12th February 2021

Would Coca-Cola’s US 30% fee reduction rule work in the UK?

Has Sweden and the Green and Golden Bell frog got anything to teach us?

Coca-Cola publicly lost its patience in the US last week and said it would withhold up to 30% of its fees if diversity targets were not met by its external lawyers.

They cited years of talking in the profession and not enough action.

A quick google search ‘Diversity in UK Law firms’ brings up 27 million results in less than a second. No shortage of reading material in amongst all of that for even the newest of entrant into the discussion.

One issue is how far up the everyday agenda of clients is law firm diversity really?

Law firms, quite rightly, give clients what they want. Otherwise they wouldn’t exist.

Looking at the larger UK firms (let’s say Top 50 by revenue) and there is plenty (but not universal) communication as to their D&I plans – even if progress isn’t quite there yet.

These firms either believe it’s the right thing to do or they believe clients want to see them doing it. Either way, if it eventually brings about positive change even the most cynical must see this as progress.

Interestingly, in a recent conversation with a global firm demonstrating a good track record in this area, they said:

They regularly lose mandates to firms very clearly lacking diversity within its ranks – whatever the client said how important diversity was in their RFPs.
That is disappointing, not least for the unsuccessful law firm in question.

This is borne out further by our own survey of 400+ global companies that showed 43% of companies would instruct those firms best on price, regardless of whether the firm in question breached the company's D&I guidelines.

How are the UK Top 50 firms actually doing as far as diversity in their senior ranks? You can see by way of a traffic light system in our TTM Law Firm Diversity Index.

But the world isn’t just about the UK Top 50 law firms. Far from it. There are approximately 150,000 solicitors and roughly 10,000 firms of varying sizes in the UK.

Firms 51 - 200 (by revenue) are significant employers and contributors in the communities within which they operate.

How are they getting on with this issue? Very hard to say.

An analysis of their own websites reveals a distinct lack of transparency in this area.

Some may be doing very well. Some less well. Either way a very large number don’t think it’s important to reveal either way what their current state of play is (other than often a sentence that D&I is very important to them).

I don’t think the first step is about clients setting targets in this area (it wasn’t Coca-Cola’s). Naturally as an opener it's more: where are we now, where should we be really and how are we going to get there?

Companies inevitably will also have to look at themselves long and hard as to how they are really doing in this area as well.

The world isn’t linear as to X% women, Y% BAME, Z% LGBT makes a happy ‘perfect’ law firm. The discussion I suggest needs to focus more on overall law firm culture – which will be shaped by what clients want from, and demand of, them.

When I was a client I wanted the best external lawyers on our account. Diversity of thought in our law firm teams to help us grow and navigate difficult issues was right up there as a requirement.

So, back to the opening question, would a wholesale adoption of the Coca-Cola model bring about rapid and positive change within the wider UK profession?

I guess one initial question is does it even work in the US?

Like Sweden’s different strategy to Covid-19 these new and novel experiments are important to analyse the results of different approaches.

The Coca-Cola scheme isn’t operating in a vacuum. For instance in the US The Mansfield Rule has had far greater adoption and, in time, the impact of that project (mingled with others) must also manifest and contribute to the overall evolution.

The legal ecosystem is vast and complicated. And just as in nature when you add, remove or modify one aspect it can take a long time for the consequences (intended or unintended) to manifest.

The Green and Golden Bell frog and its inter relationship with mosquitoes in Australia is a blunt but interesting side bar example.

What does seem clear to me though is that transparency and collaboration between companies and their law firms on how law firms ensure diversity of thought for the benefit of their clients is a financial and social imperative, at all sizes of firms not just the top few, to turn more of the red traffic lights in the TTM Law Firm Diversity Index at least amber before too long.

Interested in continuing the conversation?

Tim is always happy to discuss these issues with in-house and private practice colleagues.

Arrange a call