Some of Canada's most powerful clients are asking to see law firms' diversity metrics. Most are tracking women's progress, but visible and invisible minorities are next
You have to assume that Bindu Dhaliwal, who co-chairs BMO's Legal, Corporate and Compliance Group's Diversity Council, makes some senior partners nervous. In 2013, BMO became one of the first Canadian corporations ever to ask its law firms to hand over their numbers. Not financials. It's not so the bank can scour their bills or challenge staffing levels. But if you want to work for BMO, Dhaliwal or someone else from the group will want to see your diversity metrics at the associate, partner and managing-partner levels.
As corporate law firms everywhere are facing increasing competition for files, sustained downward pressure on revenues, and some even considering their long-term viability, they're also being asked to look beyond pricing strategies and expose their very DNA in order to win business.
For a century or more, that DNA has looked largely white and male, with an invisible presumption of heterosexual. But the notion of corporate law firms as bastions of straight white males is under attack.
Women lawyers formed the first charge: Most large law firms are now actively tracking their progress through the ranks. Visible and invisible minorities are next, with many of the large national firms just beginning to think about tracking their numbers, as clients like BMO began to ask about them.
“Business has been talking about diversity for so long but the fact is we're not even measuring in law firms in Canada — except maybe for women,” says Dhaliwal, who is based in Toronto. “And many of the large firms have just started collecting metrics for women in the last couple of years. “As large clients, we've got some sway and we think it's an important issue. In RFPs, firms all talk about their diversity issues, their women in partner-leadership programs, but it's really about measurement and you don't know what you've done until you measure it.”
For now, she says, “it's not like a pass or fail.” BMO won't rule out using a firm because it's not showing enough diversity. But the metrics are part of the weighted evaluation process the bank uses in selecting external counsel, so there could be impact for firms that do not participate.
“As an associate general counsel at the bank said, and he leads a group that uses external counsel quite heavily, ‘For the type of work I do there are three large firms that could do the same amount of work, have pretty much the same expertise and cost the same amount of money. For me, the differentiator is which firms completed our survey.' And he told one firm that he was going to replace them with another firm he's used in the past if he sees they haven't responded.”
He and everyone else in BMO's in-house legal department will see whether the firm has because the bank has a new list of preferred counsel on its internal website. It contains the names of the top 10 or 12 Canadian law firms by diversity and the amount of data they are collecting.
“There's been a lot of interest,” Dhaliwal says. Guess what? There is about to be a lot more. She says BMO's legal group is reaching out to the other big banks, trying to convince them to work together and make the same or similar disclosure requests of their external law firms. BMO is offering to share its research and approach.
Some of Canada's most powerful clients are opening the gates of change.
To step back for a moment, if corporate law firms came to be seen as a citadel of white males it's probably because they reflected back the majority of their senior corporate clients.
But the face of their clients has been changing. Women have made up roughly half of all Canadian law school graduates since the late 1990s and a significant percentage have been going in-house, says Elizabeth Vogt, the first-ever Chief Diversity and Engagement Officer at McCarthy Tétrault LLP in Vancouver, who calls it “among the biggest changes in the last 30 years” in the world of corporate law.
“We still have women in the senior ranks at the senior-associate and income-partner stage leaving private practice, and they're not leaving to stay home and raise children. They're leaving to join in-house legal departments because, whether or not they're right, they think those kind of careers are going to be more controllable,” says Vogt. “Those are our clients.”
While many law firms had women in the senior ranks, they weren't always seen as partners with real influence. The same was true of other under-represented minorities.
But there was a quiet paradigm shift. As many large corporations began to go global, having diverse voices came to be seen as a corporate strength rather than a matter of social justice. Diversity became a core competency, and the term “workplace diversity” worked its way into the business lexicon.
Law firms in general were slow to respond to this.
Determined to put it on the law firm agenda, some of Canada's most powerful GCs got together in 2011 and formed Legal Leaders for Diversity and Inclusion.
As in most developed markets, when the general counsel community sneezes, the law firm community catches a cold. Encouraged to respond, 16 Canadian law firms formed the Law Firm Diversity and Inclusion Network last year. They made a commitment to work together, not competitively, in this one area to develop a common culture of inclusion.
Needless to say, it's not wasted on Vogt that the impetus for this change came partly from men, including David All-good, Executive Vice President and General Counsel at Royal Bank of Canada in Toronto, and Kenneth Fredeen, General Counsel and a member of the leadership team with Deloitte LLP in Toronto.
“This was so critical,” says Vogt. “Things are changing in part because the guys are making it their problem. So it's not by women for women about women; it's both men and women realizing firms themselves are better if they are diverse.
“If the guys are on-board, if white men are making diversity their issue — that's how we're changing the dial.”
It's difficult to talk about law firm diversity in Canada and not talk about All-good. He is very influential in the General Counsel community and demonstrates a determined and continuing hands-on commitment to keeping this issue top of mind for law firms.
During the conversation, it emerges he had recently led a team of his group's lawyers to a lunch at a large law firm.
“It was an opportunity for the firm to demonstrate to us that they have a fairly diverse group of largely associates, but also partners,” says Allgood. “It was also a chance for us to go over there and have a discussion, share information about the kinds of things we are doing [around diversity] and the things we are looking for.”
RBC is not yet looking for metrics from its law firms, he says, but it does put a statement in all its RFPs that diversity is one of the bank's five core values. “It's made pretty clear that we would like to see a diverse presentation coming back.”
This is all important stuff, but something still niggles.
The business case for diversity has been made. Most everyone now accepts that brains, character and judgment come in all colours, genders and bodies, and are blind to sexual orientation. Clients like Dhaliwal and Allgood want it – in fact are demanding it – and law schools are delivering it.
But diversity doesn't seem to be taking root as quickly as it should. It's 2014. Why are we still talking about this?
Kate Broer, Region Co-chair of Diversity and Inclusion at Dentons Canada LLP in Toronto, says it's because institutions as well as individuals have to break through a thick wall of unconscious bias, and that takes time. “We're tribal, for lack of a better description,” she says. “We tend to gravitate towards people who are like us.
“I don't think it's anything conscious but in circumstances where people are looking for mentors or sponsors, and equally the mentors and sponsors are looking for people they can feel comfortable with, we feel more comfortable with people from our own group. But if that dynamic is happening, and we're not aware of it, then the opportunity for it to perpetuate itself increases.”
Allgood talks about unconscious bias as well, saying Royal Bank has had a Harvard professor come in several times to talk about recognizing it. Dentons considers it such a strong factor that it requires all partners who deal with promotions, hiring or compensation decisions to go through unconscious-bias training.
The firm has also introduced a formal program designed to encourage its lawyers to blur the lines, says Broer.
“What we say is it doesn't matter who you are, just choose somebody who isn't like you and work with them or take them out for a coffee and get to know them. Because we know as human beings that we have to force ourselves to do that. It's especially important at the partner level, that more senior level, where people have an ability to influence work flows and opportunities to grow.
“So as a woman partner, for example, it's really important for me to mentor the young men because then they can see women in those roles and will value the input differently because their mentor was a woman. So they're no longer looking at their colleagues thinking somehow that women are lesser.”
Is this kind of cross-bias mentoring encouraged in compensation? “It's certainly part of the mix of what would be considered,” she says, then pauses. “It's a large motivating factor for a lot of people, it would be naïve to think it wasn't. But when people engage in it, they quickly come around to recognizing how much richer the conversation is when we're mixing it up a little.”
As for metrics, she says Dentons (then Fraser Milner Casgrain) did its first diversity survey in 2008, and another in 2012 measuring “everyone from the mailroom to the CEO.”
There are privacy considerations and releases involved in asking people to self-identify and then making the information public, she says, but later does provide metrics on women. As of the end of 2013, 26 per cent of Dentons' partners, 26 per cent of its leadership team and 54 per cent of associates were women.
Given that the modern-day push for diversity started with women, their numbers are bound to be higher than other under-represented groups, including visible minorities, gays, lesbians, transgendered people and the disabled.
McCarthys is trying to track those broader numbers but it has proven challenging, says Vogt. “It's really difficult to have people self-identify. We've been doing engagement surveys for the last three years asking people to self-identify and have not had significant uptake.”
Vogt says the problem is that people “don't want to be known as ‘the black lawyer' or ‘the gay lawyer' in the firm. Because we don't have large numbers of many of those minority groups, they don't want to be seen as the poster child. They identify as being ‘the lawyer.'”
McCarthys and Dentons are both part of the newly formed Law Firm Diversity and Inclusion Network, whose members are trying to find a way to track wider numbers.
“There's been a barrier in this profession to this notion of going out and census taking, which has created some challenges around defining who we are, where are we going, and the issues,” says Vogt. “What's happened is there's been discussion amongst firms about trying to get on-board and on track with getting some measurements in place for benchmarking.”
A new project is going to make it a lot easier to measure.
The Canadian Bar Association has teamed up with the newly formed Canadian Institute for Diversity and Inclusion to start working on a three-year census that tracks diversity in law firms right across the country. Called Diversity by the Numbers, when it's finished in the fall of 2016, it's expected to provide a clear breakdown of the profession by culture, ethnicity, religion, gender and sexual orientation — providing a common baseline to measure.
In the meantime, says Broer, firms will work together to move the issue forward. “There's been discussion about whether this is a place where we can share resources, whether firms can get together to do educational things on a cooperative basis. I'm trying to push the answer towards yes and I think others are interested in the answer being yes.
“Although it hasn't coalesced yet, I think we'll probably get there.”
The current push for diversity sweeping Dentons and other large national law firms doesn't seem to have washed over regional firms the same way. At least not yet.
Doreen Saunderson, Calgary Managing Partner of Field Law LLP, says her firm of 120 lawyers hasn't felt any particular pressure. It has never recruited for diversity or had a special diversity program.
“Nobody's giving us a target number or percentage of diversity we should have,” Saunderson says. “We've always taken the perspective that we hire the best lawyers and that's given us what, for our size, we're satisfied is a reasonable level of diversity. But the profession itself is focused on the issue.”
In fact, like many other regional firms, Field Law was recently asked to participate in phase two of the Justicia Project — an initiative in the legal community aimed at retaining women lawyers that started six years ago in Ontario.
Saunderson says the firm is participating but when it comes to women, “we have a high percentage of women in leadership and a high percentage of women in senior roles, so that's old news to us.” More than 39 per cent of all Field's lawyers, and 28 per cent of equity partners, are women.
Also Field, based in western and northern Canada, seeks work from financial institutions and cross-border clients that do sometimes ask for diversity information on RFP's. Field is competitive on that front, she adds.
In the US, a study released late last year by Microsoft Corporation shows diversity in the legal profession has grown significantly more slowly than in business. “The United States becomes more diverse every year,” the study said. “The legal profession does not.”
If Canadian law firms are also lagging behind it may be because while some people in the upper levels of law firm management get it, some still don't, says Gita Anand, Chair of the National Diversity Committee at Miller Thomson LLP in Toronto.
“There are still those people who have been part of the old boys' club for a long time and want to see the opportunities it has afforded them continue,” says Anand. “So they're opening it up to a whole new demographic reluctantly, notwithstanding the fact they may have daughters, because they don't believe their daughters should have to work as hard and do what they do.”
The Ontario Securities Commission's new rule requiring corporations to disclose their policies to promote women to boards and top management roles is something that is working, she says, actually helping to change things.
“It's got the attention of individuals who are on the management teams of law firms because, by and large, those management teams are comprised of men. There have been women, and in my time I was one, but it's still mostly men.
“Seeing this issue making news headlines helps them realize that it's not an issue just for society but also for clients. The business case for diversity is highlighted.”
If you ask Anand why she thinks women
- who have been part of the diversity drive longest - are still under-represented, especially at the senior levels, the answer might surprise you. She believes the push started by Baby Boomers has begun to lose steam.
“I have to say in the legal field we see a retrogressive situation where it's going backwards. It's very sad. The progress women were making in the 1960s and 1970s and 1980s seems to have halted.”
What about people in other minority groups who are earlier in their struggle to share the power inside law firms: Is it possible it's just too soon in the trajectory to see tangible results?
Anand says she's honestly not certain, although she believes things are changing. She points to organizations such as Toronto's South Asian Bar Association, which was founded in 2005 and has almost 400 members, as evidence of traction.
The association is consulted on judicial appointments, she says, and liaises with the Law Society of Upper Canada on policy matters, so it has a real voice, she says.
Asked about the most forward-thinking diversity program at Miller Thomson right now, Anand says it is software that allows people to record the pronunciation of their names, and attach it to their email signature.
The program can be adapted for clients, students or laterals who are interviewed for positions, she says, “so that we will be sure we're not insulting people and show the proper respect by assuring their name is pronounced properly.”
In winding up, the conversation turns back to women. Anand says when she articled 25 years ago as a women and member of a visible minority group, she was a complete rarity.
“In terms of law firms, it may be too soon to expect the executive committees and management committees will be reflective of the diversity of the firm. I would have hoped women were represented to a greater extent by now because women have been practising law for at least 50 years here.
“But times are changing. I can see the change.”
At McCarthys, Elizabeth Vogt can see the change. She simply has to look at a spreadsheet.
There are some challenges to moving diversity from a concept on paper to a reality in a law-firm structure, she acknowledges. It doesn't take her long to address the big one: Diversity fatigue.
People have it. Law firms have it. She acknowledges that. It doesn't make them against diversity, it's just that law firms been talking about it for a while and they don't necessarily want to have to keep thinking about it — especially in the current atmosphere of firms failing, splits falling and bare-knuckles strategic brawls over how to grow business.
Metrics are the antidote, she says, having found that setting hard goals and regularly reporting on them is the best way to keep senior partners engaged.
McCarthys has been measuring the progress of women since 2004, says Vogt, and in any discussion with firm leadership she can demonstrate tangible changes over the last decade.
“We now have 47 per cent of our income partners women, and 10 years ago when we started to realize it was a strategic priority, it was 27 per cent. So we can look at that and say some of the programs and strategic initiatives we've put in place are working.”
When it comes to equity partners, what percentage of women have their hands on the brass ring? She says the norm is 16 per cent to 18 per cent at law firms in Canada.
“We are about 18.5 per cent. We still want the numbers for equity partners to be higher but those are moving too.”
She says McCarthys' most forward-thinking initiative in diversity is a tracking-and-analysis program that slices and dices the numbers so she can drill down and understand what's really happening.
“We've started to look at our key client teams - not just who was on the teams, because that's just tracking numbers › but who's actually working what hours on those client mandates.
“If, for example, women make up 23 per cent of combined income and equity partners, you'd expect to see 23 per cent of the senior work in any of our practice groups or industry groups being done by women. You'd expect to see 45 per cent, 55 per cent at the associate level done by women because that's the pipeline.
“So if I've got a practice group or an industry group where only 10 per cent of the senior work is actually being done by women, I look at that and say, ‘Okay, that's an issue.'
“When I ask the group leader to explain, they'll usually say it's because they don't have enough women equity partners and it's hard to do laterals. I get that. So for that group it's going to be aspirational to move that group to the 23 per cent but, at the very least, that group had better have 45 per cent, 55 per cent of the associate work being done by women because that's what our associates look like. If that same group is also down to 10 per cent on the associate work, I know I've got a problem.
“It's an initiative that goes to the heart of access to equal opportunities.”
RBC's David Allgood says we are well along the road to access. “This whole diversity and inclusion thing is a journey. To me, over the last 40 years the spectrum of what diversity means has increased dramatically from just gender diversity to all these other kinds of diversity.
“In the last several years, people don't just talk about diversity but they talk about diversity and inclusion, which I think is the next step. It's one thing to accept diverse people but then you've also got to include them for there to be effectiveness. And we're at that stage now where large organizations like RBC and the other banks and Bell have active programs to work on the inclusion part. That's how you begin to share the power, by including people in the process.
“So I'm positive on the fact that we're continuing to move down the road. Are we there yet? No, we're not there. But we're on the way.”