How companies can improve the pipeline of diverse lawyers in arbitration

The lack of gender and racial diversity, specifically in the makeup of arbitral tribunals, has been a topic of much discourse within the community, and through significant efforts by a number of initiatives, there recently have been major strides in increasing diversity in arbitrator appointments. Among other trends, many leading institutions are close to achieving gender parity in their own appointments. For example, in 2020, VIAC appointed 63% women arbitrators, followed by the DIS at 54%, the SCC at 47%, and the LCIA at 45%.

Among counsel who represent parties in arbitration, however, the numbers are less promising. There has historically been poor retention and promotion of women and diverse attorneys in the legal profession, and this problem holds true in many arbitration practices. For example, in 2019, the partnerships of GAR 30 top arbitration law firms worldwide were just 17.6% female, on average. While the percentage of racially diverse lawyers in major arbitration practices is hard to come by, the numbers are likely even smaller, considering that in the broader legal profession, racial minorities make up only 10.9% of partners at major U.S. law firms and about 8% of UK-based partners at elite British firms.

Greater diversity in arbitration allows parties to benefit from different perspectives gleaned from wider social and cultural context and must encompass all participants in the arbitral process. Current efforts, which have largely focused on the composition of arbitral tribunals, should be complemented by efforts to improve diversity among counsel. Clients, as the users of arbitration and buyers of legal services, can play a catalytic role in advancing progress by incentivizing outside counsel to give women and racially diverse attorneys key responsibilities on significant arbitration matters.

Companies can require representation and promotion of diverse groups in legal counsel teams. One of the biggest barriers for women and diverse lawyers to attain senior roles and leadership positions in their firms is access to opportunities to gain the relevant experience and to promote their capabilities to prospective clients. While it’s understandable that parties want to turn to experienced counsel when the stakes are high, we should provide opportunities for others to gain meaningful experience in those matters as well.

General counsel and other in-house counsel at corporations can significantly influence the diversity of external counsel teams working for them, and in doing so, can enable diverse lawyers to gain additional experience that is critical for their success. Carolyn Lamm, an international disputes partner at White & Case and an Equity Project Champion (an initiative described in further detail below), explained in the 2020 Equity Project Study: “One of the most important ways that GCs can use their ‘power of the purse’ is to retain women to run their cases and serve as first chairs in any disputes. If women are not provided with such opportunities and direct support by GCs, they will not significantly advance, and the gender gap will persist.”

1. Using Economic Levers To Advance Change. Companies can ensure that their law firms place women into leadership positions on matters by providing economic levers to promote change, such as Burford’s Equity Project initiative. The Equity Project aims to expand the representation of women and racially diverse lawyers in leadership positions by addressing the obstacles and biases that hinder these lawyers’ career development.

In-house lawyers may use Equity Project capital for matters they award to law firms on the proviso that a woman or racially diverse lawyer receives origination credit or leads the case. This helps to improve women and racially diverse lawyers’ profiles within their respective law firms and in the profession.

Since its launch, Burford has committed over $100 million to fund matters led by female and racially diverse lawyers through The Equity Project—with around 20% of it in international arbitration matters. Further, nearly one third of the Champions—men and women who help ensure that potential recipients are aware of the capital available—are leaders in international arbitration and dispute resolution.

2. Supporting the Move the Needle Fund. Another way to support diversity and inclusion in the legal profession is for legal departments to support the Move the Needle (MTN) Fund. In late 2019, over two dozen GCs of several major corporations as well as four large law firms founded this initiative by investing $5 million in new approaches to be adopted over the course of five years to improve diversity in the upper ranks of law firms. The founding companies include Uber, Pfizer, eBay, PNC Financial Services, Starbucks Coffee Company and Ford Motor Company.

The MTN’s founding legal departments, representing more than $1.5 billion in legal spend annually, have committed to the MTN Diversity Dividends Collective, a new initiative signed by the likes of Gap, Hewlett-Packard and US Bank, which is aimed at empowering corporate legal departments to hold law firms acting as external counsel accountable for increasing the diversity of their teams.

3. Taking the Equal Representation in Arbitration Pledge. The Equal Representation in Arbitration (ERA) Pledge seeks to accelerate the number of women appointed to leadership positions in arbitration to achieve a fair representation, with the ultimate goal of full gender parity. Despite the outsized impact corporates can have on the makeup of their outside counsel, only 7% of the nearly 5,000 signatories to the ERA Pledge are corporations.

As a result, in 2019, the ERA Pledge formed a corporate subcommittee to engage companies, financial institutions and other users of arbitration to raise awareness of the Pledge and drive its implementation. By signing the Pledge, a company signals its support, including to its external counsel, for a broader and more gender-balanced selection process. In November 2020, the Pledge’s corporate subcommittee launched the Corporate Guidelines—a set of guidelines for corporates to use to implement the diversity aims of the Pledge.

The change we need. Within the arbitration community, diversity, equity and inclusion efforts to date have primarily focused on ensuring the fair representation of women as arbitrators. While those efforts are important and must be sustained, the community now also recognizes that these efforts should also extend to counsel and address other forms of diversity, like ethnic, racial and cultural diversity.

When given the proper tools, corporate parties, as the clients of law firms, can work collaboratively to make sure that women and racially diverse counsel are given the opportunities they deserve to showcase their talents and ultimately progress in their careers.

This article was originally published in the New York Law Journal and can be found here. 

Reprinted with permission from the August 5, 2022 issue of the New York Law Journal. © 2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.