When corporate legal departments incentivize diversity for the law firms that handle their matters, there's a lot of money on the line.
Since 2008, participating outside counsel at Microsoft have received annual bonuses for reaching quantifiable diversity goals. In 2015, Microsoft created a point system, so that firms with the most diversity-related growth would receive higher bonuses. Microsoft also began rewarding firms for increasing diversity in their leadership ranks, both internally and in their relationships with the company.
“We believe that diverse people and perspectives, both at these firms and among our in-house ranks, have made us more creative and helped us better understand legislators, regulators, and customers around the world,” wrote Brad Smith, LCLD Immediate Past Chair and President of Microsoft.
In 2016, Microsoft saw marked improvement among some of its outside counsel:
- Diverse representation on management committees of participating firms increased from 31.2 to 34.4 percent
- Diverse partner composition increased from 33.2 to 34.5 percent
Notably, the firms with the most improvement were all LCLD Member firms: K&L Gates LLP; Orrick, Herrington & Sutcliffe; and Perkins Coie LLP.
Microsoft has also seen improvement in the company’s litigation record, as well as growth in patent work and licensing programs, since the program was first implemented.