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Novartis Demands Outside Counsel Make Tough Diversity Guarantees

Feb. 12, 2020, 8:55 PM

Novartis AG is demanding that its 22 “preferred” Big Law firms make specific diverse staffing commitments for each engagement with the pharma giant—or face punishment in the form of reduced payments.

Through the new program announced on Wednesday, Novartis is also requiring its outside counsel to commit that at least 30% of billable associate time and 20% of partner time will be provided by women, racially or ethnically diverse professionals, or members of the LGBT community.

If firms don’t meet their agreed-upon staffing commitments on particular matters, the Basel, Switzerland-based company will withhold 15% of the total amount billed over the life of that matter, it said in a statement.

“We recognize that corporate legal departments have an incredibly important role to play in ensuring that the legal profession accelerates its efforts to make meaningful progress when it comes to diversity and inclusion,” Novartis Group General Counsel Shannon Thyme Klinger, said in the statement.

The program applies to the 22 members of the company’s “preferred firm panel” of global and U.S.-based law firms, including Latham & Watkins, Sullivan & Cromwell, Mayer Brown, and Alston & Bird.

The company selected firms with “a demonstrably strong commitment” to diversity and inclusion, and were willing to stand by that commitment, according the statement.

The program follows years of efforts by corporate counsel to nudge their outside firms to hire more women attorneys, lawyers of color, and those affiliated with the LGBTQ+ community.

One firm on Novartis’s preferred list, Hogan Lovells, has provided the company with advice on regulatory, privacy and antitrust matters over the past year, and has represented the drug maker for more than two decades, according to a firm statement. Hogan also said it understood the “moral and strategic importance” of diversity and inclusion.

“Our firm is committed to being a leader in diversity and inclusion, and our continued partnership with Novartis reflects these efforts,” the Washington-based law firm said. “Our teams ranged from a diversity percentage of 25 to 100 percent on all of these matters, and we hope to enhance these efforts again this year.”

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bloomberglaw.com

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

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