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5 minutes on… How in-house clients can help fix the origination credit problem

As part of Burford’s Equity Project, we commissioned the 2020 Equity Project study to research whether and how GCs are using their “power of the purse” to incentivize change and close the gender gap in law. The study found that 52% of GCs and senior in-house lawyers interviewed were entirely unaware of how origination credit was awarded by the firms they hired. This is a problematic knowledge gap given that origination is critical to success, career advancement and higher levels of remuneration at Big Law firms, and according to a WSJ article, women lawyers historically often receive far less than their fair share of origination credit.

Below, we take five minutes to explore how GCs—as the holders of the purse strings—can be advocates for closing the gender gap in law by asking the firms they work with about origination credit.

The obstacle of origination credit

Why are women lawyers disadvantaged when it comes to origination credit? The answer may be a combination of history and of unconscious bias. Historically, male lawyers have inherited more client relationships than their female counterparts. Senior male partners may in turn be inclined to mentor other male lawyers. Exacerbating the problem, some law firms award origination credit in perpetuity, so male lawyers who benefited from mentorship and inherited clients stand to receive credit years later for new matters they may not be involved in. It’s not surprising, then, that Major Lindsey’s Partner Compensation Survey reveals female partners report lower average compensation nearly 80% of the time. In fact, in a report co-authored by Equity Project Champion Roberta Liebenberg, 67% of senior women report that they have experienced a lack of access to business development opportunities due to gender.

GCs want to use their power of the purse—and asking about origination credit is a simple step they can take

More in-house legal departments are recognizing their power of the purse and holding external counsel accountable for the diversity of their teams. In January 2019, 170 GCs penned a letter to the law firms that represent them: Do more to close the law’s gender gap or risk losing business. Microsoft prominently lists its expectations for outside counsel on its legal department website and notes that the percentage of diverse attorneys working on its behalf increased from 33% to 48.2% in six years. More recently, in early 2021, the GC of Coca-Cola made headlines for unveiling a series of stringent new diversity targets for its law firms.

While these corporations are very publicly holding firms accountable for their gender diversity, research commissioned by Burford suggests that most companies do not have formal policies mandating that law firms they hire must meet gender diversity requirements: 80% say their companies lack such policies. Instead, many say they apply informal assessments to guide diversity efforts, or they prioritize the diversity of their own internal legal team over those of law firms whose staffing decisions they see as outside their control.

Arguably, asking about origination credit is a simple step that in-house lawyers can take even in the absence of a formal program that will help begin to bring about change. Simply asking about origination credit will demonstrate to the law firms they hire that clients are interested in and paying attention to issues of equity as it relates to their business.

As the Assistant GC of a Fortune 100 energy company put it, “You have to follow the money. Lawyers cannot succeed in a law firm unless they receive origination credit. If you are not asking this question as a client, you are not helping.”

So why don’t in-house lawyers ask the question about origination credit? As the Managing Counsel of an oil and gas company put it, “We usually do not know because laundry like that is not done in front of the clients. I do ask about it and can usually tell from their non-answers that firms prefer not to disclose that information.”

While the gender gap in law will not go away until both the buy-side and sell-side of the legal market work collaboratively to close it, in-house counsel can take a step in the right direction by inquiring about origination credit and choosing the firms they work with accordingly. Arguably, firms also need to take the important step of committing to greater transparency on this issue. Because, as the Assistant GC of a private financial services company put it, “We ask the question and get the answer. Sometimes we are politely told that the firm will not share the information. If it is a partner who simply signs bills and does nothing else, we ask origination credit to be moved in different directions. It is a huge factor that we ask and care about… It is a massive culture problem requiring an important shift, and we need to do more.”