Banks extend diversity demands to their law firms
When Sharon Nelles, a partner at Sullivan & Cromwell, got a call one day last year from JPMorgan Chase’s Jill Centella, she assumed Centella wanted to discuss a routine legal issue.
Centella, the global head of litigation, government investigations and human resources matters, had something else in mind. The $2.3 trillion-asset JPMorgan Chase had decided to press for more women and minorities to argue its cases in the courtroom, and she wanted to get the Wall Street law firm on board with its plan.
“When you hear [JPMorgan Chase officials] say, ‘We want our matters staffed with the talented women and diverse lawyers we know are out there,’ then as a firm we have every incentive to staff our cases with those people,” said Nelles, who is a partner in the firm’s litigation group and a member of its executive committee.
PNC Financial Services Group, SunTrust Banks and others say that a broad representation of society among its outside lawyers is important to them, too.
The demands make sense given that banks have embraced diversity and inclusion in recent years in their employment policies and marketing. Industry leaders have declared diversity a central part of their business plans, criticized President Trump’s immigration policy, opposed the so-called “bathroom bill” in North Carolina, hired students with disabilities, made their workplaces more accommodating to mothers, and hired diversity chiefs to oversee their efforts to make their businesses more egalitarian.
But why seize on so specific an issue as diversity among corporate lawyers?
Perhaps one reason is that more women are holding top legal posts at banks, and many of them know what it took to get there and where those jobs can lead. For example, JPMorgan’s general counsel, Stacey Friedman, was once a Sullivan & Cromwell attorney who worked with the bank on a number of matters. And Jelena McWilliams, the new chairman of the Federal Deposit Insurance Corp., was the chief legal officer at Fifth Third Bank.
And the issue has become a big one in legal circles.
Though women make up just over half of law school students, they still lag men in senior partnerships at major law firms and in lead speaking roles on major cases.
According to a 2017 survey by the New York State Bar Association, just a quarter of attorneys appearing in commercial and criminal trials across New York are women, and female attorneys account for slightly less than a quarter of lead counsel roles. There’s a stark difference between the public and private sectors, too. Female lawyers accounted for 38% of lead counsel for parties in the public sector, but they made up less than 20% of all lead counsel for private-sector clients, the survey found.
Writing in The New York Times last summer, retired Judge Shira Scheindlin said of her 22 years on the federal bench, “the talking was almost always done by white men. Women often sat at counsel table, but were usually junior and silent. It was a rare day when a woman had a lead role — even though women have made up about half of law school graduates since the early 1990s.”
Early this year, JPMorgan launched its Leading with Diversity initiative with the goal of achieving 50% representation by women and ethnically diverse lawyers on its external legal teams by the end of 2019. The bank says it wants its lawyers to better reflect its customers, employees and shareholders.
Centella said it started by reaching out to the bank’s partner law firms and asking them to offer up more diverse teams when bidding on case work.
There is a lot of networking involved, too. Centella wants her staff and the junior women and diverse lawyers at partner firms to get to know each other now, so they will be more comfortable reaching out and working together in the future.
To Mary Hackett, a partner at McGuire Woods, that is a key distinction from previous diversity initiatives. It is not enough to simply expect law firms to recruit diverse lawyers. In order for those lawyers to move up in the ranks and attain equity partnerships, the clients have to know them and feel comfortable reaching out to them.
“It’s not staffing diversely, it’s leading diversely. That’s a huge difference,” she said of the JPMorgan initiative. “Many people want to call the white guy in New York because you know that person, you trust that person. So how do we give our clients comfort to go to a diverse lawyer to lead? They need to know them.”
Allison Schoenthal, a partner in Hogan Lovells’ consumer finance litigation practice, said she has noticed other financial institutions picking up the baton, asking law firms about the diversity of their teams when they put out requests for proposals.
“It’s been interesting to see that now clients are taking on that role,” she said. “Truthfully you need a client to push outside counsel to look at diversity.”
PNC, in Pittsburgh, has begun formally tracking the number of women and diverse lawyers staffed on its cases and now has regular discussions about that effort with its partner law firms, said Lisa Stauffer, chair of the diversity and inclusion council for the $380.7 billion-asset company’s legal department.
“The conversations are more regular, they’re more robust, they’re a component of diversity and inclusion that is part of the agenda on a regular basis,” she said. “We feel very good about what we’re seeing in terms of the outcome.”
A spokesman for the $208 billion-asset SunTrust said the Atlanta company’s diversity and inclusion efforts extended to its relationships with vendors, including outside counsel.
“Our legal department’s agreement with law firms calls for increasing opportunities for diverse and women-owned law firms to develop working relationships with SunTrust and to expand its affiliations with minority and women partners and associates in majority-owned firms,” the spokesman said in an email. “We expect our outside counsel to hire, promote, and assign a diverse workforce to handle SunTrust matters.”
Centella said she did initially worry the effort could alienate some of JPMorgan’s longstanding partner firms that had traditionally always had a man at the helm. She wondered whether some of those men might “feel pushed out or insecure” but soon concluded her concerns were unfounded.
“Honestly, they really appreciated how this is great for business and great for their firm as a recruiting and retention tool,” she said. “I didn’t really get any pushback.”
It is true that women often must juggle additional demands outside the workplace, particularly after becoming parents, and that desire for a more predictable workload is sometimes motivation to move to an in-house legal department.
But just as importantly, Centella said, many women and diverse lawyers will end up leaving a firm in part because they do not see people like themselves represented among the firm’s leadership. Giving those lawyers the opportunity to make connections with big client firms like JPMorgan and giving them a shot to speak in court send a strong message that their voices and contributions are wanted at the firm.
“When you hear from senior management at your law firm that they look at you and see somebody who can stand up and lead a major institution through a critical, crisis-proportion problem, then the confidence that you have to move forward and become that person is really everything,” Nelles said. “It’s a gift. It’s the gift of success.”