April 21, 2022
By CounselLinkReading Time: 4 minutes
In 2020, the Corporate Legal Operations Consortium (CLOC), updated its Core Competencies to reflect the increased scope and priorities for which today’s legal operations are responsible. CLOC also included language indicating that diversity, equity and inclusion (DEI) should be an essential element of the business processes and activities of legal operations professionals.
By defining the functional areas that most legal teams oversee, CLOC CORE 12 provides vital guidelines on how a legal organization’s operations department can mature and grow across specific functional areas, depending on its priorities, objectives, opportunities, and resources.
DEI plays an increasingly prominent role in each of the 12 CLOC Core Competencies. While corporate counsel have always had multiple expectations of their vendors, today we find DEI is being communicated and measured more frequently as a key part of vendor management programs. Furthermore, corporate legal departments are now far more likely to select firms that embrace DEI, push for more diverse staff to be assigned to their matters and have a formalized set of requirements for working with individuals and organizations that embrace DEI principles.
This focus on DEI may seem like a recent trend, but, in fact, efforts to incorporate DEI have been ongoing across legal entities for many years. For example, for more than a decade the enterprise legal management (ELM) software LexisNexis CounselLink® has included detailed demographics capabilities in their analytical tools to help firms and vendors measure their progress in meeting legal department DEI criteria.
Nevertheless, the legal industry overall has been slower to adopt DEI practices and tracking than other industries. There are many reasons for this lag, ranging from professional culture and societal issues to technology aversion. The good news is that today DEI is increasingly more likely to be a central element of a legal department’s overall strategy.
Beyond societal benefits, there are distinct business advantages to improving the diversity of a legal organization. According to research by Deloitte, highly inclusive teams outperform their peers by as much as 80%. Inclusive companies generate higher cash flow per employee, are more change-ready and innovative, and are more likely to be able to coach employees for improved performance and build leaders. McKinsey research shows that gender-diverse companies are 15% more likely to outperform their peers and ethnically diverse companies are 35% more likely to do the same.
Nevertheless, for those organizations in the early stages of creating a DEI program, the task can seem daunting. The challenge is to determine where among the CLOC CORE 12 functions the change should begin.
Rather than address all 12 areas at once, start with strategic planning to define concepts and goals and lock down executive support. Without executive attention and planning, DEI initiatives are unlikely to succeed.
Start by identifying the department’s objectives for launching a DEI program, which will serve as a reference point to help keep the program launch on track and can be used to set initial benchmarks and measurable goals. Initial action items might include brainstorming to define the most relevant aspects of DEI to the department, hiring more diverse talent, and choosing to work with outside counsel who employ a minimum percentage of minority partners and meet other specified diversity standards. Ask stakeholders for their input on the benefits DEI might deliver, how DEI practices might impact legal operations, and the desired end result.
After reviewing objectives to ensure that they align with departmental DEI priorities, the next step is to make a plan. To effectively track, manage, capture, store, and report on DEI data to evaluate the progress of your program, it will be necessary to leverage an enterprise legal management (ELM) solution with built-in DEI tools. Such software provides valuable measurement capabilities and features, including vendor profiles, vendor score cards, and diversity surveys that provide a holistic view of vendors and how they perform against the department’s DEI standards. These tools can also be used to measure the internal legal department’s progress.
Business intelligence, one of the CLOC core competences, is another essential element of the DEI toolkit. The appropriate software will provide management dashboards that clearly convey comparisons and trends in vendor diversity. During a recent Buying Legal® webinar on DEI benchmarks for buyers of corporate legal services, speakers underscored the importance of producing data to support the organization’s DEI posture, noting that corporate law departments now regularly request diversity demographic information from their law firms, including information on gender, race, LGBTQ+, veteran status, and disability.
Many corporate clients now set minimum standards for the in-house legal team to promote working in a diverse environment. They typically request granular detail, including metrics like the number of outside counsel hours worked by diverse timekeepers. They also monitor diversity trends of their law firms and require diverse timekeepers to be assigned mission-critical legal tasks and, if necessary, be given opportunities to develop necessary skills. Some clients offer bonuses to firms that increase diversity, while others have started to withhold a portion of their invoices if the firms do not meet their diversity requirements.
A recent ABA article highlighted the fact that, while corporate clients now increasingly include DEI metrics during the RFP process, law firms have not yet lost significant existing business due to weak DEI results. However, at CounselLink we have witnessed a continuous movement toward DEI metrics as a deciding factor for new legal work when all other factors, such as skill sets, results, and expertise, are equal.
In other words, diversity benchmarks will become increasingly important to legal departments’ success – and this is why a commitment to DEI must be woven throughout each of the 12 CLOC Core Competencies.