DEI at Law Firms Remains Live Issue a Year Into Trump’s Term

It’s been over a year since Donald Trump returned to the White House and almost immediately made it a priority to end diversity, equity, and inclusion programs at large law firms. There’s evidence that this effort is bearing fruit for the president, even after the Equal Employment Opportunity Commission walked away from investigations into several firms.

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The EEOC recently told a court it dropped the probes without getting most of the information it sought on firms’ recruiting programs and promotion decisions. Still, the move came after some of those firms struck deals with the White House and several others—including some not involved in the inquiries—scaled back diversity initiatives. Citing the cost of defending itself against Trump’s attacks, a DEI nonprofit said it’s shutting down its Mansfield Rule program that sought to have firms consider underrepresented candidates in hiring and promotions.

To talk about all of this, Bloomberg Law reporter Tatyana Monnay joins our podcast, On The Merits. She explains all the recent developments on this front and also talks about the risks that firms may face if they shut down all of their DEI programs entirely.

Do you have feedback on this episode of On The Merits? Give us a call and leave a voicemail at 703-341-3690.

This transcript was produced by Bloomberg Law Automation.

David Schultz:

Hello and welcome back to On the Merits, a news podcast from Bloomberg Law. I’m your host, David Schultz.

We’ve had quite a bit of news about diversity in the legal industry in the past couple weeks. So today we’re going to hear from Bloomberg Law reporter Tatyana Monnay about everything that’s going down and what it all means.

Before we do that, though, let’s do a really quick recap. So we found out that the Equal Employment Opportunity Commission ended the inquiry launched almost a year ago when it demanded a ton of data from law firms on hiring decisions and participation in diversity programs. The EEOC did this despite acknowledging it didn’t get everything it requested from the firms.

Additionally, the Federal Trade Commission sent a letter to more than 40 firms telling them they think it might be illegal to participate in a program called the Mansfield Rule, which requires firms to consider underrepresented applicants in hiring and promotions. But then last week, the nonprofit that runs the Mansfield Rule announced it would be shutting that down and furloughing most of its staff. It cited the cost of defending itself against Trump administration attacks as the main cause.

That’s a lot. So let’s get into my discussion with Tatyana, where I started by getting into the EEOC’s now thwarted investigation. I asked her to tell me how law firms initially reacted after seeing the EEOC’s demands last year.

Tatyana Monnay:

And we saw sort of like a range of reactions from firms. And this was also during the height of sort of the legal battles between the administration and other big law firms over executive orders. At times, you could see an overlap here. So we can confirm, and we’ve reported first at Bloomberg Law, Goodwin Procter was one of the firms that we found out actually did hand over some of the information requested by the EEOC. They handed over parts of the requested information, and they also told the EEOC that it suspended its relationships with some diversity programs that the EEOC was sort of looking into.

So another firm, Perkins Coie, you know, they were hit with an executive order. They were fighting it in court at the time. And so they actually sort of declined to hand over that information while they were in that active litigation. So that litigation is still going on. Perkins Coie, as many of us know, won that case. The executive order was found to be unconstitutional. And so it’s very likely that they did not end up answering the EEOC or handing over that information that was requested.

David Schultz:

Well, let’s get to the most recent news here, which is that even though the EEOC didn’t get what it wanted, apparently this initiative is over. The EEOC announced that its probe into these firms’ use of diversity programs is done. So what happened here? Did they just sort of feel like they got what they wanted or did they just give up?

Tatyana Monnay:

I think that’s a question best for the administration, honestly. But I mean, it was interesting to see the EEOC sort of say in court, OK, we haven’t received all of the responses that we requested. We don’t expect to receive any more responses. And you know, they said that they consider the matter to be closed, which I think many are interpreting as the EEOC is no longer looking into or investigating big laws relationship with these diversity programs.

David Schultz:

So I want to talk about the reaction to this, because on the day that you reported it, you quoted an advocacy group, Democracy Forward, that said this is a victory for the rule of law. But then you published a story last week that talked about how actually it seems like the Trump administration got a lot of what it wanted, either by firms complying and divulging their information or by firms who just ended their diversity programs. Tell me about that kind of mixed reaction here.

Tatyana Monnay:

Yeah, I mean, it’s an interesting dynamic to see a federal agency, you know, say in court, OK, we didn’t get what we were after for, but still, you know, on the flip side, still see the reaction that they wanted, which was for big law to sort of dramatically change its diversity programming and branding. Ultimately, I think the administration’s goal is to kill DEI in every industry. And right now they’re paying attention to what that looks like in big law. It was, I think, shocking for some people to see the EEOC say this, especially considering that the DEI mission for the Trump administration is still very real. So I think people are just sort of watching and waiting in anticipation for what’s coming next. And, you know, we’re not really sure what that could be.

David Schultz:

Yeah. And that kind of leads me into the next thing I wanted to talk to you about, which is an action late last month from the FTC. This was a separate but very similar action to what the EEOC took last year. Tell me what the FTC did and what was in this letter that it sent to about 40 law firms. Is that right?

Tatyana Monnay:

Yeah, it was like 40 plus law firms who ended up receiving this letter from the FTC late January. Essentially, the FTC chairman, Andrew Ferguson, sent a letter warning firms of serious concerns, quote unquote, that he had about their participation in a particular diversity program by Diversity Lab called the Mansfield Rule.

David Schultz:

All right. So let’s get into that. So this nonprofit called Diversity Lab runs a program called the Mansfield Rule, or at least it did up until last week. And the FTC says law firms should not be participating in that. What was the Mansfield Rule? And what did Diversity Lab do in relation to it?

Tatyana Monnay:

So Diversity Lab is an organization, one of many organizations in the legal sector, that is just focused on diversifying the legal profession. They sort of run programs throughout the year, you know, bringing people in the industry together. So one of their initiatives is called the Mansfield Rule. The rule essentially asks law firms to, in their hiring decisions, promotion decisions, to consider at least 30% of qualified underrepresented talent out of the, you know, unlimited number of people considered for that specific role. It’s not a rule that requires a quota. It really is just a rule or an initiative to, you know, encourage law firms to consider underrepresented talent early on in their hiring decisions.

David Schultz:

If you’re a football fan out there, and this sounds familiar to you, it’s because this is, it sounds like it’s very similarly patterned based off the Rooney Rule, which is from the NFL, right?

Tatyana Monnay:

Yes, exactly. Exactly. I’m not an NFL fan, so I did not want to make that connection. But yes, that’s, it’s very similar.

David Schultz:

But I wonder though, you know, the FTC is sending out these letters telling the firms that they think it might be illegal to use the Mansfield Rule. But were there any firms actually still doing this? Because as you mentioned, you know, the EEOC investigation chilled a lot of this work last year. Didn’t a lot of firms kind of stop these activities already?

Tatyana Monnay:

So it’s hard to tell with the Mansfield Rule specifically, but, you know, it is true that many big law firms did sort of reel back their DEI programming internally, externally. Goodwin Procter was actually one of the firms who said to the EEOC that they actually are no longer participating in the Mansfield Rule certification. It definitely is part of the calculus for firms. I’m sure that there are firms that are pulling out, but there are also firms that are sticking to their certification.

David Schultz:

It’s also worth noting that you mentioned that the FTC sent this to around 40 or so firms. Some of those firms that got this letter from the FTC were the firms that struck pro bono deals with the Trump administration to stave off these punitive executive orders that we’ve been talking about for quite some time on the podcast, right? Which ones were they?

Tatyana Monnay:

So there was some overlap for sure with the recipients of this FTC letter and also the EEOC letter back last March alongside these deals. It’s quite the Venn diagram. Some of the firms who received the FTC letter in January, you know, who also struck deals with the White House would be like Paul Weiss and Skadden made deals with the White House last year, but they also still received this FTC letter.

David Schultz:

Yeah. All right. Finally, let’s talk about what the response to this might be. It seems like unlike last year where things were really unprecedented and we never really seen this before, now we know that some of the firms that fought back in court against attacks from the Trump administration did pretty well, both one in court and kind of one in the court of public opinion. Do you think that that will happen again, that the firms that received this letter from the FTC will say, no, it’s a better move for us to fight back rather than to kind of capitulate, for lack of a better word?

Tatyana Monnay:

I don’t know. That’s a great question. Law firms are so risk averse. It’s just such an easy decision, I think, or such an easy way to think like, okay, let’s just do whatever we can to avoid litigation with the federal government, especially depending on the type of firm, you know, if they have a lot of corporate work that they want to protect. But like you said, you know, the firms who fought last year in court, they all won. Would that be the case here? Who knows? Right? And that’s always the gamble of litigation and, you know, going back to the risk averse nature of law firms, like they may not be willing to take that risk.

I think in the case of the FTC letter, I think it’s really maybe too early to think about litigation because really, you know, at the end of the letter, Chairman Ferguson sort of signed off saying like, you know, we’re not asking you to respond. It was just sort of like we’re putting you on notice, essentially. So based off of what I’m hearing from folks, litigation right now, I don’t think is in the cards, but it just depends on how this escalates.

David Schultz:

No, that’s a really good point, though. Even if the firms that sued last year succeeded, it would still be a big risk and law firms, as you mentioned, don’t like to take big risks, especially when they don’t have to. And especially now that it seems like the Mansfield rule is basically defunct, right?

Tatyana Monnay:

Yeah. I mean, cutting ties with Diversity Lab is cheaper and easier than spending hours and thousands of dollars on litigation. However, there are, you know, risks associated with sort of dropping their DEI programming or their DEI measures as a firm and to their business, which is what a lot of their sort of DEI law firm advisors are warning them. You know, it’s not necessarily like dropping DEI or dropping a diversity measure is riskless. There’s still risk associated with that. It may be different. And so you can have to weigh what you prefer there and what those risks are on each side.

I will say one important thing to add here about Mansfield rule is that, you know, the legality of the rule actually did come up during Perkins Coie’s litigation over the executive order last spring. The Justice Department lawyer at the time who was arguing the case said it was problematic. And ultimately the judge, federal judge Beryl Howell, in her final decision that ultimately struck down the executive order, she actually did devote a section to Mansfield rule. And she actually said in her decision, the way that Mansfield rule is explained and the way that the rule is applied, if it is applied the way that firms are describing it and that diversity lab describes it, it actually does not run afoul of discrimination laws. You know, that’s pretty substantial, I think. If you are considering litigating this matter, you do have this sort of standard already on your side.

David Schultz:

Hmm. All right. Well, that was Tatyana Monnay talking with us about diversity and big law. Tatyana, thank you as always.

Tatyana Monnay:

Thanks for having me.

Host:

And that’ll do it for today’s episode of On the Merits. For more updates, visit our website at news.bloomberglaw.com. Once again, that’s news.bloomberglaw.com.

The podcast today was produced by myself, David Schultz. Our editors were Chris Opfer and Alessandra Rafferty. And our executive producer is Josh Block.

Thanks everyone for listening. See you next time.