to drive diversity and inclusion with outside law firms, here are two key initiatives to start thinking about.

1. Collect and analyze diversity data

One of the main benefits of having a diverse group of individuals working on your matters is higher-quality work. It opens the door to ideas and experiences from multiple perspectives, which lead to better processes, analyses, and ultimately, solutions.

While legal departments are influencing positive change in the legal industry, 64% of departments aren’t tracking diversity data because they don’t have enough resources or the right tools to do so. But not investing into tracking that data is a big mistake. Analyzing that data helps drive informed decisions regarding hiring and retaining outside counsel, ultimately saving costs long-term.

Conduct a diversity survey of your outside counsel

Conducting surveys of your existing outside counsel or firms you’re considering partnering with is an easy way to gauge the diversity of their team and will give you a solid grasp on their DEI efforts.

An effective survey you can ask all your potential outside law firms to complete is the ABA Model Diversity Survey. It shows how diverse a company is by collecting diversity data on schedule flexibility, compensation, partnership ranks, hiring practices, and retention rates.

For law firms you already work with, we always recommend annual reviews of your OCGs. This is the perfect time to introduce a diversity survey and share why it’s important to you and your legal department. SimpleLegal’s billing guidelines whitepaper can help you get started with best practices when revisiting your OCGs.

Use legal technology to track diversity data

After deciding to work with an outside law firm, keep tracking their diversity data so you can make sure they continue to meet your law firm’s diversity requirements.

Legal operations management platforms with e-Billing capabilities collect data to provide visibility into project budgets, open litigation matters, and staff productivity. While legal e-Billing systems were created to better understand spend, modern solutions like SimpleLegal can simultaneously support a diversity program by tracking gender, race/ethnicity, and veteran status.

Tracking and analyzing data is only the first step. Taking action from your analyses is how change begins to take place.

2. Establish programs that hold law firms accountable

Once you’ve collected data and analyzed the diversity of the firms you work with, the next step is to increase diversity efforts by establishing a program that holds them accountable. A good place to start is determining your diversity success metrics. Once you set concrete metrics requirements, evaluate and rework outdated law firm billing guidelines to include that diversity criteria and make your expectations for outside counsel known from a project’s onset.

Enforcing the DEI program for your outside law firms holds them accountable to increasing representation. Check out what the following three programs are doing to enforce their DEI programs.

Microsoft offers an annual 3% diversity bonus

At the end of each year, Microsoft determines which of its outside law firms have best achieved their diversity targets and awards them with a 3% diversity bonus.

Microsoft first launched its Law Firm Diversity Program (LFDP) in 2008 to award firms that prioritize diversity initiatives. Since then, there have been a couple of iterations of the program, but the goal has remained the same: increase overall outside counsel diversity. It aims for greater inclusion of women, racial and ethnic minorities, LGBTQ+ people, people with disabilities, and veterans.

Microsoft provides all its law firm partners with five diversity criteria. The law firms choose one of the five criteria and set it as their goal to achieve for the year. The outside law firms that achieve their chosen goals are awarded a diversity bonus.

Facebook requires at least 33% of outside counsel teams be comprised of women and ethnic minorities

Facebook, in a push for a more inclusive workplace, wants ethnic minority and women lawyers to make up 33% of their outside legal teams. Its in-house legal team is also focused on increasing diversity among their own ranks and the people they work with.

Apart from requiring outside counsel to staff their teams with a diverse team that includes both women and minorities, Facebook takes its program one step further by also telling its outside counsel to encourage professional development by providing growth and leadership opportunities for their diverse lawyers.

Hewlett Packard withholds 10% of fees from firms that don’t meet its diversity mandate

Hewlett Packard (HP) stipulates in its OCGs that outside counsel that doesn’t meet its diversity standards automatically forfeits 10% of their fees.

Its diversity program states that outside law firms with over 10 lawyers must have at least one diverse firm relationship partner working with HP and at least one woman and one ethnically diverse attorney who each perform or manage at least 10% of the billable hours for HP.

Drive outside law firm diversity with SimpleLegal

Diversity in the legal profession drives innovation, decreases employee attrition, and improves overall performance and results. Diverse lawyers in leadership positions boost innovation by 45%, and, according to a study by Acritas, diverse law firms perform better, are more responsive, and are more efficient.

SimpleLegal customers can require their law firms to submit negotiated timekeeper rates before invoices can be approved. During this process, law firms can be required to input diversity criteria, including gender, race or ethnicity, and veteran status.

SimpleLegal is helping legal departments make the analysis and application of diversity data just as important as any analysis from spend data. To learn more about how SimpleLegal can help you move your legal department’s DEI needle, schedule a demo with one of our legal operations experts.