Posted on 07/06/2005 2:34:54 PM PDT by tdewey10
Wal-Mart Demands Diversity in Law Firms
Outside counsel must comply or lose its business, says GC at nation's biggest retailer
Law firms that pack their lower ranks with minorities and women while leaving white men in charge are about to find Wal-Mart a tough customer.
The nation's biggest retailer wants to see diversity at the top. The company's general counsel has told its top 100 law firms that at least one person of color and one woman must be among the top five relationship attorneys that handle its business.
Wal-Mart GC Thomas Mars made the announcement last week at an Atlanta conference on legal diversity. Top lawyers at Visa International, Del Monte, Pitney Bowes and Cox Communications also said they have begun requiring outside counsel to demonstrate that there are substantive numbers of women and minority lawyers in the upper levels of their firms.
Mars, whose department spends about $200 million a year on outside legal services, said he realized he had to do something when he saw that 82 of the top 100 relationship partners handling the company's business are white men.
Those firms get $142 million of the company's business, with individual firms' fees ranging from $350,000 to $13 million.
The goal, said Wal-Mart's associate general counsel, Samuel M. Reeves, is to "increase the number of women and minorities directly responsible for the Wal-Mart relationship at our law firms."
Mars, Reeves and the other GCs were participants in the fourth annual Symposium on Diversity in the Legal Profession, organized by the Atlanta Legal Diversity Consortium.
The move by Wal-Mart appeared to answer two of the big questions posed at the symposium that drew about 400 lawyers from around the country: Do general counsel at large companies consider the number of women and minority lawyers employed by outside counsel when deciding whom to hire -- and will they move business away from firms that remain overwhelmingly white and male?
That prospect has become serious since Sara Lee's top lawyer, Roderick A. Palmore, issued a "call to action" last year warning that he and the other signatories would consider a firm's diversity when hiring outside counsel. So far, close to 100 general counsel have signed on, including those from some of the nation's biggest companies.
Wal-Mart's move, sent in a letter to outside counsel last month, upped the ante.
Once the retailing giant gets lists of attorneys from its outside firms, due in mid-July, it will start weeding accordingly, Mars said. "We'll be making more decisions to retain and terminate firms [at that point]," he said.
"We are terminating a firm right now strictly because of their inability to grasp our diversity expectations," he added.
NO LONGER ENOUGH
Wal-Mart's new policy signals a growing determination by corporate legal departments to pressure outside counsel. It is no longer enough, the general counsel at the symposium said, to raise the numbers of women and minority lawyers in a firm's lower ranks if its upper echelons remain an exclusive club for white men.
Although the number of women and minorities running corporate law departments is disproportionately low, it is far higher than at the nation's top law firms.
Mars acknowledged that corporate legal departments also have a way to go on diversity. Wal-Mart's legal department started an effort to increase its own diversity about 2 1/2 years ago. "We had 50 lawyers and no particular diversity in the group," he said. Last year, the company hired 39 lawyers and 15 were minorities, he said. Now Wal-Mart wants to hold its outside counsel to the same standard.
Guy Rounsaville Jr., general counsel at Visa, agreed with Mars that just looking at the number of women and minorities at a firm is not enough. He said he wants to make sure the women and minority lawyers are among the client relationship managers.
"I get intrusive about who in the firm is getting credit for the relationship," he said, adding that Visa also asks outside counsel for a monthly diversity report.
Del Monte General Counsel James G. Potter said that his company's requests for proposals always include a question about the firm's track record in hiring and promoting women and minorities -- and their likelihood to be assigned to the company's work. Failing to address that question substantively "dramatically lowers a firm's chances of reaching the interview stage," he said.
Pitney Bowes' GC, Michele Coleman Mayes, said she focuses her scrutiny on the firms where her company spends the most money, adding that she looks at the law firms' numbers and also talks to their lawyers to gauge how hospitable the cultures are to women and minorities.
AVOIDING A ZERO-SUM GAME
Not everyone at the symposium thought diversity should be judged mostly by numbers. James A. Hatcher, senior vice president for legal and regulatory affairs at Atlanta-based Cox Communications, said that he does not ask firms to quantify their diversity. "I want diversity to be part of the culture," he said.
To find out if firms are fostering what he called an "inclusive environment," he asks his outside counsel a lot of questions. "At meetings with firms I'll ask, 'Why are there just white males here?' Or I'll probe associates to see how it is working there," he said.
Hatcher said his measure is "inclusiveness" instead of "diversity" because he does not want to pit white men against women and minorities.
"I try to include the white male in this," he said, explaining that sometimes "white males fear diversity efforts." Increased diversity at law firms should be a win-win situation, not a zero-sum game where white men lose opportunity as women and minorities gain it, he said.
DIVERSITY EDUCATION
To help firm managers make their environments more inclusive, the Atlanta Large Law Firm Diversity Alliance will launch a diversity education program next fall. Executive director Melanie Harrington, who announced the new program at the symposium, said it's the first of its kind.
The group has developed a management training program aimed at making the environment more hospitable for minorities -- instead of just getting the numbers up, she said.
Firm managers need to become "more cognizant that they have people coming into their environment who are not aspiring to assimilate but to contribute as they are," she said.
The program is aimed at practice leaders and others in large firms with an interest in managing diversity, Harrington said. For more information, see the American Institute for Managing Diversity's Web site, or call (404) 575-2131.
The Alliance's 11 member firms are Alston & Bird; Arnall Golden Gregory; Jones Day; Kilpatrick Stockton; King & Spalding; McKenna Long & Aldridge; Morris, Manning & Martin; Powell Goldstein; Smith, Gambrell & Russell; Sutherland Asbill & Brennan; and Troutman Sanders.
Imagine that a law firm has been turned down by Wal-Mart for not meeting its "diversity" criteria. And futher suppose that they were to sue Wal-Mart for insisting what is a baldfaced racial quota. And further suppose that the case made its way to a Supreme Court where Justice Alberto Gonzales was sitting. Gonzales must be stopped - Bush needs to nominate real conservatives to the SCOTUS
Thanks. I will keep that in my memory banks for future reference.
That's an interesting take, and one I hadn't considered.
On the surface, this looks unbelievably stupid. Maybe there's more sense here than first appears.
I do agree with you that the customer has the right to demand whatever they want from their service providers. The providers are then free to either comply with or deny that request. Loony requests will just mean less choice for the customer. That's the free market in action.
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