Published: January 2023
Written by: Bryan Anderson

Does diversity benefit law offices in quantifiable ways? Law offices — including private firms, corporate, government and not-for-profit law offices — are service businesses. More profitability is better for firm owners. Better results serve clients and the firms. Firms want to meet clients’ preferences to win business. What evidence is there whether law firm diversity supports these interests?

Diverse law firms make higher profits

Statistical analysis of law firm data shows that more diverse firms earn more money.

Dr. Evan Parker specializes in statistical analyses for the legal market. His work has been cited in the American Lawyer, the ABA Journal and the Canadian Lawyer. In a 2018 study controlling for a variety of factors, Dr. Parker concluded with a high degree of statistical confidence that diverse law firms make higher profits. Missing in Action: Data-Driven Approaches to Improve Diversity, Evan Parker (2018).

Dr. Parker’s analysis shows that having diverse legal teams was a significant characteristic factor for law firm profitability, ranked after law firm prestige, attorney leverage, geographic concentration and whether a firm performs hedge fund/private equity work. Having diverse legal teams ranked ahead of practice area concentration, or having corporate, energy and environment, or merger and acquisition practices.

Dr. Parker concluded that partners take home significantly more money at American Lawyer 200 firms with high diversity. The median diversity “dividend” reflected in the difference between firms’ partner distributions showed that the gap between low and high diversity firms approaches $180,000 per year per partner.

Diversity improves litigation settlement and trial results

Statistical analysis of real-world data shows that diverse female-male civil trial teams are more successful than male-male civil trial teams. Lack of diversity was associated with lower likelihood of success and worse trial outcomes.

Attorney, professor and researcher Randall Kiser of the consulting firm DecisionSet conducted a study of 40-plus years of data comparing final settlement offers versus trial verdict and damage awards in both New York and California. Professor Kiser assessed whether trial team gender composition could predict win rates, decision error rates, and settlement positions.

Professor Kiser’s approach to assessing trial team successes and errors focuses on demands, offers and awards in cases that did not settle. Cases that do not settle and are tried resulting in an award have three possible outcomes in his method of assessing results:

• Plaintiff error. The award is lower than the defendant’s offer.
• Defendant error. The award is higher than the plaintiff’s demand.
• No error. The award is somewhere between the final offer and the final demand.

Professor Kiser’s statistical analysis showed that female-male defense trial teams won 7% more of their cases than all-male teams, had error rates that were 9% lower, and underpriced their settlement offers far less frequently, amounting to an average savings of $2.6 million in defendant liability. His analysis showed similar benefits of mixed female-male trial teams for plaintiffs.

Professor Bill Henderson at Indiana University Maurer School of Law commented on Professor Kiser’s findings as showing that “[s]tated another away, lack of diversity is really expensive.”

Client demands for diversity

Diversity is a competitive advantage over other firms in obtaining significant business clients and matters.

Many companies set diversity requirements for outside counsel.  For example, Facebook’s legal department requires that women and ethnic minorities account for at least 33% of outside counsel. During 2021 the Coca-Cola Company increased its target for minority and women-owned law firm legal spending from 1% to 10% of its outside counsel spending.

Beginning in 2019 more than 200 company chief legal officers signed on to an open letter prioritizing spending on firms with strong diversity and inclusion programs, partnering with law firms to promote diverse talent at every stage of the pipeline, and hiring women and minority-owned firms.

Conclusion

Data shows that more diverse firms are more profitable and that diverse teams get better results. More diverse firms have a competitive advantage in obtaining work from clients who value and increasingly demand diverse teams.

Diversity in law offices is also considered desirable for qualitative reasons. These include accessing a wider and deeper attorney talent pool, growing a larger network of firm connections useful to clients and for firm business development, language capabilities, and the firm and its attorneys being more relatable to more diverse clients.

Perhaps these qualitative factors help account for the financial benefits of diversity discussed in this article. Research would be useful in assessing the quantitative dollars and cents effects of these benefits.

The bottom line is that law offices seeking improved financial performance and results should foster diversity in their offices because doing so is a good business decision as well as the right thing to do.

Bryan Anderson is a volunteer hearing officer for the School District of Palm Beach County and assists the Legal Aid Society on fair housing civil rights matters.

Published: December 2022
Written by: Nalani Gordon 

Conversations surrounding diversity and inclusion have become trending topics in recent years. Race, gender, and sexual orientation are usually at the forefront of these conversations. However, physical and mental disabilities are not generally included in the diversity conversation. The reality is that, at every level, the legal profession has significant work to do as it relates to creating an inclusive environment for people with different abilities.

The Center for Disease Control and Prevention reports that 61 million adults in the United States live with a disability. This means that 26% of the population, or 1 in 4 adults, has a disability. Despite such high numbers, the National Association for Law Placement’s 2021 Report on Diversity in U.S. Law Firms indicates that only 1.22% of the lawyers surveyed self-identified as having a disability. The Report notes the scarce numbers of attorneys reporting disabilities but offers no theory or possible explanation for the statistic. One might wonder whether the Report’s numbers are a result of the fact that lawyers are uncomfortable with disclosing their disability or are living with an undiagnosed disability. The more pressing question is: What can we do to eliminate the barriers and social stigmatization for individuals with disabilities who want to practice law?

At the law firm level, employers can intentionally promote programs that benefit attorneys with disabilities which will also, in many instances, benefit all attorneys by creating a more accessible work environment. The American Bar Association (ABA) has implemented a pledge which calls on legal employers to affirm their commitment to diversity, specifically including people with disabilities. The ABA’s guidance offers practical steps that employers can take to foster a welcoming environment, such as starting an affinity group, conducting disability awareness and bias elimination training, and offering scholarships and fellowships for law students with disabilities. By taking practical steps toward embracing individuals with disabilities, legal employers can make a tangible impact on workplaces by bringing disability inclusion to the forefront of their diversity efforts.

Recently, the Florida Bar’s Legal Fuel Podcast featured neurodiversity expert, Haley Moss for a conversation on “Understanding Neurodiversity in the Practice of Law.” Haley (who happens to be one of my favorite law school classmates) is recognized as Florida’s first openly autistic attorney. She offered profound insight regarding neurodiversity and disability inclusion in the legal profession. One of the most insightful tidbits from Haley’s interview is Haley’s comments regarding the idea that we generally think about disabilities from the perspective of offering accommodations under the Americans with Disabilities Act. But legal employers can do more to support diverse attorneys. Most importantly, law firm and law department leaders can work to create a culture of acceptance and openness so that people with disabilities can feel comfortable with sharing their unique contributions and disclosing their individual needs.  

As a profession, the legal community is making positive strides toward inclusion. In September 2020, the Florida Supreme Court amended the Rules Regulating the Florida Bar to remove the rule that treated members of the Bar who had a history of “drug, alcohol, or psychological issues” as conditionally admitted members of the Florida Bar. The rule now broadly allows the Bar to admit members under consent agreements without any reference to psychological issues. However, this rule change is recent. The vast majority of attorneys currently admitted to the Florida Bar were admitted at a time when disclosing a mental or psychological disability could have negatively impacted their admission to the Bar. As Haley Moss notes in her interview, legal professionals, including members of the judiciary, would benefit from additional education regarding working with diverse clients, witnesses, and co-workers.

At the individual level, each of us can educate ourselves on disabilities and biases. We can also do our best to listen and treat all of our colleagues with dignity and respect. Haley’s interview is an excellent resource on the appropriate language and approach for conversations with colleagues who have disabilities (Hint: listen without judgment and ask how you can support the individual). Our clients and businesses benefit from working with attorneys with disabilities because each person brings a talent and perspective that advances our clients’ interests and our profession as a whole. Inclusion for all attorneys, including attorneys who have disabilities, is the key to ensuring that the Bar is reflective of the communities that we serve.

Nalani Gordon is an associate at Gunster. Her main areas of practice are employment law, Title IX, and business litigation.