Corporate legal departments, like law firms, must be conscious of hiring and promoting diverse attorneys.
As of 2020, there were 59 Black general counsel or chief legal officers in Fortune 1000 and Global 1000 companies, according to the Black General Counsel 2025 Initiative. Hispanic lawyers made up 2.2% of the general counsel of Fortune 1000 firms in 2019. Black general counsel comprised slightly more than 5% of Fortune 1000 general counsel and Asian Americans represented about 4% of Fortune 1000 general counsel, according to the Minority Corporate Counsel Association. Women represented 29% of Fortune 1000 general counsel in 2019, according to MCCA.
In-house legal departments are increasingly seen as a driver to improve diversity issues in the greater legal industry through outside counsel hiring. Organizations such as the ABA and the MCCA have encouraged corporate legal departments to ensure their teams are reflecting diversity.
In-house legal departments are increasingly seen as a driver to improve diversity issues in the greater legal industry through outside counsel hiring.
The idea that corporate legal departments should be pushing for diversity among their full time employees and in their outside law firms is fairly new.
In 2019, law firm Paul Weiss announced an all-white 12 partner class that included only one woman; other law firms had made similar announcements around the same time. More than 170 general counsel and chief legal officers signed on to an open letter calling on law firms to “improve diversity or lose our business.”
According to Corporate Legal Operations Consortium (CLOC) data from 2018, 35% of legal departments make outside counsel or law company hiring decisions based on diversity. 44% of legal departments make internal hiring decisions based on diversity characteristics, according to CLOC data.
And, according to CLOC’s 2019 report on the state of the industry, in-house legal departments ranked diversity characteristics seventh in importance when evaluating outside counsel, after experience, cost effectiveness and other service delivery-focused metrics.
Priori’s 2021 Legal Departments Survey found that only 16% of in-house respondents said that diversity was one of their top three considerations when selecting outside counsel. In-house counsel were more focused on metrics like expertise, cost, personal relationships and firm reputation.
Legal departments ranked diversity characteristics seventh in importance when evaluating outside counsel, after experience, cost effectiveness and other service delivery-focused metrics, according to CLOC.
Numbers like these that reflect consideration of diversity factors will likely increase, as corporate legal departments are still in the nascent stages of creating processes to ensure they are working with diverse teams.
Several companies have been at the forefront of this drive for diversity in legal.
Coca-Cola’s general counsel Bradley Gayton announced in January 2021 that the company’s outside counsel guidelines would require 30% of billed time to be for work performed by diverse attorneys, and of those amounts, at least half had to be done by Black attorneys. Coca-Cola’s outside firms must report on the diversity of their teams quarterly. Failure to meet the company’s benchmarks will result in a 30% reduction in payments for legal fees.
“As a consumer of legal services, we believe that diversity of talent on our legal matters is a critical factor to driving better business outcomes,” Gayton wrote. “Quite simply, we are no longer interested in discussing motivations, programs, or excuses for little to no progress—it’s the results that we are demanding and will measure going forward.”
But this approach to outside lawyer diversity has recently been called into question. Following Gayton's resignation from his position in April 2021, the policies Gayton put in place are being reviewed, according to the company.
In 2019, Intel announced “The Intel Rule,” which indicated the company will not retain or use outside U.S. law firms that are average or below average on diversity. Firms are eligible to do legal work for Intel only if at least 21% of the firm’s U.S. equity partners are women and at least 10% of the firm’s U.S. equity partners are underrepresented minorities, which Intel defines as equity partners whose race is other than full white/Caucasian and partners who have self-identified as LBGTQ+, disabled or as veterans.
Coca-Cola’s and Intel’s approaches garnered headlines for their assertiveness. Consciousness of diversity in outside counsel hiring is a growing trend, and many other companies are implementing creative policies. But there is still much uncertainty regarding the right formula for corporate initiatives aimed at increasing lawyer diversity.