Nixon Peabody tries incorporating hourly commitment to its diversity efforts

Jeffrey MacMillan/JEFFREY MACMILLAN - Pierce Han, associate at Nixon Peabody, attends a Asian American Diversity dinner at Georgetown Law School.

For an hour last Wednesday in the lobby of Georgetown Law’s fitness center, Pierce Han, a first-year associate at Nixon Peabody, nursed a Bud Light as he shook hands and chatted with law students and young associates from other law firms. For the next two hours at the reception honoring Asian American trailblazers in the law, Han caught up with dozens of friends and acquaintances in the close-knit Asian American legal community in Washington, including a Georgetown law student he mentors, Nick Sices, and Han’s own mentor, Sprint attorney Nguyen Vu. ¶ Those three hours will go toward the 40 hours Han is looking to log as part of his law firm’s diversity initiative — a time commitment that will ultimately impact how much he gets paid.

In 2010, Han’s firm, Nixon Peabody — the law firm with 170 lawyers and staff in the District — began urging all 700 attorneys in 17 offices around the world to put in at least 40 hours a year on diversity-related activities. Those activities include almost anything that helps the firm recruit, retain and mentor lawyers who are women, minorities or gay, lesbian, bisexual and transgender. It is an unusual approach that most law firms reserve for pro bono work: Lawyers track the hours the same way they do with billable work, in 15-minute intervals on time sheets.

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“It helps with recruiting, having a young associate at a Georgetown event,” Han said. “It’s something I would do anyway, but having the hours is an added bonus and incentive to get out of the office and network.”

The legal profession has long struggled to find the right formula to retain female and minority attorneys. Last year, only 15 percent of equity partners at U.S. law firms with multi-tiered partnerships were women, and just under 5 percent were racial or ethnic minorities, according to the most recent data collected by the National Association for Legal Career Professionals. Those percentages have barely budged over the past decade.

While most large law firms have diversity programs, Nixon Peabody believes its initiative, called the “Diversity Challenge,” is the first to incorporate an hourly commitment. The effort is intended to apply a very “lawyerly” solution to an open-ended problem, attempting to address not just how to diversify, but how to objectively measure the efforts — and spread the responsibility among employees in a way that seems equitable.

“It speaks directly to what lawyers understand, and that’s keeping time,” said Kendal Tyre, co-chair of Nixon Peabody’s diversity action committee and a partner in the firm’s Washington office. “If you can measure it, and you can ask people to do it, and they’ll be judged on it, it’s more likely to get done.”

The hours can be put toward attending events sponsored by bar associations representing women, African American, Asian American, Hispanic and LGBT lawyers and judges. Internally, Nixon Peabody has also formed five so-called “affinity groups” representing those same groups. Each has their own mission and periodically meets to discuss business development, recruiting and mentoring.

“We try to create a smorgasbord of activities people can choose from so they can find what works for them,” Tyre said.

The 40-hour commitment — Tyre calls it more of a “strong suggestion” — applies to all attorneys, paralegals and other staff who keep track of their work by the hour. That way, Tyre said, everyone shoulders some of the responsibility, regardless of seniority. Although the hours are voluntary, they factor into each lawyer’s pay the same way pro bono work does — weighed less heavily than billable hours, but still considered an important part of a lawyer’s overall contributions to the firm.

Driven by in-house counsel

The idea dates back to 2004. That year, 120 chief legal officers at Fortune 500 companies — including Marriott, American Airlines, General Motors and PepsiCo — signed what’s known as “A Call To Action,” written by then-Sara Lee General Counsel Rick Palmore (now general counsel for General Mills). The document, considered groundbreaking at the time, urged general counsels to drive diversity in the legal profession by demanding results from the law firms they work with — including cutting ties with firms that fall short on diversity efforts. But in the nine years since, the percentage of high-ranking female and minority attorneys in law firms has remained stubbornly low. The increased scrutiny on diversity, however, is pushing both in-house legal departments and firms to get creative.

In 2005, Wal-Mart sent a letter to its 100 top outside law firms, telling them the retailer would end the relationship if a firm “failed to demonstrate a meaningful interest in the importance of diversity.” Wal-Mart began monitoring retention and promotion rates for women and minority lawyers, and replaced 40 “relationship partners” — the attorney at each firm who oversees Wal-Mart matters — with women and minority lawyers. Over the next two years, Wal-Mart transferred $60 million in legal work to women and minority relationship partners, and ended ties with two firms that did not meet its diversity expectations. Wal-Mart did not return a request for comment.

Another industry leader, Microsoft, began offering a 2 percent bonus to firms that could show measurable improvement in their diversity numbers.

Nixon Peabody, like most other major firms that rely on Fortune 500 companies for business, got the message. In 2004, the firm held its first diversity summit to bridge the patchwork of programs being offered in several of the firm’s offices and turn it into a coordinated effort. Firm leaders the formed a diversity committee, and six months later, held the firm’s first mandatory diversity training for all employees.

Between 2004 and 2009, the percentage of female and minority partners at Nixon Peabody grew from 1.7 percent to about 5 percent. But by 2010, the percentage had plateaued. That’s when the idea of an hourly commitment was floated.

“Our numbers were flat with respect to recruiting and retention, and we were looking for something to take it to the next level and regenerate interest and excitement,” Tyre said. “The diversity challenge was one initiative that came out of that period.”

Last year, Nixon Peabody attorneys logged a collective 5,990 hours on diversity activities. Today, more than two years into the program, the percentage of minority partners at the firm has inched up from 5 to 7 percent.

“Our numbers are not where we want them to be,” Tyre said. “But as far as our programs, we’re headed in the right direction.”

Progress in diversifying the partner ranks is slow partly because law firms hire more sparingly at the senior level. Partner hires are usually one lawyer or a small group of lawyers — which has less of an impact on the percentage of women and minority partners than, say, hiring a class of 20 first-year associates that would quickly boost the percentage of women and minority junior-level lawyers. It takes eight to 10 years for associates to make partner.

“We need to focus more on lateral recruits,” Tyre said. “The diverse [associates] we’re nurturing now, it’s going to be more than a decade before we see results ... To instantly have any immediate impact on our numbers at the partnership level means we have to similarly undertake intense recruiting at the partnership level, and that’s one thing we’re considering.”

A necessity to win business

A firm’s record on diversity can make or break its ability to win new business, as potential clients increasingly ask about attorney make-up. Tyre said Nixon Peabody has never been fired for falling short on diversity efforts, but it has lost out on pitches for new work to other law firms because they were able assemble more diverse teams.

“In the old days, [clients] just wanted to know what our diversity statistics were,” said Ellen Dwyer, managing partner of Crowell & Moring. “The dialogue has advanced to where they have software to ensure diverse and women lawyers are providing services on their active matters. We see it with companies like DuPont and with great frequency in [requests for proposals] from other clients, asking specific questions about diversity composition and who will be staffed on the matters.”

DuPont asks law firms for their diversity statistics, down to the names of minority attorneys who work on DuPont’s cases, as well as how many hours they’re billing. The company offers a cash reward to firms that are making the most progress with diversity.

“Our program is more of a carrot than a stick, but we have separated firms,” DuPont General Counsel Tom Sager said.

Instead of replacing relationship partners, DuPont focuses on diversifying the pipeline of up-and-coming attorneys at the 38 firms it does business with, including Crowell & Moring. At each of those firms, DuPont created the role of account manager, a junior-level lawyer who works under the lead partner to manage day-to-day work on DuPont matters. The idea is when the lead partner retires or leaves, the younger lawyer — a woman or minority attorney — is poised to take over the account.

“We did not want to create division by pulling someone out and putting someone else in,” Sager said. “We thought, ‘Let’s create more leadership opportunities from within.’”

Similarly, Crowell last summer began an internal sponsorship program aimed at helping women and minority lawyers advance within the firm. The program pairs up senior attorneys with junior lawyers, and goes a step beyond typical mentoring.

“A mentor is like a consultant, a sponsor is like an advocate,” said Dan Forman, a partner in the firm’s government contracting group. Last fall, Forman pushed to get the associate he’s sponsoring to cross-examine a witness in court in a contracts case — a responsibility typically handled by partners. “It’s putting your own skin in the game on behalf of the associate ... My goal is to make him the next great [government contracts] lawyer.”

Limited results

The most progress is being made not in the numbers of women and minority attorneys at law firms, but in shifting more work to the women and minority attorneys already there, said Brad Smith, general counsel of Microsoft.

Since 2008 — the year Microsoft began offering a 2 percent bonus to outside firms that meet certain diversity benchmarks — the head count of women and minority attorneys who work on Microsoft cases has only inched up from 44 to 45 percent, but the percentage of hours women and minority attorneys spend on Microsoft cases has jumped from 34 percent to 47 percent.

“It’s had the most impact changing representation on our matters more than the composition of firms,” Smith said. “It’s generating great results for us. But diversity hasn’t changed much at firms. If more companies did this, it would have more impact on the industry as a whole.”

 
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