Perspectives

Beyond Recruitment: Achieving a More Diverse Partnership

Due to heightened recruiting efforts and demographic changes in society, law firms have become more diverse. According to a 2003 study by the U.S. Equal Employment Opportunity Commission, women increased their representation in large law firms from 14.4 percent to 40.3 percent between 1975 and 2002. Minority representation also increased at the larger firms during this time period, albeit at a slower rate: African American representation increased from 2.3 percent to 4.4 percent, Hispanic Americans from 0.7 percent to 2.9 percent, and Asian Americans from 0.5 percent to 5.3 percent.¹

At least part of this growth in women and minority representation has resulted from the "business case" advanced by law firms for increasing diversity. Many firms say that among the reasons they are focusing on diversity is that their clients demand it. Such firms cite an increasing number of requests for proposals that solicit information on a firm's progress in diversity, as well as questions from clients about the staffing of their cases. These firms also cite the threat, implicit or explicit, on the part of clients to withhold business from—or terminate relations with—firms that are not sufficiently diverse.

Despite the gains made in overall women and minority attorney representation in law firms, promotion of these attorneys to partnership remains an issue. A recent study by the National Association of Legal Placement (NALP) found that in 2005, 4.6 percent of partners at large law firms were minorities and 17.3 percent were women, up only slightly from the levels recorded in 1999.²

In order to improve the partnership prospects of women and minority attorneys and increase the diversity of their partnership ranks, firms must view the business case for diversity in terms of how it contributes to their bottom lines and not simply in terms of meeting client demands. What is needed is a more affirmative vision, one that views diverse attorneys as potential rainmakers and not just a means of avoiding the loss of business opportunities.

Retention Is Important but Not Enough

Many firms argue that women and minority attorneys have not made significant gains in partnership representation because they tend to leave firms early in their associate careers. This argument implicitly assumes that if law firms were able to retain their women and minority lawyers until they became eligible for partnership, these attorneys would be promoted in larger numbers.

Accordingly, firms have introduced a number of initiatives to stem attrition. Many firms tout affinity groups based on race, gender, sexual preference, or other characteristics for providing networks for diverse attorneys and reducing feelings of isolation. Many firms have also instituted formal mentoring programs to apprise associates of the law firm's expectations of them, educate them on unwritten rules, and provide informal feedback on how their performance is being perceived. Firms are also increasingly adopting measures to address issues relating to work/life balance, such as child-care arrangements and part-time programs.

Other measures have included involving women, minorities, and LGBT (lesbian, gay, bisexual, and transsexual) attorneys in the administration of the firm or its branch offices. These attorneys are frequently asked to participate in recruiting and to serve on various firm committees. In an effort to give these attorneys more visibility, they have also been asked to serve in certain leadership roles, such as heads of practice groups or of diversity, recruiting, or other similar committees.

While all of these measures are very important, they do not address the key factors that firms consider in deciding whether to elevate associates to partnership. In most law firms, significant rainmaking skills are still more highly prized than administrative functions. Often, considerable administrative duties consume time that would otherwise be spent building a practice and may therefore hurt women, minority, and LGBT attorneys in the long run. Time-consuming administrative or committee assignments also may take associates away from billable work, thereby reducing their productivity—another key consideration for partnership.

Moreover, as Harvard Law School Professor David Wilkins has observed, firms continue to lose minority attorneys after they become partners. Wilkins cites several reasons for this, including the difficulties that such partners confront in acquiring new business, obtaining referrals, inheriting business from other partners at the firm, and in staffing matters. The problems that minority partners face at law firms often make other opportunities appear more attractive, says Wilkins, resulting in the loss of such partners and the reversal of diversity gains at the partnership level.³

Empowering Diversity

In pushing law firms to become more diverse, some companies have implicitly or explicitly threatened to withhold future business from firms that fail to make sufficient progress or field diverse teams. This is most evident in Sara Lee General Counsel Roderick Palmore's "Call to Action," which states ominously that the signatory companies "intend to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse." This initiative has become, for many firms, the basis of the "business case" for diversity.

However, the notion that law firms should embrace diversity because their clients demand it has led to a dichotomy in how the business case for diversity is made at companies and law firms. While many companies have embraced inclusiveness because their customers or clients are diverse and they see diversity as a means of increasing their market shares, law firms have adopted a much more limited view, seeing it more in terms of avoiding the loss of business opportunities. The need to have significant women, minority, and LGBT representation to "stay in the game" provides a strong rationale for the recruitment of such attorneys, but offers limited support for their promotion to partnership.

Among the most effective business cases that law firms can make for inclusiveness is increased business directly linked to a firm's diversity efforts. Law firm partners who would otherwise devote little attention to diversity issues might be more inclined to do so if they saw such increased business, particularly if diverse lawyers were responsible for generating it.

However, these attorneys often have not had the opportunity to establish connections with persons in senior positions in major corporations. They might, therefore, find it more challenging to generate significant new business. Many are relegated to the position of "service partners" working on matters that other partners generate. In law firms where the predominant business model is "eat what you kill," this subservient function can condemn women and minority partners to roles as second-class citizens. The absence of major rainmakers among women and minority partners also means that there are no significant role models for senior women and minority associates, further fueling attrition.

Some companies, like Wal-Mart, have recognized this cycle, reserving the right to designate "relationship partners" from among the women and minority partners nominated by law firms seeking to work for these companies. In July 2005, Wal-Mart sent letters to its 100 largest outside counsel, requesting that they list three to five potential relationship partners, including at least one minority and one woman. Although there was no guarantee that a woman or minority partner would be chosen to serve as the relationship partner, it helped to create opportunities for women and minorities that would not otherwise have existed. (See the May/June 2006 issue of Diversity & the Bar® for more information on Wal-Mart's diversity efforts.) Wal-Mart's initiative is a start, but law firms must do more to facilitate business generation by women and minority partners; they cannot simply look to clients for instructions. Law firms must empower diversity by providing their women, minority, and LGBT partners with real opportunities to become rainmakers and thereby become more influential members of their firms.

Among the things that firms can do to empower diversity is provide more business development training and experience to mid-level and senior associates. Associates need to learn early in their careers the importance of networking, public speaking, and other business development skills. This can be done through formal courses, but it is probably better taught by including associates in pitch meetings and other marketing activities, where they can learn by doing.

Mentors can also play a critical role by assisting women, minority, and LGBT attorneys in generating business, exposing them to clients with which these attorneys can develop important relationships, staffing them on matters involving close work with important clients, providing guidance on how to approach prospects, sharing insights on effective approaches, and steering diverse attorneys away from efforts to develop business that the firm is not likely to value.

Affinity groups should also consider becoming more focused on business development as a means of improving their members' promotion prospects. Several firms, such as Arnold & Porter LLP, Baker & Hostetler LLP, and Bingham McCutcheon LLP, have sponsored retreats for minority attorneys that have focused on professional development issues, including the cultivation of clients. Affinity groups should also consider formulating business development initiatives and strategies that leverage their firm's diversity records to generate business.

Marketing departments can assist by ensuring that women, minority, and LGBT lawyers are made aware of business opportunities that arise. All too often, requests for proposals and other similar opportunities are only made available to partners who already have significant business, and women and minority attorneys who are not established rainmakers only learn of such opportunities after the fact, when they are added to the team for diversity purposes. Marketing departments must ensure that there is a level playing field for women, minority, and LGBT partners, particularly when business opportunities have a diversity element.

Credit Where Credit Is Due

Finally, and most importantly, law firms must take steps to ensure that women, minority, and LGBT practitioners who help to develop business for the firm are given credit, including billing and origination credit. Through their work for certain clients, many service partners and associates assist in generating additional work, but receive little or no recognition because the origination credit is already "spoken for." This situation can have an adverse effect on these partners' compensation and, therefore, their incentive to remain with their law firms. It can also have an adverse impact on an associate's prospects for partnership.

A system in which origination credit is hoarded makes it especially difficult for women and minority partners to become rainmakers, because existing clients are often the best source of future business. It is also becoming more difficult for young women and minority partners to bring in business from new clients, as law firms continue to increase hourly billing rates and clients, in response, reduce their number of firms. Such a system might also be detrimental to firms because it gives service partners and associates little incentive to develop further business from the clients with which they work. The law firms that condone such hoarding also risk potential loss of business as such partners and associates take matters to other firms or move to in-house positions.

At a time when there is increased movement by partners among firms and an emphasis on "portable" business, the issue of how origination credit is assigned can be very controversial. However, firms must recognize that it is in their best interest to encourage the sharing of origination credit, including when new work is generated from existing clients. They can do so by rewarding all partners who share in origination, thereby recognizing all who help to bring new business into the firm. They can also consider penalizing partners who hoard such credit. These measures will help to make businesses clients of the firm—rather than of a particular partner—and broaden the firm's relationship with such clients, thereby making it more difficult for any single partner to take such clients with her to another firm. The result may be more business for the firm and lower attrition among partners.

Cycling Effect

Law firms can and must do more to develop diverse attorneys into rainmakers. The push to achieve diversity gains only through increased recruitment of women, minority, and LGBT lawyers can be detrimental to these groups. The result may be a "cycling effect," where substantial numbers of diverse practitioners are recruited to diversify associate ranks, only to have them leave well before partnership after having recruited other diverse associates to replace them. This cycle helps law firms to maintain overall women, minority, and LGBT representation, but leaves firms without any significant diversity gains at the partnership level.

Law firms must rethink the business case for diversity and consider how they can promote the development of women, minority, and LGBT attorneys into rainmakers. By recasting the business case for diversity to focus on how inclusiveness can contribute to the bottom line, law firms will have a better chance of retaining promising diverse attorneys and potentially expanding the business of the firm in ways that will benefit law firms and diverse attorneys alike.

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Michael W. Oshima is a partner in the corporate and securities group of Arnold & Porter LLP.

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NOTES

1. See "Diversity in Law Firms," U.S. Equal Employment Opportunity Commission (Oct. 2003), at http://www.eeoc.gov/stats/reports/ diversitylaw/lawfirms.pdf.
2. See "Women and Attorneys of Color Continue to Make Small Gains at Large Law Firms," National Association of Legal Placement (Nov. 17, 2005), at http://www.nalp.org/press/details.php?id=57.

 

3. David B. Wilkins, "Partners without Power? A Preliminary Look at Black Partners in Corporate Law Firms," Journal of the Institute for the Study of Legal Ethics (1999), pp. 15–48.

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From the July/August 2006 issue of  Diversity & The Bar^®