Frustrated With Big Law Diversity, Many Companies Are Looking Elsewhere

The glacial pace of progress made by Big Law in achieving diversity has pushed clients looking to fulfill lofty diversity goals elsewhere: They are hiring minority-and women-owned law firms.

Clients, especially Fortune 500 companies, are committing millions more in legal spend to diverse firms, partnering with organizations such as the National Association of Minority and Women Owned Law Firms (NAMWOLF). Clients say they find little-to-no drop in the quality of service they get from these firms because many are founded by minority and women attorneys who left prestigious law firms to start their own.

“We are committed to minority- and women-owned law firms and the work that they do,” said Lisa Wolmart, vice president and corporate counsel at The Prudential Insurance Co. of America, which regularly uses minority and women-owned firms as outside counsel. “They provide excellent legal services, quality of work and legal expertise.”

The 2019 Diversity Scorecard revealed that big law firms still have a long way to go on diversity. Minorities make up only 16.9% of Am Law 200 attorney head count. More specifically, black attorneys make up only 3.3% of lawyers in Big Law. Women continue to be underrepresented in leadership roles.

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Fortune 500 companies have long had programs promoting diversity within their ranks. In recent years, those diversity and inclusion goals have seeped into their legal spend, culminating in January with an open letter signed by more than 200 general counsel demanding more diverse legal representation.

But frustrated by Big Law’s glacial progress, many companies are looking to minority and women-owned law firms to fill the need for a more diverse legal team. Last month, Turo chief legal officer Michelle Fang, who spearheaded the GC letter, followed up with the release of a list of actionable steps that general counsel looking to promote diverse legal talent should take. Hiring minority- and women-owned law firms was high on the list.

At some large corporations, steps are already being taken. Of the 15 law firms that receive Prudential’s top legal spend, three are minority- or women-owned, Wolmart said. And the insurance company’s official corporate policy states that when seeking outside counsel, the legal department must consider hiring a diverse law firm for any legal matter.

Prudential is also one of the founding members of the NAMWOLF’s Inclusion Initiative, a program that encourages corporations to increase legal spend on minority- and women-owned law firms. Thirty-three companies are members, including UPS, Walmart, Verizon and Morgan Stanley. In 2010, the first year of the program, the 11 founding members spent $42 million for services provided by minority and women-owned law firms. In 2017, that figure rose to $240 million. In the seven years of the program’s existence, members have spent a total of $1.4 billion for services provided by diverse firms.

“Corporate law departments really have in our view an important role to play in pushing diversity, and I think we have a lot of power to do that,” said Wolmart. ”There’s obviously a lot of room for improvement within the profession generally. [Big law] firms have a lot of work to do.”

Many diverse firms are founded by women and minority attorneys disenchanted with the often unfriendly environment of big law. While many firms achieve parity in gender and diversity within their associate ranks, women and minorities find themselves leaving before making partner.

“When they start their own law firms they have the same credentials as Big Law,” said Joel Stern, CEO of NAMWOLF. “Our value proposition to clients comes in this order: quality, value, supporting diversity and inclusion.”

In the last five years, NAMWOLF membership has swelled from 123 firms to nearly 200. Annual meetings attract 900 attendees.

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