How General Counsel Support their CEOs’ Diversity Efforts

Diversity is now more than ever a key corporate strategy as customers become more diverse, companies become more global, and racial/ethnic communities have even greater buying power. CEOs are leading diversity initiatives with general counsel supporting such efforts by their words and deeds.

Three such general counsel are Paula Boggs, executive vice president, general counsel and secretary of Starbucks Coffee Company, headquartered in Seattle, Wash.; Samuel M. Reeves, associate general counsel of Wal-Mart Stores, Inc. in Bentonville, Ark.; and Andrew Cuyugan McCullough, senior vice president and general counsel of Century Theatres in San Rafael, Calif.

While their legal departments vary in location, size, and scope of work, these corporate counsel have invested in a variety of methods to enhance their companies' diversity efforts. The three have much in common: a fervent commitment to take action and a deep understanding that valuing diversity means exercising leadership, building relationships with outside organizations, and keeping diversity as a front and center priority on an ongoing basis.

Focus on Diversity

Paula Boggs speaks with great enthusiasm about Starbucks Coffee Company's commitment to diversity. "As a leader, it's very easy because this is a company driven by its guiding principles, and our second principle is that we will embrace diversity in everything we do," says Boggs.

As stated by Boggs, "Orin Smith [the recently retired president and CEO of Starbucks] had leadership meetings where he told us we should look at diversity like we look at other things such as the quality of our coffee and the satisfaction of our customers. It is part and parcel of what makes us successful. The diversity is not only racial/ethnic and gender diversity, but diversity of opinion, age, cultural experiences, family status, and sexual orientation. A lot of different kinds of diversity coming together makes Starbucks what it is."

"Our experience has been that the wider we cast our net, and the more organizations we can partner with that are a conduit for talent, the less the challenge."

— Paula Boggs

Boggs' commitment to diversity was made clear early on: As one of Starbucks' most senior leaders, Boggs voluntarily requested that diversity be a component of her performance plan under Smith's leadership and now Jim Donald's (Starbucks' new CEO). In turn, she made diversity goals a part of her direct reports' performance plans. Next fiscal year, Donald intends to include diversity goals in the performance plans of his direct reports. "Diversity is very central to who we are, and it has been since virtually the founding of the company," says Boggs.

Boggs is also clear that supporting the company's diversity initiatives "starts at home." In Starbucks' legal department, an active diversity committee focuses on two major issues: Ensuring that outside counsel are living up to Starbucks' diversity goals and standards, and making sure that the legal department is doing everything it can to further the company's diversity initiatives.

To reach these goals, the legal department has made sure its hiring process attracts a diverse pool of applicants, through partnerships with local and national minority bar associations and women's groups. Boggs also notes a shift in recruitment focus: "Until a couple of years ago, both staff and attorney candidates pretty much came from the law firm community. We've continued to attract gifted and talented individuals from law firms but we've found tremendously talented people by expanding our focus to other sources, like corporations and other venues. That's been another way of really improving our diversity story."

The department's recruitment efforts have paid off: Fifty percent of Starbucks' in-house lawyers are female; 22 percent are lawyers of color; and a fair number are self-identified gay lawyers. The department also boasts an age range of partners (employees) from their mid-20s to their mid-60s. "By these statistics, we walk the walk," Boggs declares. "We show we can do this."

Like Boggs, Samuel Reeves, an associate general counsel at Wal-Mart Stores, Inc. takes diversity seriously and is equally enthusiastic about its value. This type of commitment begins at the top with Wal-Mart's CEO, H. Lee Scott, Jr. Wal-Mart's legal department consists of approximately 25 percent minority representation among the attorney group, with 43 percent of the attorneys being women. Within those groups, department leaders have worked hard to ensure that minorities and women lawyers hold key positions that place them in line for promotion to officer positions in the department. Additionally, 30 percent of the legal department officers consist of minorities and 20 percent of them are women.

To assist with the company's diversity efforts, Wal-Mart established the Office of Diversity in 2003 and named Charlyn Jarrells Porter as its chief diversity officer. Porter is a lawyer who began her career with Wal-Mart in the legal department. Porter hired attorney Angel Gomez as the director of internal diversity relations. According to Gomez, Wal-Mart's diversity initiative has a two-pronged approach that entails fostering diversity internally for associates, and establishing strategic relationships with organizations outside of the company. Gomez also conveyed that the legal department has been exemplary in its efforts and execution. For example, Gomez explains, "The department's recruitment efforts with respect to minorities and women as well as the outside counsel program, align closely with the company's overall diversity initiative."

Reeves is responsible for the hiring of all outside counsel and focuses his diversity efforts in three main areas: gathering and maintaining diversity data on the law firms they currently use; participating in minority bar associations and other diversity-related programs; and creating processes for diversity to thrive within the legal department.

As to the first area of focus, Reeves says, "When we consider hiring new outside counsel, we have several core requirements, one of which is diversity. We ask difficult questions, especially about the diversity within the partnership ranks. We focus on partners rather than associates because that's where the 'rubber meets the road;' that's where the ownership of the legal profession lies. In addition, we have worked on identifying and sending business to minority-owned law firms. The business we send to them is not on a piece-meal basis, it is substantial." Secondly, participation in diverse bar associations is important. "When we've sponsored events, we don't just write a check; we get involved," Reeves stresses. "Our lawyers attend so we can identify and network with potential in-house candidates and outside counsel." Reeves adds, "It also gives us an opportunity to meet great lawyers who are Asian, Hispanic, Native American, and African American."

At the National Asian Pacific American Bar Association annual meeting, 14 Wal-Mart lawyers attended to "let the ethnic bar associations know that we have open positions and that we're looking to expand our pool of candidates. We're working hard to cast a wider net to identify quality attorneys," says Reeves.

Reeves further explains that Wal-Mart's philosophy is to lead by example. "Three of our senior lawyers attended the MCCA® CLE expo last year," he shares. "We announced to a room of 250 lawyers that we had open positions, and we wanted to talk with interested attorneys. And we did just that: We interviewed three candidates, two of whom were hired." This impromptu recruitment was just another example of the senior leadership being actively involved in the diversity process, and according to Reeves, "There is no one more committed and better at getting involved than Tom Mars, our general counsel."

Reeves' view on diversity is straightforward. "At Wal-Mart, the message is clear: Diversity is important to our business. Our customers are diverse and, internally within the department and externally with our outside counsel, we need to reflect that customer base. Internally, we do reflect our customer base. We have people with different backgrounds, experiences, and perspectives solving legal problems. We want the same from outside counsel," he declares.

Reeves' third area of responsibility is the legal department's diversity initiatives. Two lawyers at Wal-Mart focus solely on that initiative—one looks at hiring and the other at retention. Diversity and recruiting are at the top of the list at every weekly meeting with the general counsel. "We take it seriously; we aim to keep it a priority," Reeves emphasizes.

Andrew Cuyugan McCullough, senior vice president and general counsel of Century Theatres—privately owned by the Syufy family—has had a wholly different and, at the same time, similar experience to Boggs and Reeves. Prior to his current position, McCullough worked for the San Francisco City Attorney's office. When he became the chain's general counsel 10 years ago, he looked around to find other legal talent and recruited two candidates from the city attorney's office, both of whom were from racially diverse backgrounds. "We hired what was best for Century Theatres, and that best included diversity," says McCullough.

Unlike larger corporations, Century Theatres' commitment to diversity has come about without formal edicts or programs. "We have a wonderful environment, and we've increased our diversity naturally," says McCullough. "It's so unusual to do it this way. I believe the best expression of diversity is when you do it organically."

McCullough knows the commitment comes right from the top—the Syufy family owners. While the current CEO, Raymond Syufy, is a second-generation American, his parents emigrated from Lebanon, a mainly Christian country among mostly Muslim neighbors. McCullough believes the family's value for diversity is anchored in the senior Syufy's immigrant perspective, which has influenced his son's leadership style.

With a cluster of theaters in Northern California and more in 12 other states, the company's 5,000 hourly employees truly represent the diversity of the respective communities in which the theaters are located. "We employ people who live next door to us," explains McCullough, "and that means diversity."

"We also promote from within. Many vice presidents started as hourly employees and were promoted upward because the company believes that those who know the business best are those who have worked on the line. This process naturally included diverse candidates," says McCullough.

During McCullough's 10-year tenure, there have been four full-time attorneys and one part-time attorney working for the corporation—all of whom have been attorneys of color and/or white females. McCullough, a Filipino American, and another female attorney are in-house. Another attorney in the company is Latino and has assumed a business role for the company. A fourth attorney, who started in the legal department and is of South Asian descent, left the parent company about two years ago. The fifth attorney was a female who worked part-time for several years.

"We have not as yet had any white male attorneys join our company. While that may seem unusual, what is even more notable is we have done exceedingly well against our industry peers. In fact, we have posted a profit every year in our history, which is especially noteworthy because in the late 1990s almost all the major theater chains were filing for Chapter 11 bankruptcy protection," says McCullough.

The Benefits of Diversity

The rewards of diversity are clear to all three general counsel. "When I look at the law department, diversity has made what was already a great department even better," says Boggs. "It has advanced our effectiveness and augmented our talent, which makes us stronger and, frankly, a more fun place to work. The rewards are also huge. My department's satisfaction and engagement rating is very high, and it is directly tied to our diversity."

"I've also learned a lot from partners who are different than me," Boggs adds. "I wouldn't know who the Black Eyed Peas are but for my colleagues." While knowing that band may not, at first glance, seem relevant to practicing law—it is. The Black Eyed Peas are an important hip-hop group, and hip-hop fans are a significant segment of Starbucks' customer base.

For Reeves, the benefits of diversity are easy to articulate. "For us, it is both a moral imperative and our desire to drive change within the legal profession," Reeves explains. "We're known to drive change in other areas, and we're uniquely situated to do that in the legal profession as well. With 130 lawyers in-house and hundreds of outside counsel, Wal-Mart can take the lead in articulating the value of diversity."

Andrew McCullough notes that diversity can create rewarding situations. "If people of color, who do not feel particularly at home in many corporate environments, find one that is comfortable, why would they leave?" McCullough muses. "Diversity promotes loyalty and retention. We can provide both that comfortable environment as well as monetary compensation. Employee and employer both benefit."

Another gratifying example McCullough describes is the department's outside employment counsel, a women-owned legal group with partners who migrated from large firms. "They do great work, they are wonderful to work with, and they represent genuine diversity," McCullough notes. "They are such a find, and our working relationship is truly a win-win situation for both of us."

The Challenges of Diversity

Diversity is not without its challenges. While each general counsel frames it differently, the challenges they face are both similar and unique.

For Boggs, diversity hiring and retention are some of the biggest challenges. "Our experience has been that the wider we cast our net, and the more organizations we can partner with that are a conduit for talent, the less the challenge," Boggs delineates. "For example, we've participated in the National Bar Association's job fair for several years, and now we have a track record of retaining outside counsel as a result of our participation. This has given us credibility. We've also developed relationships with the National Asian Pacific American Bar Association, National Hispanic Bar Association, Northwest Women's Law Center, and other legal organizations." In fact, one new hire at Starbucks heard about the opening through MCCA's monthly "Hot Jobs" email blast.

"Building those relationships takes work and happens only over time," Boggs continues. "We've made the upfront investment to cast our net widely, but we know we must have staying power because results will not happen overnight. We've had many conversations with a variety of ethnic bar associations to really make the point that we are serious and that we need their help to achieve our diversity goals."

Another diversity challenge is to ensure that outside counsel understand Starbucks' commitment to diversity. Boggs did this in several ways. Soon after becoming general counsel, she asked her team whether she should sign the Bell South "Diversity Statement of Principle"—the Fortune 500 general counsel statement supporting diversity that also encouraged firms and law departments to advance diversity. The response was a resounding yes, so Starbucks became a signatory. Then, Boggs reports, "Our team decided we would first inform the law firms we use about our diversity commitment, seek to understand how important diversity was to them, and finally measure their commitment to diversity."

Almost three years ago, Starbucks sent letters to its top 25 law firms (based on legal fees) asking for diversity information with respect to the firm as a whole, and more specifically, as to who was doing Starbucks' legal work.

The next year, Boggs reports, "We looked afresh at the top 25, and wanted to measure how well they'd done. The second year's letter was even more tailored than the first year's, because the state's ethnic bar associations had published a report card giving grades to Seattle area law firms on their diversity efforts. We not only asked our outside counsel to tell us what they'd done in the past year, but we also incorporated their diversity grade in our letter." The legal department has also met the diversity challenge in their selection of outside counsel beyond those they find through sources such as the NBA job fair. "For beauty contests, in tie situations from a talent standpoint, if there's little to distinguish firm A from firm B, we've given the business to the firm with the better diversity record," Boggs explains.

For Wal-Mart, the challenges are both internal and external. Looking down the road, Reeves wants to ensure that Wal-Mart maintains its diversity momentum as the company grows and adds attorneys to the legal department. He desires diversity to continue to be an area of focus. Another challenge is external: Developing the pipeline of students who choose law. "It's a challenge we need to address as a legal profession: Reaching students who would not otherwise consider going into law. We're talking about how to do that right now. Again, we see ourselves as being able to lead in this area, and we're asking how Wal-Mart can impact diversity within the entire legal profession," Reeves notes.

One of Andrew McCullough's diversity obstacles is finding diverse outside counsel for remote middle market areas. "It's hard to get references for attorneys, regardless of their background, let alone racially diverse attorneys. In addition, much of our litigation is basic personal injury defense. That focus can further decrease the pool of potential lawyers and make it challenging to identify diverse lawyers who are well suited for our work."

Another challenge for McCullough is more personal. He relates, "As attorneys of color within a corporate environment, the challenge is to remember who we are and to provide the leadership in diversity that is needed. We need to support the hiring of excellent employees of color either as in-house lawyers or as employees in other positions. We cannot take our roles and our environment for granted; we cannot rest on our laurels. We need to continue to foster diversity."

Advice for Other General Counsel

Based on their varied and instructive experience, these three general counsel offer straightforward and practical advice.

As stated by Boggs, making diversity work takes patience and partnership. "It takes work to build those relationships; you have to make that upfront investment in my view. You also must have staying power because change will not happen overnight. We've had conversations with many different bar associations and law firms to really make the point that we are serious and we need their help to achieve our goals," says Boggs.

"Get involved," recommends Reeves. "There is no diversity road map, so look around for opportunities. Attend diversity events at places like historically black colleges, local and national minority bar associations, and the MCCA®. Once you start doing that, other things unfold and your particular path will become more apparent."

Reeves also advises general counsel to keep diversity "front and center" within the organization. "Every week we discuss diversity in our senior leadership meetings with the general counsel," says Reeves. "We also discuss diversity daily within my area of the department." Essentially, Reeves knows that what is focused on gets done.

Andrew McCullough's advice, while in a different direction, is also quite clear: "If you impose selection criteria for outside counsel that isn't consistent with what you use for hiring within, it's a prescription for disaster. If the commitment does not exist internally, then it won't be taken seriously by outside lawyers."

McCullough relates that when he has interviewed potential outside law firms at the California Minority Counsel Program (CMCP) job fairs, the lawyers have often been quite candid with him. "These folks can surmise whether they have a good shot at getting hired as outside counsel by what the general counsel's hiring results have been within their legal department," shares McCullough, who remembers hearing these sentiments from outside lawyers. His advice, then, is that the commitment to diversity first "starts from within."

In 2005, valuing diversity by general counsel has come a long way from a decade or so ago. From Andrew Cuyugan McCullough at Century Theatres to Sam Reeves at Wal-Mart and Paula Boggs at Starbucks, each has his or her distinct ways of supporting diversity, but all have a fervent commitment to take action, provide leadership, and focus on continuing improvement. With these leaders, their overall commitment bodes well for enhancing diversity within their corporations and throughout the legal profession.

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Peggy A. Nagae is the owner of peggynagae consulting and specializes in cultural competence, leveraging diversity, leadership coaching, and strategic planning. She is also the past president of the National Asian Pacific American Bar Association and a current board member of the National Asian Pacific American Legal Consortium and the Asian Pacific American Women's Leadership Institute.

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From the May/June 2005 issue of Diversity & The Bar^®