This October, the Supreme Court ruled in favor of Harvard University in a notable and highly covered case about whether Harvard’s admissions process was discriminatory towards Asian American applicants. ((Clare Lombardo & Elissa Nadworny, Federal Judge Upholds Harvard’s Race-Conscious Admissions Process, NPR, (Oct. 1, 2019, 3:31 PM), https://www.npr.org/2019/10/01/730386096/federal-judge-rules-in-favor-of-harvard-in-admissions-case. )) However, this did not resolve the matter completely. The argument for and against race conscious admissions first reached the Supreme Court through a case with the University of Michigan Law School at the center, as the University’s procedure for considering race in applicants was upheld in a split decision decided by Justice Sandra Day O’Connor in favor of the race-conscious admissions policy. ((Grutter v. Bollinger, 539 U.S. 306 (2003).)) But beyond the benefits of diversity and inclusion in the classroom, there is a business case for increasing diversity in corporations and corporate law firm spaces as well. This post will first look briefly at the history of diversity and inclusion historically in the legal sector and define the breadth of these terms. This post will then discuss the market-based diversity arguments. Finally, it will discuss some ideas for increasing the pipeline of diverse participants in business and corporate law.
What do Diversity and Inclusion Mean?
Diversity, Equity, and Inclusion or DEI is important in law schools because it provides equal opportunities for all individuals and prepares lawyers to operate in a global legal market. The University of Michigan Law School encourages this and defines the terms Diversity, Equity, and Inclusion collectively as the expression of identity “in myriad forms, including race and ethnicity, gender and gender identity, sexual orientation, socio-economic status, language, culture, national origin, religious commitments, age, (dis)ability status, and political perspective.” ((Diversity, Equity, and Inclusion, U. of Mich. L. Sch., https://www.law.umich.edu/diversity/Pages/default.aspx (last visited Oct. 24, 2019).)) Equity and Inclusion include the commitment to “equal opportunity for all persons” and fostering an environment welcoming of different perspectives, respect, belonging, and inclusion. ((Id.; But see MI CONST Art. 1, § 26 (limiting diversity and inclusion affirmative action policies at the University of Michigan through a state Constitutional amendment).)) These terms can be understood to emphasize a culture of understanding, confrontation of unconscious bias, and merit as the primary consideration of competency over background, connections, and conventional understandings of status. Equity and inclusion are important in an elite law school, because, as Grutter states, diversity creates educational benefits for both the diverse students as and all other students by fostering a culture where students are challenged to “think critically.” ((Grutter, supra note 2.)) Not only does this create an environment where elite lawyers are better prepared for complex, sophisticated legal challenges, but it better prepares law students to practice and operate in an increasingly international legal industry.
For graduating students, a diverse educational environment also prepares law students for the 21st century legal market, professional and educational benefits. Since the 1950s through to present day, the corporate and business world has become incredibly global and interdependent, as evidenced most recently by the global recessions that reverberated around the world in 2007 and 2008. The practice of law was once isolated to the cities where the major corporations’ headquarters were based, such as New York, London, Frankfurt, and Washington, DC. However, this is no longer the case, both in the US and abroad. Firms are opening offices in various geographic regions to build out risk-diverse practices in previously underutilized practice areas, such as capital markets and mergers and acquisitions practices in far away locales like Abu Dhabi and Shanghai. ((Morgan Lewis Enhances Investment Funds, Institutional Investor, and Middle East Capabilities By Launching In Abu Dhabi and Expanding In Washington, DC, Morgan Lewis, (Feb. 11, 2019),https://www.morganlewis.com/news/firm-enhances-investment-funds-institutional-investor-and-middle-east-capabilities.)) These once closed markets are now open for business and growth. ((Id.)) Yet, as these emerging markets increase the work available to US-trained attorneys based nationally and abroad, these markets are demanding different skills and experiences that a traditional US legal education does not provide. While having more diverse students in US law schools creates a larger pipeline of diverse attorneys to engage with these new markets, the presence of diverse students also increases the skillsets of all the attorneys educated in the same environment, since some skills have to be experienced to be learned. These skills include cross-cultural communication, interdisciplinary communication, and interdisciplinary application of legal concepts in business settings. These skills were once considered a bonus but are now no longer optional: General Counsels in the US and around the world now demand law firms and students adapt and prepare to offer diversity influenced and cultural humility skills as one of the many in their repertoire. ((Christine Simmons, 170 GCs Pen Open Letter to Law Firms: Improve on Diversity or Lose Our Business, The American Lawyer, (Jan. 27, 2019, 3:00 PM), https://www.law.com/americanlawyer/2019/01/27/170-gcs-pen-open-letter-to-law-firms-improve-on-diversity-or-lose-our-business/?slreturn=20190918195822.))
Market-Based Diversity Arguments
While there are many different types of arguments for diversity in the workplace, the market-based arguments for diversity are often cited as significant and impactful compared with arguments for diversity as a remedy for past societal discrimination. ((David B. Wilkins, From “Separate Is Inherently Unequal” to “Diversity Is Good for Business”: The Rise of Market-Based Diversity Arguments and the Fate of the Black Corporate Bar, 117 Harv. L. Rev. 1548 (2004).)) The justification for this is that in a capitalist society, everyone can agree that regardless of the moral ramifications, if diversity is a positive for the shareholders, then the directors and the decision-makers have the legal and economic support to incentivize increasing diversity.
One such market-based argument for diversity is that diversity is what the market is seeking. As the number of emerging markets increase, the leaders in these markets are coming from new backgrounds and tend to be more diverse because the markets themselves are full of people with different racial backgrounds, religions, and ethnic and gender identities. ((Simmons, supra note 8.)) These new markets have need of legal counsel who wholly “represent the clients[they]
serve.” ((Id.)) To continue to appeal to clients who desire these traits in their law firms, firms are incentivized to offer this in a way similar to firm clients asking for new features, like electronic invoicing or the emergence of flat fees.
Another market-based argument for diversity is that a more diverse attorney workforce increases the profits of a corporation and of a corporate firm. Studies have shown that decision-making groups that are more diverse “outperform” decision-making groups which are more homogenous. ((Mark Roellig, Why Diversity and Inclusion Will Advance Your Business-and Your Career, Association of Corporate Counsel Docket, Apr. 2019, at 72.)) This increased performance comes from having a greater pool of skills as well as more creative ideas for substantive and strategic outcomes for clients, which increases profits. Increasing performance and increasing profit are clearly to the benefit of shareholders. For lawyers, when advising clients on complex, sophisticated matters, the more perspectives, the better the client is served, because the client is better prepared for all the scenarios their competitors are preparing for as well.
Finally, a major market-based argument for diversity and inclusion in corporate spaces is the perception of the firm, the ability to recruit nondiverse staff, and the quality of life at the firm as perceived by current and prospective employees. ((Staci Zaretsky, Vault ‘Quality of Life’ Rankings: The Best Law Firms To Work For In America (2020), Above The Law, (Jun. 26, 2019, 12:47 PM), https://abovethelaw.com/2019/06/vault-quality-of-life-rankings-the-best-law-firms-to-work-for-in-america-2020/.)) One way to measure quality of life and employee satisfaction is to determine whether every employee perceives that their work will be recognized as significant to the overall goals of the organization and that their existence is acknowledged. Whether one’s own work is acknowledged and perceived as significant to the company can be analyzed methodically through numbers on diversity and inclusion. When diversity and inclusion are indicated as important, or a priority, to the governing boards, this prioritization signals to all employees that even the most vulnerable or marginal populations are noteworthy. ((Roellig, supra note 12.)) In a profession as hierarchical as law, this implicit signaling indicates a supportive culture to all employees, and increases the satisfaction employees get from working at a place known for a well-rounded and welcoming culture. Even if the numbers alone are not at the firm’s goal, efforts to increase the numbers indicate an attitude of management that all employees are welcome and while not guaranteeing job satisfaction, management is interested in
Increasing Diverse Participants in Law
Certain initiatives incentivize firms to build out a more diverse workforce for the above-discussed market-based arguments. Concepts like the Mansfield Rule taken from National Football League practices encourage and require firms to consider women, LGBT+, and minority lawyers for partnership openings and “significant leadership roles.” ((Evan Cohen & Zarrar Sehgal, Clifford Chance – a Mansfield Rule law firm pioneer – certified for 2018, Clifford Chance, (Aug. 20, 2018), https://www.cliffordchance.com/news/news/2018/08/clifford-chance–a-mansfield-rule-law-firm-pioneer–certified-fo.html.)) After participating in such initiatives, the results of these mandatory components speak for themselves as firms who have instituted this rule prove more successful at recruiting, retaining, and promoting women, LGBT+, and racial and ability diverse attorneys. ((Mansfield Rule Forum Commemorates Past and Paves Way for More Inclusive Future, Northwestern Pritzker Sch. of L., (Oct. 3, 2019), http://www.law.northwestern.edu/about/news/newsdisplay.cfm?ID=962&category=Diversity%20and%20Inclusion.)) Other strategies include the implementation in California of a new rule requiring “all publicly-held domestic or foreign corporations whose principal executive offices are located in California to have at least one female director on their boards.” ((Women on Boards, S. 826, 2018 Cal. State S., Reg. Sess. (Cal. 2018), https://www.sos.ca.gov/business-programs/women-boards/#targetText=California%20is%20now%20leading%20the,or%20by%20adding%20a%20seat. )) This more controversial step, while inciting intense dialogue, has had the intended effect of increasing the representation of women in these corporate, business spaces. The market-based arguments discussed in this blog make a compelling case for increasing diversity in all its forms in corporate law and the legal spaces within businesses not only for the social equality reasons, but also for the compelling financial and global business reasons.
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