THE BUSINESS CASE FOR DIVERSITY

1. THE BUSINESS CASE FOR DIVERSITY

3. Who Is ThisWhite Guy? • Practicing employment attorney for 30 years • Legal marketing attorney coach • Member of three Minnesota State Bar Association Task Forces on Diversity in the Profession 

4. Minnesota History • Bar admission - 1870’s “any male person of the age of 21 years, of good moral character… is entitled to admission to practice in all courts of this state.” • Martha Corsett - 1876 - denied admission “The part assigned to women by nature [to be wives and mothers], is as a rule, inconsistent with the life-long application needed to practice law.” - court decision “According to the decision… women cannot be admitted to practice law in the State of Minnesota – and the majority of that sex say Amen.” - Minneapolis Tribune article • 1877 - statute amended (by 63-30 vote) • 1878 - Corsett admitted

5. Minnesota History • 1889 First black lawyer (Frederick McGhee) • 1921 First female black lawyer (Lena Smith) • 1945 Second female black lawyer • 1950’s Women join established firms

6. Minnesota History • 1970 100 practicing female lawyers • 1971 20 practicing minority lawyers • 1971 Minnesota Assoc. of Black Lawyers (MABL) formed • 1972 Minnesota Women Lawyers (MWL) formed • Today Bowman and Brooke, Fish and Richardson, Fredrikson, and Dorsey, and have female managing partners

7. Minnesota and National StatisticsNational Assoc. for Law Placement (NALP)

8. Success in Private Practice “You want to see people make partner. That is where the rubber hits the road.” Gen. Counsel – Allstate

9. Is There a Problem? • Is there a glass ceiling? • Is the playing field level and the numbers simply reflect personal choice to jump off the traditional law firm track? • Debate continues, but arguments have changed

11. From The “Right Thing” tothe “Bottom Line” “Diversity preserves the legitimacy of our legal system and safeguards the integrity of our democratic government.”- Robert J. Grey Jr., former ABA President “Law firms that only pay lip service to diversity may pay a stiff economic price. Law firms that do not take diversity seriously are already losing money.” - Minority Corporate Counsel Association study

12. Less Controversial Avoids or minimizes the debate about • past or current discrimination • use of preferences Easier to achieve consensus about activity that makes money

13. What It’s About • Talent war • Turnover • Quality • Strategic • Relationship marketing • Client demand

14. Disclaimers • Not about whether a more diverse profession is the right thing • No blueprint about how firms can achieve diversity • Most relevant to large corp. firms, but can still be applicable to small firms • Valuable to those who simply want to know what’s going on in the legal profession

15. Talent War • Law students - shrinking pool of white male applicants • 22% are minorities • 48% are women • Recruiting tool

16. Turnover Costs • Lost return on investment - impact exaggerated when profitable associates leave • Additional recruiting and training costs • Discrimination suits • Expense and distraction • Publicity

17. Quality Innovative ideas and solutions “We don’t want a law department filled with white males. Assembling the team most able to get the job done for you may mean you need diverse qualifications, backgrounds and thought processes in the people you hire.” Gen. Counsel - Medtronic

18. Strategic • Diverse jury pools • LA Law • Philadelphia • “Using firms with lawyers of a different race, sex, and age may allow them to better connect with juries, who also are more diverse.” • Discrimination suits • Jones v. St. Paul Travelers • North Country • Other litigation • Losing Isaiah

23. Strategic • Cannot be window dressing • “It didn’t feel good. The jurors saw right through it.” • Smart advocacy or exploitation? • “I do it all the time.” • “It saddens me that he would allow himself to be used that way.” • Expands or limits opportunities?

24. “It’s the Relationship, Stupid!” • Once competency threshold is passed: • Subjective • Comfort and chemistry • “Business leaders tend to hire, promote and reward people that look, think and behave like them.” - study as reported in the Wall Street Journal

25. Old Boys Network Is Getting Old “Just like there’s an old boys network, there’s a network of people of color and women. Nowadays at the large corporations, it’s a person of color or a woman who is making the decision and for some it’s not appealing to deal with an all-white firm.”

26. Marketing Dynamics Working In Favor of Women/Minorities General Counsel – Fortune 500 • Women – 21% • Abbott Labs, Amazon.com, Nash Finch, Tennant • Minority – 8.6% • Dell, General Mills, McDonald’s, Proctor & Gamble In-house counsel • 25% women • 15% minority

27. Obstacles Networking – ABA Study Excluded from Opportunities • 62% - minority women • 60% - white women • 31% - minority men • 4% - white men

28. Obstacles - Minorities Informal network not as large “Minorities come into the legal profession with fewer contacts that are likely to ripen into important business contacts.”

29. Obstacles - WomenTypical or Stereotypical? • What is the image of a rainmaker? • Lack of time- UW study • Working spouses • 28 hours v. 16 per week (housework) • 11 hours v. 3 (child care)

30. Typical or Stereotypical Obstacles • “Women do not self-promote well. They worry that they will be seen as overreaching, overeager and egotistical.” • “Woman are more aware of their limitations and are more up front about them.” • Harvard law school study – “Do you consider yourself in top 20% in legal reasoning?” • 33% - males • 15% - females

31. Typical or Stereotypical Obstacles • “Women feel uncomfortable leveraging a personal relationship for business development reasons.” • “Men know how to network but not how to make friends; women know how to make friends but not how to network.”

32. Leveraging “Comfort and Chemistry” Niche litigation - Kramer & Dunleavy • Breast cancer, hormone replacement Targeted advertising - all female Buffalo, NY law firm - Schroder Joseph and Assoc. (employment law and complex litigation) • “Ever Argue with a Woman?” • “Labor Pains? Talk to us (We’re women … We get it)” Special marketing events • “Women, Wine and Wardrobe”

33. Turn Off or Turn On? • Turn off • Implies women and minorities can’t compete • Feels wrong to leverage a physical difference • Stereotyping • Perception of overplaying the gender/race card • “It just offends me.” • Turn on • “Fabulous…you hit them all right there.” • “It is difficult to benchmark results but the positive feedback we receive keeps the programs going.”

34. GLBT (Gay, Lesbian, Bisexual, Transgender) • Similar experiences of other traditionally excluded groups • Recruiting • Quality • Marketing • Board work of gay theater group • Lavendar magazine

35. Why It Doesn’t Work All The Time • Little reward - expected to hire good counsel • Change is always risky; now with added dimension • Fear of favoritism accusation • “Sure thing” - easy to second guess • In-house more concerned with own company’s diversity

36. Corporate Client Demands Companies committed to diversity expect their suppliers to be - law firms are visible vendors • “Diversity in our workplace and supplier base strengthens our company and our performance in the global marketplace.” -Gen. Counsel - Delta Airlines • “Our goal is to ensure that … we have a diverse group of lawyers internally and externally.” - Gen. Counsel - Sears

37. Differentiator • Former Merck Gen. Counsel - “We are in the fortunate position of having many highly capable law firms lining up to work with us. And it was hard in some ways to differentiate among these firms. But we found that diversity was something that would allow us to make that differentiation.”

38. Charles Morgan Letter Former Bell South Gen. Counsel • 500 G.C.s sign • “We expect the law firms which represent our companies to work actively to promote diversity within their workplace. In making our respective decisions concerning selection of outside counsel, we will give significant weight to a firm’s commitment and progress in this area.”

39. “A Call to Action” • Initiated by Rick Palmore (former Sara Lee - Gen. Counsel – now at General Mills) in the fall of 2004 • “We will make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms. We further intend toend or limit our relationships with firms whose performance consistently evidences a lack of meaningful intent in being diverse.” - 100 signators • Leadership Council on Legal Diversity created spring, 2009 • More than 50 companies and 100 law firms; first chaired by Rick Palmore; now chaired by Brad Smith, Microsoft GC • Identify strategies and best practices

40. It’s Not Just About Large Law Firms “Inclusion Initiative” • 30 million committed to minority and women-owned law firms • Brainchild of Susan Blount, Prudential GC • Partnering with National Association of Minority and Women-Owned Law Firms (NAMWOLF) • Companies include Accenture, American Airlines, Comcast, DuPont, Exelon, General Mills, GlaxoSmithKline, and Microsoft

41. Show Me Your Numbers • Who? • Cargill • General Mills • US Bank • Xcel Energy • General Motors • DuPont • Coca - Cola • American Airlines • Intel • How? • Ask • Martindale – Diversity Profiles • Website of minority owned firms • Directory of firms used by Du Pont, Shell and Wal-Mart

42. Money Talks • Shell Oil • Factors - quality, cost, professionalism, diversity • Invoices broken down by race, ethnicity and gender • Origination credit • Diversity policies • Is progress being made? • “We no longer do business with [some] firms because they were simply giving lip service to diversity.” • Microsoft • Offers bonuses to law firms who increase hours or %’s • Offers bonuses to in-house counsel whose firms improve • “If we have a goal we need to measure it, and that we should assume money does matter and it’s crazy to think otherwise.”

43. More Walkingthe Talk • Wal-Mart • 200 million spent on outside legal • 82 of top 100 relationship partners were white males • Solution • Top 100 law firms must have at least one person of color and one woman among the top five relationship attorneys • Four firms terminated; 60 million dollars of business moved • “This is not a fad or the politically correct thing to do. Diversity has become a part of who we are.” • Now demanding input into origination credit

44. Corporate Demands in Action Wal-Mart • Contact at minority conference • Denied work because of bad numbers • Considered again after switching firms • Work being relocated in other city because existing firm has bad numbers • Will be originating attorney

45. Not Without Its Own Controversy “If a GC gives more consideration to outside firms’ diversity statistics than to factors that objectively provetalent, then she will arguably be breaching her fiduciary duty in favor of serving a dubious social agenda …The Center for Equal Opportunity would be delighted to help, pro bono, any lawyer who has been discriminated against by Shell.”

46. Is It Discrimination? • No legal challenge to date • How can you objectively prove talent? • Retention of counsel is full of subjectivity • Utilizing different, but legitimate criteria to expand the “qualified pool” • Diversity brings competitive advantage; legitimate exercise of business judgment • “Businesses have made clear that the skills needed in today’s increasingly global marketplace can only be developed through exposure to widely diverse people, cultures, ideas and viewpoints.” Grutter, 2003

47. Are Law Firms Noticing? - Yes Staffing • “This report card makes you think about diversity when you put together teams for Shell matters.” - Vinson & Elkins • “People don’t always think about gender and race when they staff matters. This is a good reminder.” - Debevoise & Plimpton

48. Are Law Firms Noticing? - Yes • “It’s an economic issue…now that businesses and corporations are demanding that their own law department and their own law firms be diverse, it will get done.” - Briggs and Morgan • Faegre - client panel presentation • “real breakthrough, and that’s not an overstatement.” • “really got us revved up.”

49. Are Law Firms Noticing? - No • InsideCounsel survey • 3% fired a firm for a lack of diversity • Counsel selection attribute - 7 out of 8 • Altman Weil survey • Lack of diversity was the least important reason of 10 for firing a law firm

50. Why Aren’t They Noticing? What can’t be measured? • Screening beforehand • “Underground network” • Never get a seat at the table