In 2017, US tech company HP decided to withhold up to 10% of costs invoiced by law firms if they did not meet minimum diversity requirements. Two years later, more than 170 US-based general counsel threatened to pull their millions from ‘largely male and white firms’.
In a hard-hitting letter to firms only two months ago, Coca-Cola’s global GC, Bradley M Gayton, said score cards, summits, committees and written action plans weren’t working. Coca-Cola is demanding results, threatening to deduct 30% of fees from firms that do not meet its revised diversity guidelines.
The US has adopted a tough approach to diversity. But what is UK plc doing? After all, the lack of diversity is as much of a problem here as it is across the pond. Law Society research shows that just 8% of partners in the largest firms are black, Asian or minority ethnic, a figure that has risen by one percentage point since 2014.
A Gazette survey of FTSE 100 corporates shows that in-house teams recognise their buying power and are using it to make panel firms more diverse – but they seem to be adopting a subtler approach than their US counterparts.
That is not to say they are being soft. In its last panel review, NatWest asked firms about their own diversity and inclusion targets and were measuring this. Firms were scored against a matrix – those that did not score well could be removed or given a restricted mandate.
Should the UK get tougher and threaten to deduct fees? As part two of my investigation will reveal next week, opinion is divided.
Nevertheless, it is encouraging to see in-house teams recognise their power and use it for the greater good. And corporates should not be afraid to speak out about what they are doing. They may inspire other in-house teams to adopt a similar approach. They are also sending out a clear message to law firms - actions speak louder than words.
As Gayton said in his letter: ‘Our plan is far from perfect, but we believe that it offers greater promise than continuing down the current path hoping to reach a different destination.’