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Clients Track Diversity But Law Firms Miss the Message

Feb. 27, 2020, 9:51 AM

Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. This week, we look at an effort to make it easier to share diversity metrics between law firms and legal departments. And if this email was forwarded to you, get the next one delivered straight to your inbox.

A growing number of major legal departments are treating a law firm’s diversity statistics as an important factor when deciding whether to hire that firm.

Consider the so-called “Intel Rule.” The technology giant says that starting next year it will no longer work with law firms whose equity partnership is not at least 21% women and 10% minorities.

Microsoft Corp. has its own approach, tracking the percentage of hours that diverse partners work on its actual matters and providing bonuses to its firms that perform the best.

Plenty of general counsel have other, less visible ways of measuring diversity inside law firms, which still dramatically trails in the law compared to other industries. One problem, according to Winston & Strawn’s Chief Information Officer, David Cunningham, is that law firms are unaware of the specific metrics being used or how they stack up to other firms individual clients hire.

It is a problem Cunningham is hoping to solve with a new venture that is developing a system to digitally share diversity data between clients and law firms. It would be a step up from today’s typically analog systems that require law firms to fill out surveys on an annual basis or after matters are completed.

“Objective one is to help the law firms see themselves by the metrics through which the legal departments already see them,” Cunningham said. “It’s waking them up, basically.”

Cunningham’s Legal Metrics has developed some momentum before an official roll-out aimed for later this year.

He is backed by members of legal departments at Google, Adobe, Netflix and law firms including Winston & Strawn, Goodwin Procter, Clifford Chance, DLA Piper, and Paul Hastings. All told, there are individuals from more than 25 firms involved, at least six legal departments, and more than 10 professionals from consultancies or other legal services businesses.

Cunningham said the group will not track any personally identifiable information and that any sharing between clients and law firms would require opt-in from both parties.

He said he has been surprised by the interest he has received from law firms, as some have viewed the industry’s growing interest in sharing metrics more generally with skepticism. They are concerned hard data could be used as a cudgel to push down prices of legal work or influence how law firms staff matters.

But Cunningham said law firms are already being measured on their diversity metrics. He said he shows law firm leaders charts that clients use to benchmark firms against one another. It is often a surprise to leaders who have compared themselves to static, industry-wide surveys conducted annually. Individual departments often have targets above industry averages.

Cunningham said he is pushing legal departments to share more broadly their median scores for various diversity metrics.

“If you’re not doing well on metrics like diversity, it’s not a secret to your client. It’s just that you don’t see it from their perspective,” Cunningham said. “So we are trying to create that awareness within a firm.”

One challenge Cunningham will face is the myriad ways clients measure diversity. He said there are currently more than 20 metrics used to define diversity. Some legal departments, like Intel’s, are pushing for increases in the number of women and diverse partners at a firm. Others, like Microsoft, are focused on making sure those lawyers are actually handling their matters.

Cunningham said his goal is not necessarily to dictate to legal departments what types of metrics should be tracked. Instead, he is aiming to make it easier to communicate those metrics between departments and firms.

An early law firm member of the Corporate Legal Operations Consortium, Cunningham said he has been developing the metric sharing idea for at least four years.

“When you step outside of legal, you realize we have a 15-year immaturity gap,” he said. He noted how automotive companies, for instance, collect near real-time information on matters as detailed as how many defective parts they’ve received from suppliers.

“This isn’t really innovation,” he said of data sharing. “It is trying to catch up with other industries for both law firms and legal departments.”

Worth Your Time

On Law Firm Regulation: If you’re interested in what more liberalized rules around law firm ownership could lead to in the U.S., check out what’s happening at a UK lawyer staffing firm that took advantage of recent regulatory change in that country to start its own law firm.

On Legal Technology: Casetext launched a tool that automates legal brief-writing. It has been called a “breakthrough technology” and a “very important development.”

On Law Firm Innovation: Kennedys, a law firm with a focus on insurance claims, has launched a subsidiary to support its automated litigation platform known as KLAiM. Kennedys has previously said that clients who use the KLAiM system settle 80% of cases without the use of a lawyer.

On Data Breach Fallout: U.S. law firm Clark Hill will face a malpractice claim stemming from a data breach that led to a Chinese dissident’s personal information being leaked online, my colleague Melissa Heelan Stanzione reports.

That’s it for this week. Thanks for reading and please send me your thoughts, critiques, and tips.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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