ACROSS CORPORATE CANADA the overwhelming majority of lawyers walking the corridors of power share two distinguishing features. They are men. They are white. The same may be said of the senior litigators arguing the most important cases before the courts.
For confirmation one has only to turn to the 2005 Lexpert/American Lawyer Guide to the Leading 500 Lawyers In Canada. Of the 500 lawyers profiled, 38 are women and seven are visible minorities. The other 455 lawyers (91 per cent) share two distinguishing features. They are men. They are white. In the corridors of power, this is the face of the profession.
But, in the boardrooms and courtrooms of Canada where the most important deals are negotiated and cases argued, will this be the future face of the profession? To a considerable extent publications like the Lexpert/American Lawyer 500 reflect the past. These are the law school graduates of the 1970s, as well as some stalwart holdovers from the 1960s and fast-moving stars from the 1980s, who clawed their way to the top. What of the future? Will the leading lawyers come to more closely mirror the multicultural and gender composition of the student body of Canadian law schools and Canadian society generally?
In the US, major law firms have a keen interest in attaining and maintaining a diversity, from women and visible minorities through to sexual orientation, in their associate and partner ranks which is representative of American society generally. According to the cynics or, if you prefer, pragmatists, this interest has little to do with the “moral imperative” of diversity and everything to do with—what else?—money. As one New York lawyer put it, off the record, “Doing the right thing? That’s a nice sop for the politically correct crowd.”
Yet, notwithstanding this keen interest, large US firms have not made any real headway. They have been at it more than a decade. According to the National Association for Law Placement (NALP), a US monitoring organization, while about 10 per cent of lawyers in large US firms are what is termed lawyers of colour, only 5 per cent of partners in these firms are from visible minorities, compared to 15 per cent of associates.
The aggressive but spectacularly unsuccessful attempt by New York-based Cleary Gottlieb Steen & Hamilton LLP between 1989 and 2000 to build a critical mass of black attorneys was the subject of a cover story in The American Lawyer (see “Losing the Race,” October 2001). As reported in “Face Up To It: White Men and the Diversity Issue,” the cover story for the December 2002/January 2003 issue of Legal Business, the situation is even more dismal in the UK.
But, for “progressive” law firms in the US, and the corporate clients they are belatedly following, the reason for their continuing strong interest in diversity is self-evident. Diversity is good for business. Even the most conservative firms, which distrustfully equate diversity with quotas as opposed to merit, understand that if they do not pay attention to diversity they will lose serious ground in the two wars every major firm is now fighting.
The first war is over talent. The second war is for important corporate clients. The business case for diversity in the US is driven by these two considerations.
In Canada there is a third consideration. This is the de facto integration of the US and Canadian economies accompanied by US in-house corporate counsel, in many instances, deciding which Canadian law firm is retained on important corporate or litigation matters, Canada/US cross-border or wholly within Canada. The same conclusion has been drawn in the UK. As noted by Claire Smith, author of the “Face Up To It” cover story in Legal Business, “It is inevitable that, as these (US corporate) clients globalize and as English firms increasingly work for American companies, these same demands (for diversity) will be made of English lawyers.”
It was Hubert Védrine, the French foreign minister during the 1990s, who somewhat petulantly coined the term hyperpuissance to describe a United States too powerful to be simply called a superpower. Similarly, by definition, what is happening regarding diversity in law firms in the US will have an impact in Canada. It is not a question of “if”. It is a question of “how much” of an impact.
IN THE US the extent of the impact is clear. For in-house corporate counsel the lines have been drawn. As spelled out in A Call to Action: Diversity in the Legal Profession, and endorsed on October 24, 2004 by the board of directors of the influential Association of Corporate Counsel (ACC):
As Chief Legal Officers, we hereby reaffirm our commitment to diversity in the legal profession. Our action is based on the need to enhance opportunity in the legal profession and our recognition that the legal and business interests of our clients require legal representation that reflects the diversity of our employees, customers, and the communities where we do business. In furtherance of this renewed commitment, this is intended to be a Call to Action for the profession generally and in particular for our law departments and for the law firms with which our companies do business.
In an effort to realize a truly diverse profession and to promote diversity in law firms, we commit to taking action consistent with (Diversity in the Workplace – a Statement of Principles). To that end, in addition to our abiding commitment to diversity in our own departments, we pledge that we will make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms. We intend to look for opportunities for firms we regularly use which positively distinguish themselves in this area. We further intend to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse. (emphasis added)
Authored by Roderick Palmore, the high-profile African American chief legal officer (CLO) of Sara Lee Corp., the ACC’s Call to Action seriously upped the ante for law firms wanting to work for Sara Lee and the growing list of corporate signatories to the manifesto. The referenced Statement of Principles, signed in 1999 by the CLOs of more than 500 major US and multinational corporations (from American Airlines and Bank of America through to Verizon Communications and Xerox Corp.), called on “law firms which represent our companies to work actively to promote diversity within their workplaces.” Five years later, dissatisfied with what had been achieved, Palmore set out the price for non-compliance: take diversity seriously or lose our business.
And, underlining the position taken by the ACC is the fact that increasing numbers of visible minorities are going in-house. According to Cathy Abelson, a Philadelphia legal recruiter, as reported in “Losing the Race,” there is no mystery why this is happening. “It is easy to understand. Minorities can feel more equal at companies than at firms. Law firms are more elite in their structure. And companies often have minorities in other job categories. Personal connections are necessary to be a rainmaker in a law firm, which is more of a barrier to people who are first-generation college graduates.”
Nevertheless, one must not overstate the case. As reported in “Courting Shell” (The American Lawyer, June 2004), last year Pittsburgh-based Kirkpatrick & Lockhart LLP “released a two year study of in-house counsel at nearly 200 companies in the Fortune 1000. Kirkpatrick found that respondents rated diversity only 4.1 in importance in choosing outside counsel for routine matters (on a scale of 1 to 10). The number dropped to 3.3 on bet-the-company matters. Even more sobering, less than one-half of 1 per cent listed diversity as the reason they hired a particular firm. The study concluded that diversity is at best a ‘tie-breaker’ advantage among firms that are roughly equal according to more traditional hiring criteria.”
The importance of diversity, in large part, depends on who you talk to. “It’s becoming a real criteria in awarding work,” says Theresa Cropper, the director of diversity in the Chicago office of DLA Piper Rudnick Gray Cary. DLA Piper Rudnick is an important US/UK law firm recently formed by way of a trans-Atlantic merger. Speaking of the signatories to the Statement of Principles, and particularly the signatories to the Call to Action like Palmore and the CLOs of companies like Boeing, Starbucks and Sears, Roebuck and Co., Cropper emphasizes that these statements of intent have to be taken seriously. “These people are not kidding.”
The determined position taken by Palmore and the ACC on diversity would not be possible if Corporate America itself had not moved beyond the “incomplete success” of the affirmative action programs of the 1980s. Central to this shift in position was recognition of the link between diversity and business strategy. The Harvard Business Review has been driving the point home repeatedly. For example, publication of a 2001 study of Fortune 500 companies which linked higher profitability with superior performance in promoting women to senior positions. The top 25 companies posted returns on investment 69 per cent higher than the Fortune 500 median in their industry.
THE MOST COMPELLING business case for diversity is also one of the oldest. Lou Gerstner’s reorganization of IBM between 1995 and 2005 increased the number of female executives, ethnic minorities born in the US and self-identified gay, lesbian, bisexual or transgender (GLBT) executives, respectively, by 370, 233 and 733 per cent. More than half of IBM’s Worldwide Management Council—its top 52 decision-makers—now consists of women, ethnic minorities born in the US or non-US citizens.
IBM’s diversification of its workforce is all about money. As David Thomas notes in “Diversity as Strategy” (Harvard Business Review, September 2004): “The entire effort was designed to help the company develop deeper insights into its major markets with a direct tie to two of Gerstner’s central dictates. One: IBM needed to get closer to its customers and become more externally focused. Two: it needed to focus on talent—attracting, retaining, developing and promoting the best people.” The return to date on the various initiatives attributed to IBM’s eight diversity task forces is estimated to be an additional $1 billion in revenue.
There are many other such corporate examples. A sustained focus on diversity has been credited with playing a major role in the financial turnaround of Lucent Technologies, under the leadership of CEO Patricia Russo. It has helped to facilitate innovation and accelerated the growth of new markets. A similar focus on diversity and multicultural or global markets is behind the improved performance of Avon, under the leadership of CEO Andrea Jung. And diversity-related best practices play a central role in the ongoing clean-up by CEO Richard Parsons of the “train wreck” merger between Time Warner and AOL.
There is also EI du Pont de Nemours and Co. where Thomas L. Sager, a white, middle-aged vice-president and assistant general counsel, has received the honour of having an award created by the Minority Corporate Counsel Association (MCCA) named after him. The award is given annually to law firms that demonstrate a sustained commitment to diversity. Having seen diversity pay off on the business side, Sager put it front and centre when DuPont created the new DuPont Legal Model in 1992.
As explained by Sager in a recent interview with The Metropolitan Corporate Counsel, “At about the time that DuPont Legal began its convergence program in 1992, I realized that the racial and ethnic complexion of our customers, suppliers, shareholders and employees was changing in the US and throughout the globe as we entered new markets. It became clear to me that lawyers representing DuPont, both in DuPont Legal and our outside law firms, had to reflect these changes if they were to serve as effective ambassadors and extensions of this company. The business case for diversity, particularly in the legal arena, is really a no-brainer.”
Not surprisingly, DuPont was one of the early signatories to the 1999 Statement of Principles. But, as DuPont and the other signatories soon discovered, the legal profession was responding, in Thomas Sager’s words, to this “no-brainer” with glacial speed. When the American Bar Association (ABA) elected Dennis Archer as its 127th president in 2003, Archer was the first African American to hold this prestigious position. Visible minorities comprised more than 30 per cent of the American population, but lawyers of colour—African American, Latino, and others—represented just over 10 per cent of the US legal profession. And their visibility in large law firms was virtually nil.
Archer recognized that changing the face of the profession was a complex task. It involved creating role models and opportunities for lawyers of colour and buy-in from clients, particularly large corporations. Of great importance was the attitude and response of the leading full-service US law firms. As Archer explains, “Most lawyers of colour, indeed most lawyers, practise as solo practitioners or in very small firms. But it happens that the large firms often set the tone for the profession.”
To accomplish his objectives, long before his election as President of the ABA, Archer was one of the driving forces behind the Minority Counsel Demonstration Project. This was an ABA initiative launched in 1988 designed to develop increased demand for the services of black, Asian, Hispanic and Native American lawyers in private practice by encouraging clients to ask for their services. “We are still woefully underrepresented,” says Archer. But with the ABA buying into diversity, clients like DuPont and IBM exerting pressure, and activists and role models like Archer and Palmore reshaping the face of the profession, that’s changing—although not as quickly as either Archer or Palmore would like.
CANADA DOES NOT HAVE a Thomas Sager, a Roderick Palmore or a Dennis Archer. And, despite an official federal policy of multiculturalism, Canada is more reluctant than the US to put diversity in the spotlight. As Won Kim, managing partner of Toronto litigation boutique Roy Elliott Kim O’Connor LLP (REKO), puts it, “In Canada we celebrate diversity. But that means we don’t talk about it.”
This reluctance to even talk about workplace diversity is real. It was recently encountered by Canadian Business magazine when that publication attempted to assess how visible minorities and Aboriginal peoples are “faring in Corporate Canada.” As noted by writer Valerie Marchant in “The New Face of Work” (Canadian Business, March 29, 2004), most companies “had little or no information or were unwilling to share it.” Further, “several companies responded as if our interest in the subject was inappropriate.” In researching this cover story for Lexpert a similar reluctance was encountered on behalf of law firms and their corporate clients, including those publicly recognized for positive action on diversity and equity issues.
Canadian law firms should get used to hearing and answering these questions. While the pressure to move on workplace diversity isn’t as overt as it is in the US legal market, it’s here. And, in an economy dominated by US/Canada cross-border deals, it’s growing. As noted by Garth Girvan, a senior corporate lawyer in the Toronto office of McCarthy Tétrault LLP, “In most cases, it would surprise any in-house counsel if we presented an all-male team.” And, when working with US counsel, even when the issue isn’t directly addressed, Girvan points out that it is understood the client expects to see some level of diversity in the legal team. “There is more and more diversity in-house. There are more women and more visible minorities. It would surprise US counsel if we presented a monolithic face to them.”
Given the importance of US/Canada cross-border work, McCarthys is one of many Bay Street firms that knows it has to address these expectations. While Girvan has yet to have a discussion with US corporate counsel where his firm’s performance on diversity issues is squarely put on the table as a criteria for getting work, this is now part of life for US firms.
As Theresa Cropper at DLA Piper Rudnick explains, “Many clients have been requesting diversity reports for a couple of years now and they’re becoming more sophisticated with their questions.” US corporate clients are no longer satisfied with vague descriptions of diversity initiatives. They wanted detailed accounts of how the firm’s commitment to diversity plays out on their big deals and files. Furthermore, as Cropper points out, important clients are not exactly shy about what they want to know. “They want to know who’s working on their files—and how much each of them is billing.” In other words, full disclosure.
Shell Oil Co. in the US is a good example. As reported in “Courting Shell,” the company requires its law firms “to break down their invoices according to race, ethnicity, and gender of billing lawyers. It then drills deeper to ensure that women and minorities aren’t relegated to handling only junior-level tasks. Once a year Shell sends out report cards, which show how its firms stack up, diversity-wise, against other Shell outside counsel.”
As noted at the outset of this article, it’s not a question of “if” this importance paid to diversity in the US is coming to Canada, it’s a question of “how much” of an impact it will have. It’s already here. As Anne Ristic, assistant managing partner of Stikeman Elliott LLP’s Toronto office notes, over the last year her firm has participated in about five requests for proposals or annual client reviews in which clients asked specific questions about the firm’s diversity and equity policies. And if there’s one thing law firms know, it’s that if clients care about something, so should they.
BUT IN CANADA, do clients really care? Not really. As David Allgood, executive vice-president and general counsel at the Royal Bank of Canada, puts it, “My own view would be when large corporations are retaining Canadian law firms, diversity is not a factor. There is a very high percentage of women in most law firms, and as far as more visible minorities are concerned, people don’t choose law firms on whether or not they have visible minorities, but on the quality of legal services. It’s kind of a neutral issue in Canada.”
David McAusland, senior vice-president & chief legal officer at Alcan Inc., agrees with Allgood. “I don’t think diversity is on anyone’s agenda, formally, at this time in Canada.” Terrie-Lynne Devonish, general counsel at Primus, is of the same view. “I’ve never been at a company where the question has been asked.”
Why? Organizations like the MCCA and African American corporate counsel like Roderick Palmore have played a major role in making US law firms take diversity seriously. In contrast, in-house corporate counsel in Canada continue to be predominantly white. Terrie-Lynne Devonish is one of the very few lawyers of colour—and of even fewer women lawyers of colour—with a position of power in a Bay Street legal department. And that, says one senior Toronto corporate lawyer, off the record, is why Canadian corporate counsel aren’t asking hard questions about diversity. “They’re not even asking the easy ones because, as a group, they just aren’t that diverse themselves.”
The same goes for the management teams with which in-house counsel work. As Devonish points out, “At the executive level it’s still predominantly white, male and English.” Devonish does emphasize, however, that white women have made significant inroads in corporate legal departments and increasingly on corporate management teams.
Wayne Bigby, president of Toronto-based legal communication firm Lexoro Inc. and a Blake, Cassels & Graydon LLP alumnus, agrees with Devonish. “If you look at the announcements of recently promoted or appointed executives in the pages of the Globe and Mail or The National Post, you see more and more women but you very rarely see visible minorities.” And this, suggests Bigby, may mean that the pressure US in-house counsel and clients are exerting on their law firms respecting diversity may never surface in Canada.
GOOD NEWS FOR Canadian law firms uncomfortable with the importance the US legal market attaches to diversity? Hardly. It matters less and less what Canadian corporate clients think. Given the de facto integration of the Canadian and US economies, and the importance of US/Canada work to major Canadian firms, what increasingly matters is what US in-house counsel think. It is likely that the expectations of US clients will assume greater importance in the Canadian legal market.
And, between the activism of people like Roderick Palmore and Dennis Archer, and the example set by corporations such as IBM, DuPont and Sara Lee, more and more US law firms are integrating diversity into their operating strategy. A number are now realizing a financial payback.
New York-based White & Case LLP is a good example. As Liz Pava, the firm’s chief marketing officer, pointed out at a recent conference in Chicago, about half of the signatories to the 1999 Statement of Principles are White & Case clients. Add to this increasing numbers of women and visible minorities filling executive roles at Fortune 500 companies and it’s clear what’s driving the importance White & Case attaches to diversity. This has translated into a 45 per cent and 21 per cent increase, respectively, in the firm’s number of Asian and Hispanic associates. It is having an impact at the partner level as well. Four of the firm’s 11 new US partners in 2003 were visible minorities (an additional two were female).
White & Case is not alone. New York-based Shearman & Sterling LLP made its 10-year “global diversity initiative” an important part of the firm’s overall strategic plan. As pointed out by Anna Brown, the firm’s diversity management attorney and executive director of its diversity committee, “Law firms take note of what clients are requesting, whether it’s with respect to a diversity initiative or billing arrangements. It certainly promotes the business case for diversity.”
IF THE ROLE PLAYED by Canadian corporate clients in putting diversity on the agenda is underwhelming, the role played by Canadian law students and young lawyers cannot be overstated. As Abas Kanu, a senior corporate associate in the Toronto office of Stikeman Elliott, emphasizes, “I wanted to be at a firm that had a very broad outlook in terms of diversity of its people and diversity of its practice. I was interested in Stikeman Elliott because it had always had a global outlook. I believe the two factors, diversity of people and diversity of practice, or an international, global focus of practice, go together.”
And it’s not just young lawyers who identify themselves, as Brad Berg at Blakes in Toronto puts it, as “people of difference.” “Many young lawyers, and clients as well, value difference. They view it as a strength.” Berg, who was openly gay when he joined Blakes in 1996, goes on to explain that “There are far more straight lawyers who understand and support their GLBT colleagues, and several who are leaders in the profession in representing GLBT clients.”
In The Rise of the Creative Class (New York, 2002), economist Richard Florida makes a compelling argument for a link between diversity and creativity. Florida notes that the increasingly important “creative class,” in which he includes professionals such as lawyers, is building the 21st century economy on a set of values among which diversity and its perceived contribution to business success are key. And, according to Kimberley Bachmann in the 2003 Human Resources and Skills Development Canada study entitled “The Impact of Employment Equity on Corporate Success in Canada,” a third of Canadian employers agree. These employers report that employment equity has enhanced creativity in their workplaces.
Leslie O’Donoghue, vice-president, general counsel and corporate secretary at Calgary-based Agrium Inc., puts it in even stronger terms. “From my perspective, diversity is very much a survival issue. When a team at a company, a law firm, or a board of directors is made up of males of same age group, they all see the world the same way. Our board, for example, has specifically recognized that when we bring female directors on board they will bring different perspectives. That’s crucial in business.”
Catherine Lamboley, general counsel with Shell Oil Co. in the US, agrees with O’Donoghue. “When you use people with diverse backgrounds and different ways of looking at things, you get a better solution.”
AND LAW FIRMS? As noted by Josee Bouchard, the Law Society of Upper Canada’s equity advisor, “There is not only awareness of diversity issues among law firms, but a high level of commitment. There is recognition throughout the profession that a diversified team leads to a more diverse client base, which gives law firms a competitive edge.”
In a way it’s a case of embracing the inevitable. As Mary Jackson, Director of Legal Personnel at Blakes in Toronto notes, “Law school classes are now diverse, period, in terms of ethnicity, religion, everything. Law firms have to respond to that reality.” If they don’t, suggests Leslie O’Donoghue, the consequences may be dire. “How will law firms survive if they don’t tap into and retain those qualified candidates? It will be a bit of a crisis for them if they don’t figure out how to manage it.” Diana Good, a partner who heads the diversity committee at Linklaters & Alliance, the UK-based global law firm, does not mince words on the subject. Good was recently quoted as stating that “This is not about being politically correct. This is about recruiting and retaining really good people.”
And so far they are not managing particularly well. As Chima Nkemdirim, a corporate lawyer with Fraser Milner Casgrain LLP in Calgary and a member of the firm’s recruitment committee, unhappily reports, “We don’t seem to see as many applicants from visible minorities as I’d think we should given the current demographics at law schools.” One senior Toronto corporate lawyer, speaking off the record, is blunt. “Bay Street firms have not been good at recruiting visible minorities, and they have been worse at retaining visible minorities. And they frequently have no idea why.”
Part of the reason for this is that talent “of difference” is still prone to “self-selecting” out and not applying to firms where these individuals believe they may not be welcome. “I wanted to work for one of the major firms because I was interested in international corporate work,” says one Southeast Asian Canadian senior associate, off the record. “I knew my diversity and fluency in three languages could be an asset. But I knew very well that at the firms I was most interested in, there was very little in terms of diversity among the lawyers because the old boys’ network was still doing the recruiting. And most of the clients were middle-aged white men. In the back of my mind throughout the interview process was a concern whether the large firms would help someone of diverse background advance.”
It’s not that the firms or the partners doing the recruitment are racist. In most cases they are well-intentioned. As David Allgood at the Royal Bank puts it, “The law firms I would use in Toronto are in the business of finding the best, smartest people they can and diversity would not stop them.” Or, as Won Kim at REKO puts it, “The Seven Sisters do try hard.”
But most of these firms are starting with a significant handicap. They were founded decades ago by white males who recruited other white males who recruited... “A lot of firms like to hire people who are like them,” says Kim. “They talk about ‘fit’ and that can be a scary word. You ‘fit’ with people who are like you.” Abas Kanu at Stikeman Elliott agrees with Kim. “Fit is a very bad word. It’s a loaded word. It’s not the right word to use in the recruitment context.”
Similar views were expressed by Denise Morgan, one of the African American attorneys who left Cleary Gottlieb. As reported in the “Losing the Race” cover story in The American Lawyer, Morgan attached considerable importance to a subtle, even subconscious, inclination of a virtually all-white partnership to favour those who looked like them. “There are some associates who were taken under people’s wings more easily, and I think they were more often white. And the fact that they were men may have been most important. They see themselves in these guys.”
But “fit” is the word law firms have been using ever since they discovered they had a “culture”. And it’s had the unsurprising result of each firm reinventing itself in its own image with each new set of recruits. As Mary Jackson at Blakes points out, addressing the needs of the cross-border marketplace and tapping the entire breadth of talent coming out of today’s law schools requires law firms to “deconstruct” what they mean by “fit” and “culture”. And they have to learn how to interview and how to identify strengths in a diverse talent pool that does not necessarily have a superficial “fit” but will, nonetheless, contribute significant value to the firm.
“Law firms have been recruiting for years without interview skills,” says Jackson. Linc Rogers, a corporate restructuring lawyer in the Chicago office of Blakes, agrees. “A Bay Street interview is like what are you hobbies, where do you like to go on vacation?” The visible minority students who succeed in Bay Street interviews, suggests Rogers, “learn how to leverage their difference” or work hard to make themselves “fit”.
Similar views were expressed by Alfred Perry, also one of the African American attorneys who left Cleary Gottlieb. As reported in The American Lawyer cover story, in no uncertain terms Perry was of the view that “If you go in there and walk the walk and talk the talk and work your ass off, you’ll have the same chance as your white counterpart.”
But this may be changing. Canadian law firms are responding to pressure from US clients, their own growing appetite for cross-border work, and the rapid diversification of the talent pool. As explained by Patrick Monahan, Dean of Osgoode Hall Law School, “What it means is that as law firms compete in that talent pool, they will have to adjust their own expectations as to what this diverse pool of individuals values. Law firms are starting to change, although the changes we’ve seen in law schools are still filtering their way down to law firms.”
“It’s changing, it’s working its way through the system,” agrees Won Kim. “Law firms are increasingly staffed by people more reflective of society and the law schools. We will see a tidal wave of people from minority cultures coming into the big law firms.”
BUT WILL THEY STAY? The profession has seen a “tidal wave” before, when women started graduating from law school in significant numbers. By 1979 the average law school graduating class in Canada was 25 per cent female. But 26 years later the percentage of female partners at the top-tier law firms rarely breaks double digits. It’s not uncommon, in an office of 120 lawyers, to see only four female partners. The performance of US law firms is similar. Only 11 per cent of the US partners at White & Case are female.
The challenge is no longer recruitment nor, with women making up approximately 54 per cent of Canadian law school graduates, is it a question of finding qualified candidates. It is, simply, retention. Rates of retention at all levels in the profession have been dropping, with fewer and fewer associates likely to remain at their first firm. In the US, according to a 1998 study by NALP, less than 26 per cent of associates remain with their original firm.
But, as Queen’s law professor Fiona Kay reports in her 2004 paper “Turning Points and Transitions: Women’s Careers in the Legal Profession,” women continue to leave the profession generally, and private practice specifically, in greater numbers than men. Those who do stay are more likely to work part-time and less likely to occupy positions of leadership and authority. In the US retention rates are worst for women of colour, fully 100 per cent of whom, according to NALP, leave their first law firm position.
There are, of course, exceptions. Linda Robinson at Osler, Hoskin & Harcourt LLP heads up the corporate commercial group, generally viewed as the most “powerful” practice group in the firm. High-profile Oslers corporate partner Jean Fraser has been a managing partner, as is Dale Ponder. At Torys Sheila Block has periodically been the public face of the firm and continues to play a major role in its litigation department. Similar examples are found at Fasken Martineau DuMoulin LLP where Sue Paish is the current managing partner of the firm’s Vancouver office, and in Maryse Bertrand, a corporate superstar and management committee member in the Montreal office of Davies Ward Phillips & Vineberg LLP. But, despite the considerable inroads made, these powerful women remain the exception rather than the norm.
“It’s concerning,” acknowledges Kirby Chown. Chown is the regional managing partner for Ontario at McCarthys and is chair of the firm’s diversity committee. McCarthy Tétrault hired its first female lawyer, Edith Shephard, in 1925. Eighty years later, and 30 years after the first female “tidal wave” of law school graduates, gender equity is still a priority on the firm’s diversity agenda. “It signals to us that we have to think creatively about how to keep women in the firm,” notes Chown.
AND THERE IS increasing urgency in getting it right. Client pressure and student expectations aside, as law firms jockey for an arguably contracting pool of domestic work and attempt to win more cross-border work, they, like their clients, are starting to appreciate the business case for diversity. In other words, doing the right thing is going to make them money.
Vancouver-based Davis & Company learned this early on. In 1946, the firm successfully sued the federal government on behalf of Japanese Canadians Ottawa had tried to deport. It then worked to recover their seized property. And, in the 1950s, “over the objection of some clients,” says managing partner Doug Buchanan, Davis hired and then admitted to the partnership George Fujisawa, the first Japanese Canadian to graduate from law school in British Columbia.
The business payback for the firm, in the shape of a pioneering Pacific Rim practice, was enormous. As Buchanan points out, “When Japan started becoming an economic power we had this history of sympathy, and we had the only Japanese-speaking Canadian lawyer around.” By the time other Canadian law firms started paying serious attention to Japan, Davis had first mover advantage. It remains the only Canadian law firm with a Tokyo office.
“It would be nice to say we had this strategic view of going into the Pacific Rim,” says Buchanan. “But it was largely because of the sense of social responsibility that our 1950s partners had which led to this connection and opportunity for future generations of the firm.”
The Pacific Rim connection in turn drove the firm’s east-west expansion. The Toronto office of Davis & Company was established to represent Japanese clients investing in the auto industry in Ontario. The firm’s Montreal office, headed by Michiko Hara, remains entirely focused on Japanese business activity in Quebec. And the Pacific Rim connection gives the firm a competitive edge in the talent market. Says Buchanan, “Most of the people who want to do Canada-Japan work end up with us.”
Wayne Bigby at Lexoro hasn’t seen Canadian law firms use diversity as a business development tool or a way to differentiate themselves from the competition. “But I’ve certainly seen it in the advertising by the major US law firms.”
And it is an approach embraced by important US and global corporations and professional service firms. InterContinental Hotels Group, Daimler Chrysler Corp., Enterprise Rent-A-Car, Citigroup, PricewaterhouseCoopers, Time Warner, Aetna, HSBC, Morgan Stanley, Kodak, Verizon Communications, and Starwood Hotels & Resorts Worldwide have all used diversity in their marketing as a means of differentiating themselves from competitors. “I’m a firm believer in looking at what your clients are doing and learning from them,” says Bigby. “In many cases, it makes sense to mimic them. In all cases it makes sense to understand what they’re doing, and why.”
And, although they may not be exactly cross-examining their law firms about diversity, key Canadian clients are investing heavily in their own diversity initiatives. The banks, among the most highly prized of Bay Street clients, are leading the way. They dominated the top 10 spots in the March 2004 survey of best companies for minorities conducted by Canadian Business.
And the banks are not doing so because the government, by way of the Employment Equity Act, is telling them what to do. Nor are they, as HSBC Executive Vice-President Sarah Morgan-Silvester recently put it, paying attention to diversity “just...because it’s the right thing to do. You do it because you’ve also found a good business reason to do it.”
WHILE IN-HOUSE corporate counsel in Canada aren’t demanding that their law firms present their own diversity reports, they are exerting subtle pressure by way of example. As David Allgood at the Royal Bank points out, “As clients change, that has to affect what the law firms do.” And David McAusland at Alcan argues that “just because clients aren’t asking questions, that doesn’t mean they’re not taking notes. In an informal sense, we notice if there is diversity in a law firm, just as we notice whether there is good governance or a good compensation structure. These things become transparent to clients.” And, the more corporate clients come to value the business return on diversity in-house, the more their law firms will have to value it too—whether they want to or not.
And, for the most part, they want to. A few are even figuring out how to do it. There is nothing like the promise of more revenue and the threat of lost business—never mind losing the war for talent—to motivate even the most tradition-bound law firm to embrace change. Eventually.
Marzena Czarnecka is a Lexpert staff writer.
For confirmation one has only to turn to the 2005 Lexpert/American Lawyer Guide to the Leading 500 Lawyers In Canada. Of the 500 lawyers profiled, 38 are women and seven are visible minorities. The other 455 lawyers (91 per cent) share two distinguishing features. They are men. They are white. In the corridors of power, this is the face of the profession.
But, in the boardrooms and courtrooms of Canada where the most important deals are negotiated and cases argued, will this be the future face of the profession? To a considerable extent publications like the Lexpert/American Lawyer 500 reflect the past. These are the law school graduates of the 1970s, as well as some stalwart holdovers from the 1960s and fast-moving stars from the 1980s, who clawed their way to the top. What of the future? Will the leading lawyers come to more closely mirror the multicultural and gender composition of the student body of Canadian law schools and Canadian society generally?
In the US, major law firms have a keen interest in attaining and maintaining a diversity, from women and visible minorities through to sexual orientation, in their associate and partner ranks which is representative of American society generally. According to the cynics or, if you prefer, pragmatists, this interest has little to do with the “moral imperative” of diversity and everything to do with—what else?—money. As one New York lawyer put it, off the record, “Doing the right thing? That’s a nice sop for the politically correct crowd.”
Yet, notwithstanding this keen interest, large US firms have not made any real headway. They have been at it more than a decade. According to the National Association for Law Placement (NALP), a US monitoring organization, while about 10 per cent of lawyers in large US firms are what is termed lawyers of colour, only 5 per cent of partners in these firms are from visible minorities, compared to 15 per cent of associates.
The aggressive but spectacularly unsuccessful attempt by New York-based Cleary Gottlieb Steen & Hamilton LLP between 1989 and 2000 to build a critical mass of black attorneys was the subject of a cover story in The American Lawyer (see “Losing the Race,” October 2001). As reported in “Face Up To It: White Men and the Diversity Issue,” the cover story for the December 2002/January 2003 issue of Legal Business, the situation is even more dismal in the UK.
But, for “progressive” law firms in the US, and the corporate clients they are belatedly following, the reason for their continuing strong interest in diversity is self-evident. Diversity is good for business. Even the most conservative firms, which distrustfully equate diversity with quotas as opposed to merit, understand that if they do not pay attention to diversity they will lose serious ground in the two wars every major firm is now fighting.
The first war is over talent. The second war is for important corporate clients. The business case for diversity in the US is driven by these two considerations.
In Canada there is a third consideration. This is the de facto integration of the US and Canadian economies accompanied by US in-house corporate counsel, in many instances, deciding which Canadian law firm is retained on important corporate or litigation matters, Canada/US cross-border or wholly within Canada. The same conclusion has been drawn in the UK. As noted by Claire Smith, author of the “Face Up To It” cover story in Legal Business, “It is inevitable that, as these (US corporate) clients globalize and as English firms increasingly work for American companies, these same demands (for diversity) will be made of English lawyers.”
It was Hubert Védrine, the French foreign minister during the 1990s, who somewhat petulantly coined the term hyperpuissance to describe a United States too powerful to be simply called a superpower. Similarly, by definition, what is happening regarding diversity in law firms in the US will have an impact in Canada. It is not a question of “if”. It is a question of “how much” of an impact.
IN THE US the extent of the impact is clear. For in-house corporate counsel the lines have been drawn. As spelled out in A Call to Action: Diversity in the Legal Profession, and endorsed on October 24, 2004 by the board of directors of the influential Association of Corporate Counsel (ACC):
As Chief Legal Officers, we hereby reaffirm our commitment to diversity in the legal profession. Our action is based on the need to enhance opportunity in the legal profession and our recognition that the legal and business interests of our clients require legal representation that reflects the diversity of our employees, customers, and the communities where we do business. In furtherance of this renewed commitment, this is intended to be a Call to Action for the profession generally and in particular for our law departments and for the law firms with which our companies do business.
In an effort to realize a truly diverse profession and to promote diversity in law firms, we commit to taking action consistent with (Diversity in the Workplace – a Statement of Principles). To that end, in addition to our abiding commitment to diversity in our own departments, we pledge that we will make decisions regarding which law firms represent our companies based in significant part on the diversity performance of the firms. We intend to look for opportunities for firms we regularly use which positively distinguish themselves in this area. We further intend to end or limit our relationships with firms whose performance consistently evidences a lack of meaningful interest in being diverse. (emphasis added)
Authored by Roderick Palmore, the high-profile African American chief legal officer (CLO) of Sara Lee Corp., the ACC’s Call to Action seriously upped the ante for law firms wanting to work for Sara Lee and the growing list of corporate signatories to the manifesto. The referenced Statement of Principles, signed in 1999 by the CLOs of more than 500 major US and multinational corporations (from American Airlines and Bank of America through to Verizon Communications and Xerox Corp.), called on “law firms which represent our companies to work actively to promote diversity within their workplaces.” Five years later, dissatisfied with what had been achieved, Palmore set out the price for non-compliance: take diversity seriously or lose our business.
And, underlining the position taken by the ACC is the fact that increasing numbers of visible minorities are going in-house. According to Cathy Abelson, a Philadelphia legal recruiter, as reported in “Losing the Race,” there is no mystery why this is happening. “It is easy to understand. Minorities can feel more equal at companies than at firms. Law firms are more elite in their structure. And companies often have minorities in other job categories. Personal connections are necessary to be a rainmaker in a law firm, which is more of a barrier to people who are first-generation college graduates.”
Nevertheless, one must not overstate the case. As reported in “Courting Shell” (The American Lawyer, June 2004), last year Pittsburgh-based Kirkpatrick & Lockhart LLP “released a two year study of in-house counsel at nearly 200 companies in the Fortune 1000. Kirkpatrick found that respondents rated diversity only 4.1 in importance in choosing outside counsel for routine matters (on a scale of 1 to 10). The number dropped to 3.3 on bet-the-company matters. Even more sobering, less than one-half of 1 per cent listed diversity as the reason they hired a particular firm. The study concluded that diversity is at best a ‘tie-breaker’ advantage among firms that are roughly equal according to more traditional hiring criteria.”
The importance of diversity, in large part, depends on who you talk to. “It’s becoming a real criteria in awarding work,” says Theresa Cropper, the director of diversity in the Chicago office of DLA Piper Rudnick Gray Cary. DLA Piper Rudnick is an important US/UK law firm recently formed by way of a trans-Atlantic merger. Speaking of the signatories to the Statement of Principles, and particularly the signatories to the Call to Action like Palmore and the CLOs of companies like Boeing, Starbucks and Sears, Roebuck and Co., Cropper emphasizes that these statements of intent have to be taken seriously. “These people are not kidding.”
The determined position taken by Palmore and the ACC on diversity would not be possible if Corporate America itself had not moved beyond the “incomplete success” of the affirmative action programs of the 1980s. Central to this shift in position was recognition of the link between diversity and business strategy. The Harvard Business Review has been driving the point home repeatedly. For example, publication of a 2001 study of Fortune 500 companies which linked higher profitability with superior performance in promoting women to senior positions. The top 25 companies posted returns on investment 69 per cent higher than the Fortune 500 median in their industry.
THE MOST COMPELLING business case for diversity is also one of the oldest. Lou Gerstner’s reorganization of IBM between 1995 and 2005 increased the number of female executives, ethnic minorities born in the US and self-identified gay, lesbian, bisexual or transgender (GLBT) executives, respectively, by 370, 233 and 733 per cent. More than half of IBM’s Worldwide Management Council—its top 52 decision-makers—now consists of women, ethnic minorities born in the US or non-US citizens.
IBM’s diversification of its workforce is all about money. As David Thomas notes in “Diversity as Strategy” (Harvard Business Review, September 2004): “The entire effort was designed to help the company develop deeper insights into its major markets with a direct tie to two of Gerstner’s central dictates. One: IBM needed to get closer to its customers and become more externally focused. Two: it needed to focus on talent—attracting, retaining, developing and promoting the best people.” The return to date on the various initiatives attributed to IBM’s eight diversity task forces is estimated to be an additional $1 billion in revenue.
There are many other such corporate examples. A sustained focus on diversity has been credited with playing a major role in the financial turnaround of Lucent Technologies, under the leadership of CEO Patricia Russo. It has helped to facilitate innovation and accelerated the growth of new markets. A similar focus on diversity and multicultural or global markets is behind the improved performance of Avon, under the leadership of CEO Andrea Jung. And diversity-related best practices play a central role in the ongoing clean-up by CEO Richard Parsons of the “train wreck” merger between Time Warner and AOL.
There is also EI du Pont de Nemours and Co. where Thomas L. Sager, a white, middle-aged vice-president and assistant general counsel, has received the honour of having an award created by the Minority Corporate Counsel Association (MCCA) named after him. The award is given annually to law firms that demonstrate a sustained commitment to diversity. Having seen diversity pay off on the business side, Sager put it front and centre when DuPont created the new DuPont Legal Model in 1992.
As explained by Sager in a recent interview with The Metropolitan Corporate Counsel, “At about the time that DuPont Legal began its convergence program in 1992, I realized that the racial and ethnic complexion of our customers, suppliers, shareholders and employees was changing in the US and throughout the globe as we entered new markets. It became clear to me that lawyers representing DuPont, both in DuPont Legal and our outside law firms, had to reflect these changes if they were to serve as effective ambassadors and extensions of this company. The business case for diversity, particularly in the legal arena, is really a no-brainer.”
Not surprisingly, DuPont was one of the early signatories to the 1999 Statement of Principles. But, as DuPont and the other signatories soon discovered, the legal profession was responding, in Thomas Sager’s words, to this “no-brainer” with glacial speed. When the American Bar Association (ABA) elected Dennis Archer as its 127th president in 2003, Archer was the first African American to hold this prestigious position. Visible minorities comprised more than 30 per cent of the American population, but lawyers of colour—African American, Latino, and others—represented just over 10 per cent of the US legal profession. And their visibility in large law firms was virtually nil.
Archer recognized that changing the face of the profession was a complex task. It involved creating role models and opportunities for lawyers of colour and buy-in from clients, particularly large corporations. Of great importance was the attitude and response of the leading full-service US law firms. As Archer explains, “Most lawyers of colour, indeed most lawyers, practise as solo practitioners or in very small firms. But it happens that the large firms often set the tone for the profession.”
To accomplish his objectives, long before his election as President of the ABA, Archer was one of the driving forces behind the Minority Counsel Demonstration Project. This was an ABA initiative launched in 1988 designed to develop increased demand for the services of black, Asian, Hispanic and Native American lawyers in private practice by encouraging clients to ask for their services. “We are still woefully underrepresented,” says Archer. But with the ABA buying into diversity, clients like DuPont and IBM exerting pressure, and activists and role models like Archer and Palmore reshaping the face of the profession, that’s changing—although not as quickly as either Archer or Palmore would like.
CANADA DOES NOT HAVE a Thomas Sager, a Roderick Palmore or a Dennis Archer. And, despite an official federal policy of multiculturalism, Canada is more reluctant than the US to put diversity in the spotlight. As Won Kim, managing partner of Toronto litigation boutique Roy Elliott Kim O’Connor LLP (REKO), puts it, “In Canada we celebrate diversity. But that means we don’t talk about it.”
This reluctance to even talk about workplace diversity is real. It was recently encountered by Canadian Business magazine when that publication attempted to assess how visible minorities and Aboriginal peoples are “faring in Corporate Canada.” As noted by writer Valerie Marchant in “The New Face of Work” (Canadian Business, March 29, 2004), most companies “had little or no information or were unwilling to share it.” Further, “several companies responded as if our interest in the subject was inappropriate.” In researching this cover story for Lexpert a similar reluctance was encountered on behalf of law firms and their corporate clients, including those publicly recognized for positive action on diversity and equity issues.
Canadian law firms should get used to hearing and answering these questions. While the pressure to move on workplace diversity isn’t as overt as it is in the US legal market, it’s here. And, in an economy dominated by US/Canada cross-border deals, it’s growing. As noted by Garth Girvan, a senior corporate lawyer in the Toronto office of McCarthy Tétrault LLP, “In most cases, it would surprise any in-house counsel if we presented an all-male team.” And, when working with US counsel, even when the issue isn’t directly addressed, Girvan points out that it is understood the client expects to see some level of diversity in the legal team. “There is more and more diversity in-house. There are more women and more visible minorities. It would surprise US counsel if we presented a monolithic face to them.”
Given the importance of US/Canada cross-border work, McCarthys is one of many Bay Street firms that knows it has to address these expectations. While Girvan has yet to have a discussion with US corporate counsel where his firm’s performance on diversity issues is squarely put on the table as a criteria for getting work, this is now part of life for US firms.
As Theresa Cropper at DLA Piper Rudnick explains, “Many clients have been requesting diversity reports for a couple of years now and they’re becoming more sophisticated with their questions.” US corporate clients are no longer satisfied with vague descriptions of diversity initiatives. They wanted detailed accounts of how the firm’s commitment to diversity plays out on their big deals and files. Furthermore, as Cropper points out, important clients are not exactly shy about what they want to know. “They want to know who’s working on their files—and how much each of them is billing.” In other words, full disclosure.
Shell Oil Co. in the US is a good example. As reported in “Courting Shell,” the company requires its law firms “to break down their invoices according to race, ethnicity, and gender of billing lawyers. It then drills deeper to ensure that women and minorities aren’t relegated to handling only junior-level tasks. Once a year Shell sends out report cards, which show how its firms stack up, diversity-wise, against other Shell outside counsel.”
As noted at the outset of this article, it’s not a question of “if” this importance paid to diversity in the US is coming to Canada, it’s a question of “how much” of an impact it will have. It’s already here. As Anne Ristic, assistant managing partner of Stikeman Elliott LLP’s Toronto office notes, over the last year her firm has participated in about five requests for proposals or annual client reviews in which clients asked specific questions about the firm’s diversity and equity policies. And if there’s one thing law firms know, it’s that if clients care about something, so should they.
BUT IN CANADA, do clients really care? Not really. As David Allgood, executive vice-president and general counsel at the Royal Bank of Canada, puts it, “My own view would be when large corporations are retaining Canadian law firms, diversity is not a factor. There is a very high percentage of women in most law firms, and as far as more visible minorities are concerned, people don’t choose law firms on whether or not they have visible minorities, but on the quality of legal services. It’s kind of a neutral issue in Canada.”
David McAusland, senior vice-president & chief legal officer at Alcan Inc., agrees with Allgood. “I don’t think diversity is on anyone’s agenda, formally, at this time in Canada.” Terrie-Lynne Devonish, general counsel at Primus, is of the same view. “I’ve never been at a company where the question has been asked.”
Why? Organizations like the MCCA and African American corporate counsel like Roderick Palmore have played a major role in making US law firms take diversity seriously. In contrast, in-house corporate counsel in Canada continue to be predominantly white. Terrie-Lynne Devonish is one of the very few lawyers of colour—and of even fewer women lawyers of colour—with a position of power in a Bay Street legal department. And that, says one senior Toronto corporate lawyer, off the record, is why Canadian corporate counsel aren’t asking hard questions about diversity. “They’re not even asking the easy ones because, as a group, they just aren’t that diverse themselves.”
The same goes for the management teams with which in-house counsel work. As Devonish points out, “At the executive level it’s still predominantly white, male and English.” Devonish does emphasize, however, that white women have made significant inroads in corporate legal departments and increasingly on corporate management teams.
Wayne Bigby, president of Toronto-based legal communication firm Lexoro Inc. and a Blake, Cassels & Graydon LLP alumnus, agrees with Devonish. “If you look at the announcements of recently promoted or appointed executives in the pages of the Globe and Mail or The National Post, you see more and more women but you very rarely see visible minorities.” And this, suggests Bigby, may mean that the pressure US in-house counsel and clients are exerting on their law firms respecting diversity may never surface in Canada.
GOOD NEWS FOR Canadian law firms uncomfortable with the importance the US legal market attaches to diversity? Hardly. It matters less and less what Canadian corporate clients think. Given the de facto integration of the Canadian and US economies, and the importance of US/Canada work to major Canadian firms, what increasingly matters is what US in-house counsel think. It is likely that the expectations of US clients will assume greater importance in the Canadian legal market.
And, between the activism of people like Roderick Palmore and Dennis Archer, and the example set by corporations such as IBM, DuPont and Sara Lee, more and more US law firms are integrating diversity into their operating strategy. A number are now realizing a financial payback.
New York-based White & Case LLP is a good example. As Liz Pava, the firm’s chief marketing officer, pointed out at a recent conference in Chicago, about half of the signatories to the 1999 Statement of Principles are White & Case clients. Add to this increasing numbers of women and visible minorities filling executive roles at Fortune 500 companies and it’s clear what’s driving the importance White & Case attaches to diversity. This has translated into a 45 per cent and 21 per cent increase, respectively, in the firm’s number of Asian and Hispanic associates. It is having an impact at the partner level as well. Four of the firm’s 11 new US partners in 2003 were visible minorities (an additional two were female).
White & Case is not alone. New York-based Shearman & Sterling LLP made its 10-year “global diversity initiative” an important part of the firm’s overall strategic plan. As pointed out by Anna Brown, the firm’s diversity management attorney and executive director of its diversity committee, “Law firms take note of what clients are requesting, whether it’s with respect to a diversity initiative or billing arrangements. It certainly promotes the business case for diversity.”
IF THE ROLE PLAYED by Canadian corporate clients in putting diversity on the agenda is underwhelming, the role played by Canadian law students and young lawyers cannot be overstated. As Abas Kanu, a senior corporate associate in the Toronto office of Stikeman Elliott, emphasizes, “I wanted to be at a firm that had a very broad outlook in terms of diversity of its people and diversity of its practice. I was interested in Stikeman Elliott because it had always had a global outlook. I believe the two factors, diversity of people and diversity of practice, or an international, global focus of practice, go together.”
And it’s not just young lawyers who identify themselves, as Brad Berg at Blakes in Toronto puts it, as “people of difference.” “Many young lawyers, and clients as well, value difference. They view it as a strength.” Berg, who was openly gay when he joined Blakes in 1996, goes on to explain that “There are far more straight lawyers who understand and support their GLBT colleagues, and several who are leaders in the profession in representing GLBT clients.”
In The Rise of the Creative Class (New York, 2002), economist Richard Florida makes a compelling argument for a link between diversity and creativity. Florida notes that the increasingly important “creative class,” in which he includes professionals such as lawyers, is building the 21st century economy on a set of values among which diversity and its perceived contribution to business success are key. And, according to Kimberley Bachmann in the 2003 Human Resources and Skills Development Canada study entitled “The Impact of Employment Equity on Corporate Success in Canada,” a third of Canadian employers agree. These employers report that employment equity has enhanced creativity in their workplaces.
Leslie O’Donoghue, vice-president, general counsel and corporate secretary at Calgary-based Agrium Inc., puts it in even stronger terms. “From my perspective, diversity is very much a survival issue. When a team at a company, a law firm, or a board of directors is made up of males of same age group, they all see the world the same way. Our board, for example, has specifically recognized that when we bring female directors on board they will bring different perspectives. That’s crucial in business.”
Catherine Lamboley, general counsel with Shell Oil Co. in the US, agrees with O’Donoghue. “When you use people with diverse backgrounds and different ways of looking at things, you get a better solution.”
AND LAW FIRMS? As noted by Josee Bouchard, the Law Society of Upper Canada’s equity advisor, “There is not only awareness of diversity issues among law firms, but a high level of commitment. There is recognition throughout the profession that a diversified team leads to a more diverse client base, which gives law firms a competitive edge.”
In a way it’s a case of embracing the inevitable. As Mary Jackson, Director of Legal Personnel at Blakes in Toronto notes, “Law school classes are now diverse, period, in terms of ethnicity, religion, everything. Law firms have to respond to that reality.” If they don’t, suggests Leslie O’Donoghue, the consequences may be dire. “How will law firms survive if they don’t tap into and retain those qualified candidates? It will be a bit of a crisis for them if they don’t figure out how to manage it.” Diana Good, a partner who heads the diversity committee at Linklaters & Alliance, the UK-based global law firm, does not mince words on the subject. Good was recently quoted as stating that “This is not about being politically correct. This is about recruiting and retaining really good people.”
And so far they are not managing particularly well. As Chima Nkemdirim, a corporate lawyer with Fraser Milner Casgrain LLP in Calgary and a member of the firm’s recruitment committee, unhappily reports, “We don’t seem to see as many applicants from visible minorities as I’d think we should given the current demographics at law schools.” One senior Toronto corporate lawyer, speaking off the record, is blunt. “Bay Street firms have not been good at recruiting visible minorities, and they have been worse at retaining visible minorities. And they frequently have no idea why.”
Part of the reason for this is that talent “of difference” is still prone to “self-selecting” out and not applying to firms where these individuals believe they may not be welcome. “I wanted to work for one of the major firms because I was interested in international corporate work,” says one Southeast Asian Canadian senior associate, off the record. “I knew my diversity and fluency in three languages could be an asset. But I knew very well that at the firms I was most interested in, there was very little in terms of diversity among the lawyers because the old boys’ network was still doing the recruiting. And most of the clients were middle-aged white men. In the back of my mind throughout the interview process was a concern whether the large firms would help someone of diverse background advance.”
It’s not that the firms or the partners doing the recruitment are racist. In most cases they are well-intentioned. As David Allgood at the Royal Bank puts it, “The law firms I would use in Toronto are in the business of finding the best, smartest people they can and diversity would not stop them.” Or, as Won Kim at REKO puts it, “The Seven Sisters do try hard.”
But most of these firms are starting with a significant handicap. They were founded decades ago by white males who recruited other white males who recruited... “A lot of firms like to hire people who are like them,” says Kim. “They talk about ‘fit’ and that can be a scary word. You ‘fit’ with people who are like you.” Abas Kanu at Stikeman Elliott agrees with Kim. “Fit is a very bad word. It’s a loaded word. It’s not the right word to use in the recruitment context.”
Similar views were expressed by Denise Morgan, one of the African American attorneys who left Cleary Gottlieb. As reported in the “Losing the Race” cover story in The American Lawyer, Morgan attached considerable importance to a subtle, even subconscious, inclination of a virtually all-white partnership to favour those who looked like them. “There are some associates who were taken under people’s wings more easily, and I think they were more often white. And the fact that they were men may have been most important. They see themselves in these guys.”
But “fit” is the word law firms have been using ever since they discovered they had a “culture”. And it’s had the unsurprising result of each firm reinventing itself in its own image with each new set of recruits. As Mary Jackson at Blakes points out, addressing the needs of the cross-border marketplace and tapping the entire breadth of talent coming out of today’s law schools requires law firms to “deconstruct” what they mean by “fit” and “culture”. And they have to learn how to interview and how to identify strengths in a diverse talent pool that does not necessarily have a superficial “fit” but will, nonetheless, contribute significant value to the firm.
“Law firms have been recruiting for years without interview skills,” says Jackson. Linc Rogers, a corporate restructuring lawyer in the Chicago office of Blakes, agrees. “A Bay Street interview is like what are you hobbies, where do you like to go on vacation?” The visible minority students who succeed in Bay Street interviews, suggests Rogers, “learn how to leverage their difference” or work hard to make themselves “fit”.
Similar views were expressed by Alfred Perry, also one of the African American attorneys who left Cleary Gottlieb. As reported in The American Lawyer cover story, in no uncertain terms Perry was of the view that “If you go in there and walk the walk and talk the talk and work your ass off, you’ll have the same chance as your white counterpart.”
But this may be changing. Canadian law firms are responding to pressure from US clients, their own growing appetite for cross-border work, and the rapid diversification of the talent pool. As explained by Patrick Monahan, Dean of Osgoode Hall Law School, “What it means is that as law firms compete in that talent pool, they will have to adjust their own expectations as to what this diverse pool of individuals values. Law firms are starting to change, although the changes we’ve seen in law schools are still filtering their way down to law firms.”
“It’s changing, it’s working its way through the system,” agrees Won Kim. “Law firms are increasingly staffed by people more reflective of society and the law schools. We will see a tidal wave of people from minority cultures coming into the big law firms.”
BUT WILL THEY STAY? The profession has seen a “tidal wave” before, when women started graduating from law school in significant numbers. By 1979 the average law school graduating class in Canada was 25 per cent female. But 26 years later the percentage of female partners at the top-tier law firms rarely breaks double digits. It’s not uncommon, in an office of 120 lawyers, to see only four female partners. The performance of US law firms is similar. Only 11 per cent of the US partners at White & Case are female.
The challenge is no longer recruitment nor, with women making up approximately 54 per cent of Canadian law school graduates, is it a question of finding qualified candidates. It is, simply, retention. Rates of retention at all levels in the profession have been dropping, with fewer and fewer associates likely to remain at their first firm. In the US, according to a 1998 study by NALP, less than 26 per cent of associates remain with their original firm.
But, as Queen’s law professor Fiona Kay reports in her 2004 paper “Turning Points and Transitions: Women’s Careers in the Legal Profession,” women continue to leave the profession generally, and private practice specifically, in greater numbers than men. Those who do stay are more likely to work part-time and less likely to occupy positions of leadership and authority. In the US retention rates are worst for women of colour, fully 100 per cent of whom, according to NALP, leave their first law firm position.
There are, of course, exceptions. Linda Robinson at Osler, Hoskin & Harcourt LLP heads up the corporate commercial group, generally viewed as the most “powerful” practice group in the firm. High-profile Oslers corporate partner Jean Fraser has been a managing partner, as is Dale Ponder. At Torys Sheila Block has periodically been the public face of the firm and continues to play a major role in its litigation department. Similar examples are found at Fasken Martineau DuMoulin LLP where Sue Paish is the current managing partner of the firm’s Vancouver office, and in Maryse Bertrand, a corporate superstar and management committee member in the Montreal office of Davies Ward Phillips & Vineberg LLP. But, despite the considerable inroads made, these powerful women remain the exception rather than the norm.
“It’s concerning,” acknowledges Kirby Chown. Chown is the regional managing partner for Ontario at McCarthys and is chair of the firm’s diversity committee. McCarthy Tétrault hired its first female lawyer, Edith Shephard, in 1925. Eighty years later, and 30 years after the first female “tidal wave” of law school graduates, gender equity is still a priority on the firm’s diversity agenda. “It signals to us that we have to think creatively about how to keep women in the firm,” notes Chown.
AND THERE IS increasing urgency in getting it right. Client pressure and student expectations aside, as law firms jockey for an arguably contracting pool of domestic work and attempt to win more cross-border work, they, like their clients, are starting to appreciate the business case for diversity. In other words, doing the right thing is going to make them money.
Vancouver-based Davis & Company learned this early on. In 1946, the firm successfully sued the federal government on behalf of Japanese Canadians Ottawa had tried to deport. It then worked to recover their seized property. And, in the 1950s, “over the objection of some clients,” says managing partner Doug Buchanan, Davis hired and then admitted to the partnership George Fujisawa, the first Japanese Canadian to graduate from law school in British Columbia.
The business payback for the firm, in the shape of a pioneering Pacific Rim practice, was enormous. As Buchanan points out, “When Japan started becoming an economic power we had this history of sympathy, and we had the only Japanese-speaking Canadian lawyer around.” By the time other Canadian law firms started paying serious attention to Japan, Davis had first mover advantage. It remains the only Canadian law firm with a Tokyo office.
“It would be nice to say we had this strategic view of going into the Pacific Rim,” says Buchanan. “But it was largely because of the sense of social responsibility that our 1950s partners had which led to this connection and opportunity for future generations of the firm.”
The Pacific Rim connection in turn drove the firm’s east-west expansion. The Toronto office of Davis & Company was established to represent Japanese clients investing in the auto industry in Ontario. The firm’s Montreal office, headed by Michiko Hara, remains entirely focused on Japanese business activity in Quebec. And the Pacific Rim connection gives the firm a competitive edge in the talent market. Says Buchanan, “Most of the people who want to do Canada-Japan work end up with us.”
Wayne Bigby at Lexoro hasn’t seen Canadian law firms use diversity as a business development tool or a way to differentiate themselves from the competition. “But I’ve certainly seen it in the advertising by the major US law firms.”
And it is an approach embraced by important US and global corporations and professional service firms. InterContinental Hotels Group, Daimler Chrysler Corp., Enterprise Rent-A-Car, Citigroup, PricewaterhouseCoopers, Time Warner, Aetna, HSBC, Morgan Stanley, Kodak, Verizon Communications, and Starwood Hotels & Resorts Worldwide have all used diversity in their marketing as a means of differentiating themselves from competitors. “I’m a firm believer in looking at what your clients are doing and learning from them,” says Bigby. “In many cases, it makes sense to mimic them. In all cases it makes sense to understand what they’re doing, and why.”
And, although they may not be exactly cross-examining their law firms about diversity, key Canadian clients are investing heavily in their own diversity initiatives. The banks, among the most highly prized of Bay Street clients, are leading the way. They dominated the top 10 spots in the March 2004 survey of best companies for minorities conducted by Canadian Business.
And the banks are not doing so because the government, by way of the Employment Equity Act, is telling them what to do. Nor are they, as HSBC Executive Vice-President Sarah Morgan-Silvester recently put it, paying attention to diversity “just...because it’s the right thing to do. You do it because you’ve also found a good business reason to do it.”
WHILE IN-HOUSE corporate counsel in Canada aren’t demanding that their law firms present their own diversity reports, they are exerting subtle pressure by way of example. As David Allgood at the Royal Bank points out, “As clients change, that has to affect what the law firms do.” And David McAusland at Alcan argues that “just because clients aren’t asking questions, that doesn’t mean they’re not taking notes. In an informal sense, we notice if there is diversity in a law firm, just as we notice whether there is good governance or a good compensation structure. These things become transparent to clients.” And, the more corporate clients come to value the business return on diversity in-house, the more their law firms will have to value it too—whether they want to or not.
And, for the most part, they want to. A few are even figuring out how to do it. There is nothing like the promise of more revenue and the threat of lost business—never mind losing the war for talent—to motivate even the most tradition-bound law firm to embrace change. Eventually.
Marzena Czarnecka is a Lexpert staff writer.
Lawyer(s)
Lou V. Gerstner
Won J. Kim
Garth (Gary) M. Girvan
Anne L. Ristic
David R. Allgood
David L. McAusland
Terrie-Lynne Devonish
Wayne Bigby
Abas Kanu
Bradley E. Berg
Richard Florida
Leslie O'Donoghue
Mary E. Jackson
Chima Nkemdirim
Linc Rogers
Fiona Kay
Jean M. Fraser
Dale R. Ponder
Sheila R. Block
Maryse Bertrand
Kirby Chown
Douglas B. Buchanan
Firm(s)
NALP Foundation
Cleary, Gottlieb, Steen & Hamilton
Sara Lee Corporation
Bank of America
American Airlines
Verizon Communications
Xerox Corporation
K&L Gates LLP
Fortune
Boeing Company (The)
Starbucks Coffee Company
Sears, Roebuck and Co.
Harvard Business Review
IBM Corporation
Alcatel-Lucent
AOL Time Warner Inc.
American Bar Association
Roy O'Connor LLP
Canadian Business Magazine
McCarthy Tétrault LLP
DLA Piper US LLP
Shell Oil Company
Stikeman Elliott LLP
Royal Bank of Canada - RBC Law Group
Rio Tinto Alcan Inc.
Primus Telecommunications Canada Inc.
Lexoro Inc.
Globe and Mail (The)
National Post
Shearman & Sterling LLP
Nutrien Ltd.
Law Society of Ontario (The)
Linklaters LLP
Dentons Canada LLP
Cleary, Gottlieb, Steen & Hamilton
York University Osgoode Hall Law School
Queen's University
Osler, Hoskin & Harcourt LLP
Torys LLP
Fasken Martineau DuMoulin LLP
Davies Ward Phillips & Vineberg LLP
DLA Piper (Canada) LLP
DaimlerChrysler USA
Citigroup Investor Relations
PricewaterhouseCoopers LLP
Time Warner Inc.
AETNA
Royal Bank of Canada (RBC)
Morgan Stanley & Co. International Limited
Kodak Canada Inc.
Verizon Communications
Starwood Hotels & Resorts