Corporate Diversity Demands Put Pressure on Outside Counsel

Kellie Schmitt

The Recorder

December 28, 2006

Was it the snub heard 'round the world?

At a minority counsel conference earlier this year, one speaker told the crowd that his former company, McKesson Corp., had cut a prominent firm out of the bidding for its legal work.

Though Arthur Chong says he didn't name the firm, he did explain his reason to the audience: "It had been highlighted in a legal magazine for not having much diversity."

Chong was followed on stage by Wal-Mart General Counsel Thomas Mars, who, Chong and others say, told the audience: "I know who that firm is, and I am going to speak to them."

That firm is Gibson, Dunn & Crutcher, and the tale -- by now oft-repeated in GC circles -- offers a window into the pressures that diversity efforts can put on attorney-client relationships.

Chong was referring to a 2005 piece in The American Lawyer (a Recorder and Law.com affiliate) that showcased Gibson's struggle with diversity. At the time, Gibson had five minorities among its 256 partners.

Today, it has seven minority partners, and by mid-January, it should have 10. Gibson Chairman Kenneth Doran says he heard about Chong's speech, and is working with Wal-Mart on diversity efforts -- yet says the recent hires aren't a result of any scolding, but of a long process within the firm.

"It's an active, ongoing multiyear effort that will continue," he said. "A speech in April doesn't lead to results that same year -- that's not how the world works."

Doran calls Wal-Mart "a very significant client relationship" and the feeling is probably mutual. Though Wal-Mart, the world's largest retailer, uses scores of firms, Gibson is handling some of its most pressing and politically sensitive matters.

This summer, Gibson lawyers helped Wal-Mart strike down a Maryland law -- dubbed "the Wal-Mart bill" and copied in other states -- that would have required very large employers to either provide health insurance or contribute up to 8 percent of payroll costs to a state fund. Gibson's Theodore Boutrous Jr., meanwhile, is defending Wal-Mart in a closely watched gender bias class action filed in San Francisco on behalf of 1.6 million female workers.

In recent years, however, Wal-Mart's legal department has joined the chorus of in-house counsel publicly pushing outside firms to diversify -- or else. And Gibson would seem a prime target. The American Lawyer story pointed out that while the firm ranks relatively well in terms of female partners, its percentage of minority partners put it 93rd among Am Law 100 firms.

A June 2005 letter sent by Wal-Mart Associate General Counsel Samuel Reeves requested diversity statistics from outside firms and threatened to "end or limit relationships with law firms who fail to demonstrate a meaningful interest to the importance of diversity."

Reached by phone, Mars said he didn't want to comment on any discussions he might have had with the firm following the April speech without first letting the firm know he was doing so. A week later, he e-mailed to say he had no comment.

Doran said his firm updates Wal-Mart on its diversity efforts, as requested, and includes minority partner Marcellus McRae as one of its relationship partners with the retailer. In a public letter last year, Wal-Mart asked law firms to submit a slate of candidates, including at least one woman and person of color, for the relationship role.

McRae did not return requests seeking comment.

But Doran says the firm's push to diversify isn't just because of "spectacular" clients like the big-box retailer. The firm can point to efforts it's made that go back a decade, and Doran says diversity has been a priority for him since he took the helm four years ago.

"It makes fundamental sense for our firm and makes it strong -- that's why we do it," he said. "But, are we aware of the initiatives of Wal-Mart and Tom Mars and other GCs and are we working with them? Absolutely."

GAUGING THE EFFECTS

In October, Gibson announced it had hired two lateral partners, both of whom are Asian-American. One won't start until January. Also starting in January, in the London office, is a South Asian partner. And then there is one African-American among the lawyers the firm is promoting to partner effective Jan. 1.

(On Dec. 19, an additional Gibson minority partner fell to her death hiking near a waterfall in Hawaii while on vacation. Elizabeth Brem, a partner in the Orange County office fluent in English and Spanish, was 35.)

Chong said that, while he was working in house at McKesson Corp., the company cut Gibson from a list of outside firms that could bid on the vast majority of its legal work; by the time he made his speech, in April, he was general counsel at Safeco, a Seattle-based insurer. He doesn't know whether his speech had any effect on Gibson. "If indeed it's true that the firm heard it and took action, that's a beacon for others to follow," he said.

Certainly many others heard -- or have heard of -- the speech.

"I go to meetings and people say 'Can I get a copy?'" Chong said.

Sandra Yamate, the director of the American Bar Association Commission on Racial and Ethnic Diversity in the Profession, attended the conference. "I have lawyers tell me," she said, "that Art's remarks were some of the most insightful comments they had heard from a GC in years -- the fact that he was able to appreciate the role and responsibility that he as a client carried."

In recent years, a number of GCs have publicly pressed firms to meet diversity goals with threats of withholding work. But few lawyers can point to examples where a lack of diversity has actually cost someone a client, which is one reason why lawyers say Chong's speech was important.

Since April, Yamate says there's been an uptick in the number of firms asking for help with diversity initiatives. "Sometimes, they refer to the speech, and we can trace it back to one of the minority lawyers in the audience," she said.

Jayanne Hino, a Davis Wright Tremaine partner who attended the conference, said she hears at ABA meetings "about what a great speaker Art was and how we really need to get him out there in front of other law firms."

As for Chong, making business decisions based on diversity just makes good sense, he said.

"Law firms exist to please and serve clients," he said. "If clients are serving a diverse population and saying diversity is important to us, and therefore it should be important to you, I don't see how that isn't good business."

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7306634)

Waterfalls = racist

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7306705)

http://www.gibsondunn.com/insidegdc/whoswho/bio/?contactId=f716467a74c4c902

Also, was a potential milf.

http://starbulletin.com/2006/12/21/news/story07.html

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7312213)

But really, the biggest part of the long ongoing process is going to be trying to convince minorities to come and work for them.

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7312173)

Statements like this presumably attract Hispanic business but it seems like they would have a negative effect on prospective employees.

As a non-Hispanic, I find this a serious disincentive to even think about wanting to work for these firms.

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7307022)

For example, illegal aliens are not a race, so how is opposing illegal immigration racist?

For that matter, Mexicans are not a race, so how is identifying someone as Mexican a "racial slur"?

Why is it okay to advertise your firm as being #1 in Hispanic hiring, yet it would not be okay to advertise your firm as #1 in Caucasian hiring?

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7312169)

all it means is they have 8% hispanics instead of 6%

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7312175)

BTW, how do you take a token job like "minority relationship partner" and still have the ability to look at yourself in the mirror in the morning? This sort of behavior should be completely illegal.

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7307689)

Let's bring the inept, socially awkward attorneys into the partner ranks and lower the quality of legal services. Then Ching Chong Chang will surely be dishonored.

(http://www.autoadmit.com/thread.php?thread_id=553280&forum_id=2#7312352)