Firms not focussing on diversity run the risk of missing out on work due to the poor perception that decision makers might have of them in the legal market.
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Why having good lawyers and the lowest rates isn’t enough

Posted by: Laurence Simons 29/11/16
In the past, having leading legal minds or the lowest billing rates might have been enough to win big clients but that’s just not the case anymore. Clients are increasingly asking law firms to provide information such as diversity statistics and details of their corporate social responsibility and environmental policies when reviewing their suite of outside counsel.

In fact PayPal’s chief legal officer, Louise Pentland, recently told firms that they won’t be getting work from the company unless they make meaningful progress on diversity. Shortly after starting at the company she told a US publication that she would “not just stand by and let this be another decade of only dealing with white men in law firms.”

According to Pentland the company will make decisions on which firms to approach for outside counsel based on what they “really do to support and advocate diversity.” Firms that are unable to show evidence of “meaningful progress in a reasonable time” will not be used by PayPal. Just a year after being hired as General Counsel, Pentland was promoted to an expanded role as chief business affairs and legal officer, taking on additional responsibilities for government relations, social innovation and communications.

In comments illustrative of the shifting consensus among GCs, Pentland expressed her changing expectations for external counsel “I have great diversity in my team – men, women, ethnic backgrounds… I am very focused on picking law firms that really emulate our company’s values – diversity and inclusion.”

The PayPal GC is just one of many who are striving to use their power to encourage greater change in law firms. Uber general counsel, Salle Yoo, recently called on clients to support law firm diversity efforts by sending more work to female lawyers, saying “Women cannot become partners, and they certainly cannot become powerful partners – ones that could demand and effect change – without a book of business. If we fail to be intentional about who we call [with new work], we are failing to optimise the opportunity that we have, as clients, to effect real change in law firms.”

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