What It Takes for a Newly Combined Law Firm to Successfully Meld Two Diversity Programs
Few would dispute the competitive advantages intrinsic to law firm mergers and acquisitions, from expanded geographical reach to improved internal efficiencies. Based on recent activity, there's little doubt that such business arrangements will continue to surge in the years ahead. According to leading legal-industry consultants Hildebrandt International, 2006 saw 58 completed mergers and acquisitions involving law firms, nine more than in 2005. Fourteen additional mergers became effective in the first quarter of 2007 alone. Merger discussions between high-profile law firms are on the rise.
Beyond the primary objectives of combining firms is a subject that has received less attention, yet warrants a closer look: the spillover effect that this upward trend is having on diversity initiatives within newly combined law firms.
Paul Sweeney, litigation partner and administrative partner of the Los Angeles office of Kirkpatrick & Lockhart Preston Gates Ellis LLP (K&L Gates) and chair of the firm's diversity committee, is just now beginning to witness the impact of Kirkpatrick & Lockhart Nicholson Graham's (K&L) January 2007 merger with Preston Gates & Ellis (PGE). He explains that geography alone has been a significant factor in bringing in more minority attorneys.
"Being able to extend our geographical reach has allowed us to have much greater access to minority groups that we have not had access to before," Sweeney says, noting that with only three West Coast offices—Los Angeles, Palo Alto, and San Francisco—his former employer (K&L) missed out on an entire population sector, most notably the concentrated Asian and Native American populations in the Pacific Northwest. In fact, Sweeney adds, despite the fact that K&L was twice the size of PGE, the latter firm actually had a greater number of Asian partners. Now, as a combined firm, K&L Gates is in a better geographical position to recruit and retain this broader population of attorneys. The firm currently employs 1,161 attorneys in the U.S., of whom only 138 are minorities and 391 are women.
Sweeney reports that the merged firm is also benefiting from PGE's successful development of women attorneys in leadership positions. "At the time that we merged, the managing partner of PGE was a woman. [K&L has] never had a woman as a managing partner. To have women in very senior positions has been an enormous positive for the legacy of K&L women partners. Their success sends a strong message to the women in the combined firm."
Jack Fabiano, a partner in the litigation and securities department of WilmerHale and one of the co—chairs of the firm's diversity committee, has witnessed similar advances following the 2004 merger of Hale and Dorr LLP and Wilmer Cutler Pickering LLP, a combination that resulted in 1,025 attorneys. Prior to the merger, approximately 10 percent of the employees of each constituent firm were minorities. In three years, the combined firm's percentage has leaped to 15 percent.
–Paul Sweeney
"We've seen an increase in promotions from associate to partner and increases in numbers of summer associates who are minorities. The number of minorities has gone up," Fabiano reports. "Part of that, I think, is a benefit of the merger. People who are interested in more than one of the major cities in which we practice have flocked to us. And because we have a bigger practice base as a result of the merger, we can offer more professional opportunities than either individual firm did before."
Restructuring, Reworking, and Redefining
But how do two firms, each with its own diversity program, goals, and initiatives, come together and meld their individual cultures without losing ground on what they've already accomplished?
For the diversity team at WilmerHale, merging the policies and initiatives of each constituent firm involved "a lot of starts and stops," according to Fabiano. What began with separate diversity committees and individual focus groups resulted in the creation of a firm-wide diversity committee chaired by members from each major office (Boston, Washington, DC, and New York) and an umbrella strategic initiative focusing on three tenets: recruiting, promoting a leadership culture, and retention and career development.
"The two firms had really similar cultures," explains Fabiano, "but each city had a different professional focus and different demographics." In Boston, the office's minority population was small, so its most pressing inclusiveness goal was to convince law students of varying ethnic backgrounds to come to the Boston area. In Washington, leaving to enter into the government was so common that a major goal became creating a positive springboard for minority associates. The New York office saw its greatest challenge as retaining a diverse population of attorneys in an environment where it was becoming increasingly common to move in and out of offices quickly. To address the varying needs of each sector, the newly formed committee unified the combined firm's inclusiveness goals while allowing each city to create its own initiatives.
Julia Frost-Davies, financial restructuring partner and co-chair of the diversity committee for Bingham McCutchen LLP, has experienced eight mergers and acquisitions since joining the firm in 1995 and has witnessed a boost in diversity initiatives following each transaction. "We gain in terms of strength," she explains. "[Our initiatives] have been buttressed by bringing in additional talent, additional perspectives, and additional ideas." Frost-Davies notes that no single combination—including last year's mega-merger with Washington, DC-based Swindler Berlin, the second largest law firm combination of 2006—has had a major impact on Bingham's diversity policy. Although the newly melded firm (now with nearly 1,000 lawyers after this year's combination with the Los Angeles-area firm Alschuler Grossman) consistently exceeds the national average in every class of representation, according to NALP (National Association of Legal Placement) statistics, Bingham McCutchen LLP recently opted to create a more formal diversity program.
The process involved gathering a group of partners and senior staff to create a diversity action plan to be presented to the firm's partners. "Then we went on a national listening tour," Frost-Davies says, noting that because individual attorneys and staff came up through a host of different firms, it was important to drill down to uncover the ideas of each of its constituents. "We gave every individual in the firm an opportunity to weigh in on the draft of the action plan."
For K&L Gates, it was a matter of taking two strong programs and combining the best aspects of both. Because diversity was a key core value for both firms, a combined program was immediately put front and center. "Before the merger, we had phone calls back and forth," explains Sweeney. "Within two weeks of the merger being consummated, we came together physically and talked about setting an agenda for how we would proceed so that we could continue our momentum going forward." Almost immediately, the team reviewed existing diversity initiatives and capitalized on both firms' strengths. "We looked at where they overlapped and selected the best practices."
Greater Numbers, Increased Challenges
If law firms entering into a merger are each led by senior-level attorneys with a strong emphasis on inclusiveness, and if each firm boasts a progressive diversity policy, a certain number of bumps along the road are eliminated. But even with synchronized philosophies, practical complications abound.
Sweeney notes that the toughest challenge from the outset entailed wrapping his arms around what was happening in K&L Gates' 22 different offices. It was one thing to manage the firm's national efforts, which include an internally and externally distributed diversity newsletter, a committee with representatives from all offices, a national recruiting program, and a firm-wide mentoring program, Sweeney explains. But it's another experience entirely to tie together local programs aimed at each region's individual challenges and objectives. For example, K&L Gates' Los Angeles office hosts events for minority local law students to offer them an insider's view of being a minority attorney at a "majority" firm. The firm's Pittsburgh office works with students of color who are applying to law schools. "Understanding what was going on in these various offices, being able to exchange ideas about what works best, and make recommendations to other offices, I thought would be the greatest challenge," says Sweeney, adding that thus far, four months into the merger, gathering and sharing that information has, in fact, proven work-intensive, but it is ongoing and is being successfully accomplished.
Wendell Taylor, a partner in the corporate department of WilmerHale, member of the firm's executive and hiring committees and one of the co-chairs of its diversity committee, agrees, noting that physical distance is an inherent challenge. "Separation is something we work against all the time," he says. "It's harder still when you're dealing with three major offices over a 500-mile stretch." The firm relies on frequent telephone discussions and emails to narrow the office gap.
There's also the issue of the sheer volume of people involved on any given issue. "All of a sudden you have double the number of senior partners," explains diversity co-chair Fabiano. "Each firm had different ways of communicating with senior partners about what was important." The solution of the chairs of the Diversity Committee: After approval at the senior level, the committee presented the new diversity initiatives to WilmerHale partners via a firm-wide videolink and ran a town hall-style meeting to request individual input.
–Jack Fabiano
"Communication and information flow are the most significant challenges," suggests Frost-Davies. With more than 700 attorneys employed at Bingham during the plan roll-out in 2006, she and diversity committee co-chair Ralph Martin made it a priority to get personal. "Ralph and I have personally visited each of the offices and met with people individually and in groups," she explains, noting that personal visits, a firm-wide intranet, and email have proven to be key tools for spreading the team's inclusiveness message, creating excitement, and soliciting feedback. "It's important any time we do a combination to immediately share with attorneys who haven't already been part of our diversity program what our goals are. It's very important that folks know what's going on," Frost-Davies adds.
Davies and Sweeney both tout having representatives and staff liaisons on the ground as a way to muster support and head off problems. "It's much easier to pull off if there's someone on the ground in each office that local people can reach out and touch," Sweeney explains.
Buy-In: The Ultimate Tool
Fabiano reports that despite the logistical complications of meshing two strong diversity programs while simultaneously doubling in size, the WilmerHale team has come out ahead. He attributes the firm's success, quite simply, to the lack of cultural gap and strong leadership among the chairs of the Diversity Committee in each office. Prior to the merger, each firm's managing partner—who together became co-managing partners of the combined firm—was strongly committed to inclusiveness. "One partner was the first Asian—American lawyer in Boston. The other was very dedicated to diversity," Fabiano explains. "They came together after having been on the same page individually [which was] probably the biggest advantage in overcoming transition problems."
"There are firms out there who talk the talk about diversity but don't walk the walk," suggests Sweeney. "If you have one firm that has an aggressive program and another that really doesn't even know how to spell 'diversity,' you're going to run into problems." To illustrate his firm's commitment to diversity, Sweeney cites K&L Gates' executive committee's internal diversity. "Four out of the seven members are minorities and/or women. That's more than half," Sweeney says, adding that he believes the level of representation keeps diversity on its list of priorities.
Like Fabiano, Sweeney attributes his firm's smooth transition to buy-in from top levels of management followed by communication of this core value to all of its constituents. "Because everybody was moving in the same direction," he says, "we haven't missed a beat." DB
Kara Mayer Robinson is a freelance writer based in northern New Jersey.
From the July/August 2007 issue of Diversity & The Bar®