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6.2.20: COVID-19 Crisis Series CLIENT-SIDE

Updated: Jul 31, 2020

As its first topic of focus, the Council of Luminaries has decided to have regular meetings to discuss the effects of the COVID-19 pandemic on the legal industry as they materialize. The objective is to identify developments in the market, at both clients and firms and to explore potential solutions and make predictions on where things go from here. Key takeaways from each meeting will be published for the public following each discussion.

The below meeting was conducted primarily with the client-side group.

This Week's Temperatures

Each week we ask the Luminaries to answer these four questions, on a scale of 1-10 with 5 being what would have been their pre-COVID response.

We started this week’s call with a discussion on diversity, inclusion and race. It ended up being the only topic we covered.

There are two different issues at play – the environment in the workplace and the environment outside in the community. The outside is taking over the narrative right now. In the workplace, however, a couple of things legal ops does can help: Tell firms where they are in terms of benchmarks and putting pressure on firms to hit numbers.

The legal profession is already one of the least diverse professions in the country, and we are concerned about how firms will respond to the economic crisis. Reductions and pay cuts will hit diverse employees of the firm first and foremost.

One group member described his company’s robust plans, which will be launched in the next 30 days for their preferred partner firms. (This was on tap for earlier this year, then they decided to delay due to COVID-19 but the recent events have pushed the company to rethink and launch sooner). The company has set targets for each firm in four areas. Firms must either hit those targets or show movement towards each these targets each quarter or be penalized by a percentage of their fees. The maximum penalty is 4% per year. “We know it takes time for firms to move, so we will not be very public about this at first. It’s really just a first step.”

One topic the company hotly debated internally was why the penalty rather than an incentive. They considered paying bonuses but thought that this way would be more directly motivating the least diverse firms. Also, the company’s culture is not to pay more to firms for what they should already be doing.

Another group member says that they prefer to reward with referrals rather than penalize or pay a financial bonus, saying they see it as table stakes. The model is not formulaic, but they are open and direct that they are tracking and sharing back to the firm. While progress is slow, they have seen change.

They also said that they understand that some firms have issues with building a pipeline as it starts with barriers to entry back in or before law school. They want to reward the right behavior, and they want their lawyers to be representative of their customer base, as at the end of the day diversity is good business.

The Phantom Diverse Relationship Partner

Another Luminary reported that their program is 4 years old and that it takes a while. They used 2017 as a base line year, rolled the program out in 2018, so 2019 was first full year of metrics. They are very specific tracking hours so that firms can’t have a diverse relationship partner that doesn’t do anything. They measure in aggregate across the top firms by spend and also firm by firm, then sit down with each and give them their metrics every year. “You have to measure what you care about.”

They added that the problem is often on the partner level and if you want diversity of strategic thought, the partners working on the matters have to be diverse. (Numerous group members mentioned that firms too often bring a relationship partner that is diverse but is not necessarily working a lot of hours on their matters.

There has to be consequences, such as the firm not getting more work, which can be difficult if the company has firms it likes and they are embedded. “I’m thinking there are going to be some firms that are made an example of. We don’t measure the means to the end. We measure what we are getting.” She added that it won’t change overnight; it’s a pipeline problem.

One group member expressed concern that things will go backwards due to the pandemic. Most firms are most diverse at lowers levels. Cutting summer associate programs, etc. will have an impact.

Potential Solutions

The group members were also concerned about IP, as higher STEM often means even lower diversity. One Luminary was impressed with their IP group’s own internship program.

The IP group at their company reached out to first year law students and recruited diverse people. They have a lot of 1-1 involvement, gave them good assignments, and helped them get jobs with our firms as summer associates. This is the third year they’re doing it (virtual this year), but they placed people into firms and as they come up ranks they’re in a position to earn work. “It’s a drop in the ocean, but it has made our lawyers open their eyes a lot. Over time we’ll be building a network of people who know our company. We also hope they will go back to their schools and say what a great place we are to work.”

One issue is managing diversity around the globe. It means different things in different places and the ABA/EEOC guidelines don’t necessarily translate. UK firms, for examples, are very interested in social development, from high school on up. Lawyers there note that the country has a class system that needs to be dealt with.

A company can make a big difference in giving work and creating a book of business to senior associates and non-equity partners to help them make partners. That can be very powerful.

Some wondered if law departments should be helping fund law firm diversity programs, but most were against it. “They have resources. We pay them to do our work; they can fund their own programs.”

One group member mentioned that measuring pre-matter diversity and making sure firms know it is linked to the engagement can be effective. It’s powerful to say, “you were neck and neck, but it came down to diversity and we went another way.” How much we close the loop and feed that information back to firm is how we are end up with the teams we want.

Another member mentioned that the desire for a diverse team is in their RFP, but the key is making sure it’s serious. Multiple members told war stories about firms practicing obvious tokenism, such as bringing a female associate to a pitch whose only function was to advance slides.

Another agreed that it’s good to include D&I in the RFP, but a dream would be a 2-way dashboard on actual utilization and hours are that can be visualized in a real time report card to track RFP/Promised vs. Actual in real time “It’s better in the heat of the moment. If you wait to postmortem, it can be too late.”

It doesn’t have to be too late, however, if you track against it and put firms on a PIP (performance improvement plan) if they do not live up their promises. So much of this is metrics. Firms must feel like they have to just make sure the numbers match up, but they often stuff the bottom with diverse associates to make the numbers look good. It’s hard to know if they are taking this seriously.

The Pathways to Partnership program may be part of the solution, which encourages making 6-8 year associates the relationship lawyers. Having them get credit for the work can make a big difference. Lawyers are rewarded when they bring in the business, and we need to help them do that. Another strategy is to reward firms who have diversity on their management, hiring and compensation committees, as that’s who really has the power.

Only a Third of Law Departments are Tracking

According to the 2019 Law Department Operations Survey, only 32.3% of companies track diversity metrics, which makes it hard to move the needle.

There is also a general shift for of diverse attorneys moving in-house. Firms focus on billable hours and can work attorneys to death, and the more marginalized in our society will be hit the hardest. Firms complain that they struggle to find and keep talent because people want to move in-house, but the fact that so many are willing to take such a big pay cut to do so says a lot about the firm’s environment and ability and willingness to nurture people. There’s a big cultural impact at firms based on who they choose to mentor, etc. Young associates who don’t look like the partner you often fall to the wayside. Also, bad assumptions can cause damage, such as that a young woman might have a family and not be willing to travel.

Moving beyond the billable hour can have a big impact on diversity. The more we can move away from the billable hour the more we push efficiency, the more it is good for all.

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