Coca-Cola demands action on law firm diversity

The Coca-Cola Company is updating its outside counsel guidelines to require that the US law firms it uses take concrete steps toward promoting diversity within their ranks.

In an open letter released last week, Coca-Cola senior vice president and global general counsel Bradley Gayton complains that decades of discussions in the legal profession about the importance of diversity have led to score cards, summits, committees and plans – but that these are not working.

‘The hard truth is that our profession is not treating the issue of diversity and inclusion as a business imperative,’ writes Gayton, who joined Coca-Cola last year having previously been chief administrative officer and general counsel at Ford Motor Company. ‘We are too quick to celebrate stagnant progress and reward intention. We have a crisis on our hands and we need to commit ourselves to specific actions that will accelerate the diversity of the legal profession.’

He adds: ‘Quite simply, we are no longer interested in discussing motivations, programs or excuses for little to no progress – it’s results that we are demanding and will measure going forward.’

Specifically, Coca-Cola’s outside counsel guidelines will now include commitments from law firms such as:

• That they will give Coca-Cola self-identified diversity data (including American Indian or Alaska Native, Asian, black, women, Hispanic/Latinx, LGBTQ+, Native Hawaiian or other Pacific Islander and people with disabilities) for the company’s quarterly analysis of the diversity of teams working on its legal matters
   
• On each new Coca-Cola matter, at least 30 percent of each of billed associate and partner time will be from diverse attorneys, and of such amounts at least half will be from black attorneys. The company notes that these percentages are roughly linked to US census population data and will be adjusted over time as US census data evolves, with the aim of at least 50 percent of billed associate time and billed partner time being from diverse attorneys with at least half of that amount from black attorneys
   
• The responsible Coca-Cola attorney for each new legal matter will review performance against the relevant law firm’s commitment for new matters each quarter. Where there is a failure to meet the commitment, the law firm will be required to provide a plan to meet that target, and failure to meet it over two quarterly reviews will result in a 30 percent reduction in fees payable for the matter until the commitment is met. Continued failure may lead to the firm no longer being considered for Coca-Cola work
   
• The company encourages law firms that cannot meet these diversity commitments internally to work with other firms to do so
   
• Law firms’ managing partners ‘will publish a personal commitment to diversity, inclusion and belonging and related action plans setting forth measurable goals’
   
• Law firms will provide transparency as to how credit is apportioned on Coca-Cola matters or how work on Coca-Cola matters is factored into an attorney’s performance evaluation and compensation
   
• Law firms will identify two or more diverse attorneys, at least half of whom are black, as candidates for succeeding to the relationship partner role with Coca-Cola. The company’s aim is to have at least 30 percent diverse relationship partners at its most-used firms, with at least half of those partners being black.
   

Coca-Cola expects to select a panel of preferred firms within 18 months of implementing the updated guidelines. An important factor in determining whether a law firm sits on that panel will be its performance in terms of these commitments, Gayton writes. He adds that these actions will be customized and rolled out across the company’s global organization.

He also outlines initiatives Coca-Cola’s legal department is engaging with and encourages peers at other companies to do the same. Those initiatives include joining an American Bar Association project intended to expand and create opportunities at all levels of responsibility for diverse attorneys and direct a greater percentage of the legal work the company buys to diverse attorneys.

‘While there is a long road ahead to effect systemic change around social justice, diversity, inclusion and belonging, we believe the actions outlined above are steps in the right direction and look forward to working toward our shared goals with our law firm partners,’ Gayton writes.

Coca-Cola is not alone in pushing for diversity at the outside law firms it works with. General counsel at 12 major financial institutions including JPMorgan Chase, Bank of America and Goldman Sachs last September published an open letter in which they committed to gaining a deeper understanding of the progress the law firms they hire are making in having racially and ethnically diverse employees – and including that data in the factors they consider when selecting external counsel.