Microsoft’s latest incentives could improve equality at law firms
In the last two decades several initiatives have been launched to increase racial and gender diversity at US law firms. But many firms, especially larger ones, continue to be dominated by white males.
Microsoft may be on the verge of creating more balance by making diversity not just a necessary approach but a profitable one. This July, the software giant announced a program to provide incentives to firms advancing diversity. The company would give bonuses to outside counsel based on the percentage of racial minority and women attorneys. Any firm providing services to Microsoft could receive a 2 percent bonus for meeting diversity standards, in addition to a 3 percent increase paid to all firms for the 2009 financial year to June 30.
Firms wishing to participate in the scheme must have notified Microsoft on or before August 15 this year and defined how they intend to measure diversity. Microsoft defines a minority as a woman or anyone from an African-American, Alaska Native, American Indian, Asian, Hawaiian or Pacific Islander, Latino/Hispanic or mixed race background. Sexual orientation is not included as it does not need to be disclosed to employers. However, in cases where this information is voluntarily disclosed, companies may include it in the equation.
The company has defined two criteria it will accept in relation to this program, of which participating firms must select one. Option one sees diversity measured as a 2 percent increase in the total hours worked by diverse employees as a percentage of total hours worked on all matters relating to Microsoft business. The increase is assessed by comparing results to the previous fiscal year.
Under the second option, the firm must demonstrate a 0.5 percent increase in the number of attorneys meeting the diversity definition as a percentage of the total number of attorneys. The attorney does not have to work on a Microsoft matter. An attorney is defined as a partner, of counsel, associate and full or part-time attorney, but not employed on a contract or non-permanent agreement.
What’s good for them is good for us
This is not just an incentive for outside law firms to boost diversity; internal employees can also benefit. Microsoft’s in-house legal team (and those directly involved in hiring outside counsel) can get bonuses based on the degree of improvement outside firms make in their level of attorney diversity.
While the first payments will not be made until the latter half of 2009, the program is attracting attention. Presently, the scheme affects 17 outside law firms part of Microsoft’s ‘premier preferred provider group’. This group includes law firms such as Arnold & Porter; Covington & Burling; Heller Ehrman; K&L Gates; Perkins Coie; Sullivan & Cromwell, and Weil, Gotshal & Manges.
Microsoft general counsel Brad Smith explains that the company implemented the experimental scheme because there has been a lot of talk about raising diversity standards but very little actual increase. The company is hopeful, and sees this as an opportunity to take real action to achieve long-term, concrete results.
