Outside-In How Diversity Initiatives Differ for Outside Counsel and In-House Counsel

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1 Outside-In How Diversity Initiatives Differ for Outside Counsel and In-House Counsel Mark T. Cumba Pettit Kohn Ingrassia & Lutz PC El Camino Real, Ste 300 San Diego, California (858) (858) [fax] Return to course materials table of contents

2 Mark T. Cumba is an attorney with Pettit Kohn Ingrassia & Lutz PC in San Diego, California, and practices in the areas of civil and trial litigation, product litigation, and retail litigation. He has successfully represented local and national clients in both state and federal courts. His experience includes defending the design, manufacture, performance, and warnings of a wide array of products, from automobiles and motorcycles to pharmaceuticals and medical devices, as well as defending retail chains in litigation. Mr. Cumba is an active member of DRI, authoring articles and presenting on various legal topics ranging from discovery strategies to tort reform. He is a current member of the Diversity Committee and is past chair of DRI s YLC Diversity Subcommittee. Mr. Cumba is also active in local bar organizations as a member of San Diego Defense Lawyers as well as the San Diego County Bar Association. Mr. Cumba received his J.D. from the Chicago-Kent College of Law and is a recipient of Chicago-Kent s Young Alumni Award. Mr. Cumba began his legal career as a prosecutor with the Cook County State s Attorney s Office in Chicago where he prosecuted misdemeanor and felony matters.

3 Outside-In How Diversity Initiatives Differ for Outside Counsel and In-House Counsel Table of Contents I. Introduction II. How Is Diversity Defined? III. In-House View of Diversity Initiatives IV. Outside Counsel View of Diversity Initiatives V. The Business Case for Diversity VI. Conclusion Outside-In How Diversity Initiatives Differ for Outside Counsel and... v Cumba v 389

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5 Outside-In How Diversity Initiatives Differ for Outside Counsel and In-House Counsel I. Introduction Building a business case for diversity crosses all industries. A human resource and business management publication authored more than ten years ago shed light on human resource departments need to develop a case for diversity integration based on the competitive edge gained by optimizing the personnel resources of a company. G. Robinson and K. Dechant, 11(3) Academy of Management Executive 21 (1997). In fact, there were even studies done in the early 1990s linking diversity and organizational performance. T.H. Cox and S. Blake, Managing Cultural Diversity: Implications for Organizational Competitiveness, 3 Academy of Management Executive (1991). A number of companies took advantage of their diverse talent to improve marketplace understanding. One example is Avon Company, which turned around unprofitable inner city markets by hiring African-American and Hispanic managers to be in charge of marketing to these populations. Another example is Maybelline, Inc., which launched a new product line, Shades of You, for women with darker skin tones. With no minorities working in marketing or in middle or upper management, Maybelline hired individuals of color into marketing to concentrate on promoting the line. Shades of You captured 41 percent of the $55 million ethnic cosmetics market, making Maybelline the leader in the ethnic marketplace. Maybelline has since expanded the product portfolio having discovered that women in general prefer a wide range of color choices. J. Dreyfuss, Get Ready for the New Workforce, Fortune, April 23, 1990, ; Cosmetic Firms Find Women Blur Color Lines, Wall St. J., July 3, 1996, B1. With this in mind, it is no surprise that law firms and corporate legal departments have placed increasing emphasis on building a business case for diversity. Our country is becoming more and more diverse and the legal industry, like any other industry, has refocused its attention on diversity efforts by working to increase the number of minorities and women hired, retained, and promoted. Anyone in the legal industry knows that, in the last two decades, in-house counsel have focused on diversity with the law firms they have retained. Specifically, in 1992, DuPont reviewed the diversity of a law firm s attorneys in deciding whether to hire that firm or not. Similarly in 1995, American Airlines had minority programs focused on considering the diversity of the law firms it used. In the late 1990s, Bell South s general counsel, Charles Morgan, prepared a document called Diversity in the Workplace: A Statement of Principle. This document set forth the strategy for advancing diversity in corporate legal departments and private law firms and encouraged corporate law departments to consider law firms diversity when choosing outside counsel. Law departments of hundreds of corporations signed onto that initiative. The initiative from corporate law departments for more diversity in the legal profession received another big push in That is when Sara Lee Corp. s general counsel, Roderick Palmore, began circulating a letter to fellow chief legal officers at corporations nationwide asking them to pledge to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse. Palmore s Call to Action initiative has been signed by more than 100 companies. Morgan s Statement of Principle and Palmore s Call to Action are based on the recognition that the composition of the profession should reflect a diverse society. Firms, corporations, governmental Outside-In How Diversity Initiatives Differ for Outside Counsel and... v Cumba v 391

6 agencies and public-interest law departments need to adopt specific goals for the hiring, retention, and promotion of minorities and women. So with these initiatives in place and with other variations of diversity initiatives continuing to evolve, it is important to see how diversity initiatives are viewed from the perspectives of in-house legal departments and the outside counsel it hires. Like any other corporate or firm policy, similarities exist, but they must also be specifically tailored to the business objectives, missions and the bottom lines of each company. II. How Is Diversity Defined? Diversity means many different things to many different people. While some companies use the traditional Equal Employment Opportunity Commission ( EEOC ) definition of diversity dealing with differences in gender, race or ethnicity, and age, other companies use broader definitions that include different physical abilities, qualities, and sexual orientation. Other companies even define diversity by focusing on heterogeneity of attitudes, perspectives, and backgrounds among group members. In the general sense, diversity is all the ways we differ including but not limited to age, ethnicity, gender, physical abilities or qualities, race, sexual orientation, educational background, geographic location, military experience. Diversity may even refer to a firm s status as a small, minority, women, or veteran-owned business. In the context of the legal profession, diversity may be viewed as a philosophy and practice of recruiting, hiring, promoting, and sustaining employees such as in-house legal counsel or contractors and vendors such as outside legal counsel who have differences that contribute to the work environment. Regardless of how diversity is defined, it is about using differences to solve problems individually and as a member of a team. In other words, diversity allows for the collaboration of individuals whose backgrounds and perspectives are heterogeneous. III. In-House View of Diversity Initiatives The bottom line for an in-house attorney differs from that of an outside counsel in the sense that in-house legal departments seek to keep fees and billable hours down so their bottom lines go up. Outside counsel see their bottom line go up in correlation to increased fees and/or billable hours. Thus, in-house attorneys may view diversity in a manner slightly different from that of outside counsel. The duties and responsibilities of in-house attorneys are not only about providing timely accurate legal advice to business partners within the company but also about giving legal advice that is practical and effective. In-house attorneys are trusted advisors and counselors in policy-making and business decisions. Working collaboratively with others with different work and life experiences, cultures, ethnicities, backgrounds, and so forth, increases the likelihood of success. With corporations, there is a need to bring diverse thinking and representation to the legal departments to reflect the growing diversity of the corporations employees and customers, the judges, juries, and governmental agencies with which the legal staff interacts. While many leading corporate law departments have established formal diversity and inclusion programs, and have made significant strides in achieving diversity both in their internal staff and in external representation by law firms, most acknowledge that more needs to be done to achieve true diversity in the profession. 392 v DRI Annual Meeting v October 2010

7 For in-house legal departments, legal competency and expertise in a subject matter, quality and timing of service, and attorney billing rates still top the list of criteria used to award business to law firms. But as stated above, the heads of law departments at a growing number of corporations have added another business component to the mix: law firms efforts toward improving gender and racial diversity. Top lawyers at many companies are expecting law firms to demonstrate progress on the diversity front. Some in-house counsel want to hire minority- or women-owned law firms. Others look beyond the overall complexion of a firm. They may hire a majority-owned law firm with guarantees that a minority or woman attorney will be the primary case handler or contact with the client. In any event, companies are delving into detailed data about the lawyers who actually work on their matters, and they are grading firms on their efforts to hire, retain, and advance women and minorities. IV. Outside Counsel View of Diversity Initiatives The job of outside counsel is to make life easier for in-house counsel when a company lacks inhouse expertise, time to do the work, or needs an independent opinion. Essentially, for outside counsel, cost-effective problem solving is their job. Research from the mid-1990s, when diversity was not yet in vogue, showed that heterogeneous teams produced more innovative solutions to problems. This was achieved because differences among members of a team allowed them to see problems from a variety of perspectives based on the various experiences of the team members. Different views surfaced and were discussed. While heterogeneity may initially create difficulties in communicating, understanding, and functioning in a group, a heterogeneous group ultimately outperforms a homogeneous group in identifying problems and producing alternative solutions. S.E. Jackson, K.E. May, and K. Whitney, Understanding the Dynamics of Diversity in Decision-Making Teams, in R. Guzzo, E. Salas and Associates (eds.), Team Effectiveness and Decision Making in Organizations (San Francisco: JosseyBass). Thus, law firms must view diversity as building teams that will be able to quickly respond in the best, most cost-effective manner to the needs of their clients. Due to the growing interest in diversity from corporate clients, law firms must be mindful that in-house legal departments are requesting more sophisticated data and annual, quarterly, or monthly reviews of a firm s diversity performance. Diversity performance can become a difference-maker between two firms that measure up similarly in other areas. It is something that differentiates otherwise equal organizations. To respond to the demands of the corporate legal departments, firms need to recruit broadly and diversely so they can get the best talent. By getting the best talent, firms can produce the broadest, most creative product. That product is what firms need to offer to their clients and prospective clients. In addition, an increasing number of law firms are establishing mentoring programs aimed at fostering a more inclusive environment for minorities. Law firm leaders are increasing their efforts not only to attract minority attorneys but also to help them advance in the firm. These efforts may include diversity training programs as well as professional development programs aimed at minorities and women. It is no secret that diversity does not happen overnight; rather, these changes require systemic changes. Law firm leaders must view the corporate calls for diversity as an opportunity to partner with their clients toward the common goal of achieving diversity within the profession. Outside-In How Diversity Initiatives Differ for Outside Counsel and... v Cumba v 393

8 V. The Business Case for Diversity Minorities and women remain grossly underrepresented in top-level private sector jobs, such as law partner and corporate general counsel. Minorities and female attorneys in law firms continue to suffer from lack of access to clients and business networks outside the firm. Among partners, minorities and women continue to be clustered at the bottom of the firm s financial and status pecking order. According to a 2001 Society for Human Resources Management/Fortune survey, the majority of the 121 U.S. human resources professionals who responded said that diversity initiatives affect their organization s bottom lines in several positive ways including: improved corporate culture improved recruitment of new employees improved client relations improved productivity Improved productivity must be viewed by both in-house attorneys and outside counsel as increased profitability for the company and the law firm. The legal profession is a business, and it is clear that diversity will improve the bottom line. Whether a short term or long term diversity initiative, it should be measurable and connected to the company s or firm s overall business strategy. More important, the entire organization top to bottom must be involved and accountable for implementation of the initiative for it to succeed. VI. Conclusion There are three major elements to the Call to Action: the principal interest in diversity; law firms diversity performance, especially hiring and retention; and the commitment to limiting or eliminating law firms that were uninterested in diversity initiatives. In order for corporations and firms to receive the best ideas, the best resources, and the best people, it is essential that they include a mix of ideas and perspectives. Diversity benefits everyone. Diversity is not about advancing one s self or one s own ethnic group. Rather, it is about making our society live up to its potential. Diversity can bring fresh perspectives to problems. Diversity also uses different life experiences, backgrounds, cultures, and ideas to more effectively solve problems. Regardless of the diversity initiatives counsel may implement, it must be understood by law firms and corporate law departments that diversity creates a resilient and stable organization that is better able to withstand the challenges of our multicultural business world. 394 v DRI Annual Meeting v October 2010