Freddie Mac will soon require outside law firms to prove their dedication to diversity if they want to continue working with the public-private mortgage company.
The Federal Home Loan Mortgage Corp. is launching a talent stewardship program designed to improve the pipeline for diverse lawyers in-house and at outside law firms, according to Ricardo Anzaldua, Freddie Mac’s general counsel and executive vice president. The program is based on a model Anzaldua implemented when he was the top lawyer at MetLife Inc.
“If the firm is made up of 80 to 90% white men, then white men are going to be the ones who feel the most comfortable in the environment and end up succeeding,” Anzaldua said. “The challenge for the firms is to make the environment more nurturing and more conducive to development for diverse talent.”
Bloomberg Law is conducting a Q&A series highlighting some of the legal industry’s most important relationships: the often fruitful but sometimes complicated connections between general counsel and their outside law firms. We’re talking with general counsel across industries about how they select outside lawyers and handle issues like billing, fees, and tracking performance.
Anzaldua joined McLean, Va.-based Freddie Mac in 2018. He was previously with New York-based insurance company MetLife for five years, most recently as executive vice president and general counsel. Anzaldua began his career with Cleary Gottlieb Steen & Hamilton.
This conversation has been edited for clarity and length.
Bloomberg Law: Tell me about the diversity program you started at MetLife and that you’re bringing to Freddie Mac.
Ricardo Anzaldua: At MetLife, we assembled and launched a talent stewardship initiative, which was designed to hold our senior leadership accountable for the retention and promotion of top talent in the organization, with a specific focus on developing a diverse leadership pipeline for the organization. We’re reproducing that at Freddie Mac with exactly the same intent.
The program consists of each protégé being assigned an officer—which is vice president or above—in the organization who will act as a sponsor. Those sponsors will be joined together with the high potential talent that we’ve identified in a dyadic relationship where sponsors and protégés are responsible for designing a plan for the advancement of the protégé, focusing on those elements of the protégé's experience and competencies that need to be buttressed in order to make them credible candidates for leadership in the future. In about 60 to 75% of the cases, these relationships involve a diverse candidate for future leadership.
The internal program has just launched at Freddie Mac with invitations for those who are not in the management ranks to apply. Those are due by January of next year. It was a very successful program at MetLife. A number of the participants in that program have been promoted within MetLife, and others have found advancement opportunities outside of the MetLife Legal Affairs Division. And I expect the same thing to happen at Freddie Mac.
BL: How does this internal talent stewardship program impact diversity within your outside firms?
RA: First, we get our own house in order. We figure out what it is that we need to do in order to make sure that we’re making bias-blind advancement opportunities available for our diverse talent. Once we have done that, and we’ve created the structure that holds our senior leadership accountable, then we announce it to our outside counsel.
We give the outside counsel a year to replicate the program in their own organizations, and we tell them, “This is what we expect you to do. And if you need help doing it, we will help you.” We give them all of the things that we have developed in the creation of our own program so that they don’t have to reinvent any wheels. I’ve told the firms that they should be looking out for the talent stewardship initiative sometime in 2021.
The plan is not just a plan for a plan’s sake. It’s a plan that’s designed to create an outcome. We will be reevaluating the plan each year, we will be looking at how individuals perform within the plan, and how successful the firm is at advancing the careers of diverse lawyers.
BL: How do you evaluate those plans, and resulting diversity progress at your 90-or-so outside firms?
RA: We have an ongoing relationship with all of our outside firms in relation to diversity, equity, and inclusion. We call it our Engage Excellence Program. We have a team in our legal operations department that keeps track of the diversity statistics for all the firms. All of our firms do reporting on their diversity statistics, and then we meet with them annually.
We look over time at what firms have accomplished, what they are able to do, and what’s within the scope of their capabilities for advancing diversity within their firm. Depending on what the firm structure is, we evaluate what they’ve been able to accomplish. Honestly speaking, there are no firms that absolutely hit the ball out of the park. Everybody has room for growth.
BL: What are the specific numbers that you look at?
RA: What we look for especially is how well the firm is doing at developing diverse associates. If you look at the bottom line of these diversity statistics, you can often be tricked by what the outcomes look like. For example, in some firms, diverse partnership numbers look very good. But they look very good because the firm is good at doing lateral hires of partners. That is, they find successful, diverse women and people of color from other firms and they hire them away as partners. That doesn’t really solve the issue that we’re looking to solve in the legal profession.
What we really need to do in the profession is give up-and-coming lawyers, who have a desire to succeed and to advance within the profession, the tools that they need in order to be successful. So, we look at how well the firms are doing at retaining and promoting the diverse associates within their firms and retaining and advancing non-equity partners into equity partner positions and making sure that the diverse partners within the firm are successful. Debevoise & Plimpton, for example, has done a spectacular job out of the MetLife program.
BL: Why did you choose to put in place this talent and diversity stewardship program in addition to just tracking the demographics of your outside firms?
RA: More and more corporate clients are paying serious attention to the diversity of their firms. Many of the clients really just look to make sure that there are diverse lawyers working on the teams that are representing them. The reason that I don’t stop at that is because I really don’t know what all of my colleagues and other companies are doing. If you just make sure that people working on your matters are diverse, then you might have firms that are just allocating all their diverse lawyers to your work.
I have told firms that if we can be helpful in the development of your diverse cohort by putting them to work on our matters, then we welcome that. But if it’s better for their development for them to work on matters for other clients, then that’s fine, too. I think it’s good that clients are considering these issues, but only if they’re considering them from a holistic perspective. We really all need to be working on the improvement of the diversity of the profession, and not just the improvement in the diversity of people doing our work.
BL: Have you gotten any feedback on the talent stewardship program from your outside counsel?
RA: I did at MetLife, but I haven’t at Freddie Mac. I think that that’s just a reflection of the passage of years. By now, everybody understands that diversity is absolutely an imperative. The legal profession can’t keep turning its back on this issue or hiding its face from the issue. By now, all of the firms that we’ve been working with are grateful to have a client who has a constructive idea about how to tackle this rather than just criticizing them for the lack of diversity in their organization.