PayPal’s Warning to Law Firms Illustrates Clients’ Power to Advance Diversity

PayPal’s Warning to Law Firms Illustrates Clients’ Power to Advance Diversity

The most diversity-conscious leaders not only strive to build a more diverse and inclusive workforce within their own organization, but also pay attention to the diversity of the suppliers and partners with which they do business as an enterprise. Earlier this year, we spotted a trend in which large companies were starting to demand greater diversity at the agencies that produce their advertising.

Another area where client organizations are pushing for more diversity is in the legal sector; recently, LegalWeek reported that PayPal was reviewing the diversity credentials of the external law firms with which it does business, and warning these firms that they might lose business if they don’t make meaningful progress on this front.

In the US, particularly, the legal sector is one place where diversity and inclusion initiatives are badly needed. Although more than one third of the US population are racial or ethnic minorities, these individuals make up only 12 percent of all legal professionals and only 2 percent of partners at law firms. While women represent about half of the US population, they make up only 36 percent of lawyers and only 18 percent of partners.

Whether your organization has an internal legal department or relies on outside counsel (or both), there are opportunities to drive diversity in this area. The legal department can also be a valuable partner in advancing D&I throughout the organization. CEB Diversity and Inclusion Leadership Council members can read our new research on how to foster D&I in legal and strengthen this partnership.

If your organization doesn’t have a legal department, it can still make a difference in this regard; like PayPal, you can use your power as a client to encourage diversity at the law firms you turn to for advice. Who you work with is a choice and does have an impact on long-term diversity efforts.

Again, this holds true every time your organization purchases goods or services from another organization. In our research on how organizations can support diversity among their suppliers, we’ve seen that the best companies raise awareness of their supplier diversity programs and embed them into their organizational cultures, hold employees accountable for supporting supplier diversity, and use metrics to track supplier diversity spending. Members can read about how four organizations successfully implemented supplier diversity programs here.