Calls for greater diversity in Big Law have been prevalent for decades, yet women make up little more than a quarter of partners at 10 of the most prestigious firms on both sides of the Atlantic, according to research by diversity-analytics company Pirical. In the United States, the number of “minority partners” is just 10.9%. In my years as a litigator and now as Co-Chief Operating Officer of the world’s largest legal finance company, I have always been keenly aware of the importance of a diversity of perspectives on business outcomes. This is particularly true in litigation where complex challenges require creative solutions to achieve the best possible outcomes.
GCs and in-house legal departments, as the purchasers of legal services, are ideally placed to help #BreakTheBias and increase diversity in Big Law. There are a number of ways they can do this.
Challenge the instinct to use litigators you already know.
For most companies, litigation is both an unwanted cost and a major distraction. Thus, when faced with the prospect of high-stakes commercial litigation or arbitration, in-house lawyers naturally turn to counsel they already know, even if that choice isn’t optimal for the particular case at hand. As one GC stated in the 2020 Equity Project study: “Hiring is about who you know … No one wants to take a risk in high-stakes commercial litigation.”
While it is completely understandable that people want to work with a litigator or arbitration lawyer who is known and trusted by their organization, this can unintentionally help to reinforce the gender gap status quo.
By requesting female litigators and litigators from racially diverse backgrounds on their client teams, GCs can provide an opportunity for these lawyers to develop relationships with the client, showcase their skills and gain experience that will ultimately help them to advance within their firms. Legal departments can use tools like Burford’s Equity Project—a $100 million pool of legal finance capital to back commercial disputes led by female and racially diverse lawyers—as a compelling reason to talk to their law firms about appointing diverse teams on their high-profile matters and simultaneously de-risk their litigation claims.
Ask upfront how panel law firms award origination credit.
Origination credit and the billable hour are two primary factors in the compensation and career advancement of private practice lawyers. But, as revealed in the 2020 Equity Project study, nearly two of three GCs (64%) don’t regularly ask their law firms about origination credit and over half (52%) are entirely unaware of how origination credit is awarded.
Unsurprisingly, many GCs assume that origination credit sits with the partner they have the relationship with. According to one GC in the study: “I would naturally assume the origination goes to the partners with whom I have a relationship.” Although this is a logical assumption, it is not always the case.
As a result of implicit biases within law firm culture, historically privileged groups tend to inherit client relationships more frequently than their female or racially diverse counterparts. This is because law firm mentors tend to gravitate towards juniors who share similar interests and backgrounds—resulting in the unintentional side-lining of equally talented and skilled female and racially diverse litigators. This is a common phenomenon also known as affinity bias. The 2021 McKinsey Women in the Workplace report demonstrates this affinity bias in action: Only 10% of white employees mentor or sponsor one or more women of color.
The way law firms are typically structured means that partners often receive origination credit in perpetuity. So historically privileged groups—who frequently benefit from mentorship, sponsorship, and the inheritance of key clients—stand to receive credit for new matters that they may not be directly involved in. The way that origination credit is awarded is implicitly biased away from female and racially diverse lawyers who might be the client’s main point of contact.
As the buyers of legal services, in-house lawyers can use their purchasing power to ask about origination credit and ensure that the lawyers working on their matters are being adequately compensated for bringing in new business and maintaining those client relationships.
Start conversations with law firms about why diverse representation matters to you.
Legal departments committed to diversity, equity and inclusion (DEI) goals can use Equity Project funding to incentivize their outside firms to appoint diverse client teams, and law firms and companies alike can include The Equity Project as part of their ongoing Environmental, Social and Governance (ESG) efforts. As an additional motivating factor, Burford will donate a portion of its balance sheet profits to organizations focused on advancing gender and racial equity initiatives.
Many in-house legal departments are already using their power of the purse to start conversations with their panel law firms about diverse representation and in some cases to mandate strict diversity expectations. We have seen high-profile examples of this from big name brands like Microsoft, HP and Freddie Mac in recent years.
Ultimately, this is an area where greater collaboration with, and transparency from, law firms are needed. However, GCs can use tools like The Equity Project to kickstart the conversation and show law firms that DEI is a key consideration in their law firm selection.
In a Burford-hosted webcast last year, Ricardo Anzaldua, former Executive Vice President and General Counsel of Freddie Mac, in simple terms explained the importance of having this conversation: “The law firm partners that have been resisting diversity have been doing it on the argument that the clients don’t really care. We have to show them that it’s just not true. We care. And we care so much that we are going take our business away from you if you don’t address it.”
Despite increased discourse around DEI, some senior law firm partners still (mistakenly) assume that while diversity is a nice to have, it’s not an essential consideration for clients. This is a type of confirmation bias—where law firm partners who believe their clients’ only concern is law firm reputation overlook information that contradicts that. The truth is that in-house legal departments now consider a whole host of factors in law firm selection, and they know that diversity in their counsel choices increases the chances of optimizing case resolutions.
Aside from the capital commitments that we are making to advance female and racially diverse lawyers, the mere existence of The Equity Project has helped to facilitate important conversations about leadership on key matters within law firms. We know this anecdotally from female and racially diverse lawyers who have used The Equity Project as conversation starters.
By making sure panel law firms are given clear expectations regarding DEI staffing and opportunity on their matters, GCs and senior in-house lawyers can help to break down the biases that hold back underrepresented groups from progression and leadership in Big Law.
This article was originally published in New York Law Journal and can be found here.
Reprinted with permission from the March 7, 2022 issue of New York Law Journal. © 2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.