General counsel have been urged to resist temptation to turn to less risky traditional suppliers and reach out to legal services businesses run by women to ensure a diverse supplier base once the pandemic ends.

Former Linklaters lawyer Dana Denis-Smith, who runs legal services provider Obelisk Support, is among 27 people to write an open letter to GCs.

The letter says a snap poll of female founders running legal services businesses carried out since the lockdown began shows that 39% have seen sales drop considerably. Funding is now harder to come by for 21%. The third most commonly reported pressure is the added strain of childcare, which is falling disproportionately on women.

‘There is a real danger that coming out of the crisis, start-up ‘new law’ businesses like these just won’t survive. In tough times, with budget cuts and extra scrutiny on spend, commitments to diversity and inclusion are all too easily forgotten and smaller, more innovative suppliers can be swept aside. There is a temptation for in-house counsel to turn to traditional suppliers that are perceived as less risky despite being shown to be less cost-effective in the long run.’

The signatories are concerned that female entrepreneurs ‘already facing poor odds due to the structural inequalities prevalent amongst the investment community’ and lower access to corporate spend will struggle to survive.

They say: ‘Unless collective action is taken, we will be left with a less diverse, less vibrant market and that will be to the detriment of everyone working in the legal profession. The opening-up of the market to a range of alternative providers over the past 10 years has been hard won and reversing this progress would be damaging…

‘On behalf of all women who have together contributed to an emerging ecosystem of alternative legal services companies, we ask that when reviewing budgets and making procurement decisions in the coming weeks and months, you consider the long-term benefits of maintaining greater competition, innovation and supplier diversity in the sector.’

The letter outlines ‘essential actions’ for GCs. These include reaching out to women-owned businesses, not just panel firms. GCs are asked to consider how they can encourage law firm partners to take similar steps.

Over the past few years GCs have tried to use their buying power to encourage greater diversity in the legal profession.

US tech giant HP threatened to withhold up to 10% of costs if law firm partners did not meet minimum diversity requirements. Subsequently more than 170 mostly US-based GCs threatened to pull millions from what they called ‘largely male and white’ firms.

BT has offered a guaranteed renewal to the panel firm with the best diversity and inclusion record.