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Coca-Cola will withhold a nonrefundable 30% of fees from law firms that fail to meet its new diversity requirements, as it criticised the legal sector for not viewing diversity and inclusion (D&I) as a business imperative.
Senior vice-president and global general counsel at the beverages company, Bradley Gayton, outlined the new measures in a letter issued on January 28.
He told US law firms he was mandating the unprecedented move for the legal sector with “a heavy heart”.
“For decades, our profession has had discussions about why diversity is important. We have developed score cards, held summits, established committees and written action plans.” he wrote.
But he added that these efforts had failed to deliver the expected results. “I’m reminded of this by the alarming number of new partner headshots that continue to be proudly published with an obvious lack of diversity and when I read that black equity partners will not reach parity with the black US population until 2391,” wrote Gayton.
The letter went on to outline the company’s revised diversity guidelines for its external counsel.
Non-refundable 30% reduction
For every legal matter, at least 30% of each of the billed associate and partner time must be attributable to attorneys from diverse backgrounds, and at least half of them must be black attorneys.
If law firms fail to meet this commitment over two quarterly reviews, Coca-Cola will impose a non-refundable 30% reduction in owed fees payable for future cases until the firm has achieved the set requirements.
Gayton criticised the legal sector for being “too quick to celebrate stagnant progress and reward intention”.
“In the grand scheme of things, the issue of the diversity of our profession is not a complex problem. If we approach this like any other business imperative, we would allocate capital and invest in aspects of our business that move us forward to achieve our goal and grow profitably,” he wrote.
“We will no longer celebrate good intentions of highly unproductive efforts that haven’t and aren’t likely to produce better diverse staffing. Quite simply, we are no longer interested in discussing motivations, programmes, or excuses for little to no progress. It’s the results that we are demanding and will measure going forward,” added Gayton.
According to the letter, Coca-Cola will select a panel of preferred firms 18 months following the issuance of the revised guidelines. “Meeting the commitments above will be a significant factor in determining your firm’s inclusion and ongoing status on the panel,” Gayton stated.
While the above actions will be initially applied to US firms, Coca-Cola plans to roll out the initiative across its global organisation.
Coca-Cola is the latest company to use its buying power to demand greater D&I from the legal profession. According to a report in The Law Society Gazette, tech company HP said in 2017 that it would withhold up to 10% of costs from law firms if they failed to meet its minimum diverse staffing requirements, prompting 170 US-based GCs to emulate this move.
In the UK, telecoms company BT confirmed that it would offer guaranteed panel renewal for the law firms with the best D&I record.
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Coca-Cola, GC, Diversity and inclusion, Bradley Gayton, diversity guidelines, fee cuts, HP, BT