Coca-Cola has announced a new policy this year in which it is implementing a diversity quota for the outside counsel it keeps. Coca-Cola says it will only hire law firms that commit to providing evidence of 15 percent of billed time being from black attorneys, which is a percentage that is higher than the percentage of African Americans in the U.S. population.
Back on January 28th, Coca-Cola’s legal department sent out a letter to the company’s exterior council which outlined their new requirement that the law firms must “commit that at least 30% of each of billed associate and partner time will be from diverse attorney’s and of such amounts at least half will be from Black attorneys.”
Coca-Cola said that those requirements will tighten over time, with the “ultimate aspiration” being that “at least” 50% of time billed will be from “diverse” attorneys, and of that 25% will be from specifically black attorneys. The firms working with Coca-Cola are expected to apply that standard to their current work with Coca-Cola as well.
While African Americans make up about 13% of the U.S. population, the amount of black lawyers is much lower. African American attorneys make up just about 5% of ALL U.S. lawyers, the American Bar Association stated this past year.
Coca-Cola has said that failure to comply with the new diversity requirements on legal engagements over two quarterly reviews could result in the slashing of compensation for the firm by up to 30% for all new work, and additional failed reviews could result in the firm no longer being allowed to work with Coca-Cola.
Coca-Cola has stated that it will also incentivize law firms to follow along with their new diversity quotas by making compliance “a significant factor in determining” whether firms are included on the company’s upcoming panel of “preferred firms.” Coca-Colaadvised and encouraged the law firms to seek outside help if they believe they will be unable to meet the new quotas internally.
“I write you with a heavy heart,” Bradley Gayton, senior vice president and general counsel of the Coca-Cola Company wrote in his letter to the company’s outside counsel.
Gayton declared that Coca-Cola’s previous efforts to promote diversity “are not working” as apparent from the “alarming number of new partner headshots” with an “obvious lack of diversity.”
“We have a crisis on our hands” that requires “specific actions that will accelerate the diversity of the legal profession,”
“The time has come for us to stop championing good intentions and motivations, and instead, reward action and results. Quite simply, this is now an expectation,” Gayton wrote in a statement accompanying the letter, adding that his hope is that Coca-Cola’s law firm partners “view this as an opportunity to effect real systemic change.”
Hans Bader, a longtime civil rights lawyer who served a stint in the federal Office for Civil Rights, described Coca-Cola’s policy as “illegal.”
Retired attorney Paul Mirengoff wrote in a blog for Power Line that Coca-Cola has left itself vulnerable to being sued for racial discrimination with its new diversity policy.
“Coke can take comfort from the fact that no law firm is likely to sue the company or its officers. Similarly, no lawyer at one of these firms is likely to challenge Coke’s practice,” Mirengoff wrote.