A clear statement on diversity: make it a direct economic issue for primary law firms

The legal department of General Motors (GM), which has promoted diversity among its law firms since 1993, has recently tugged on the wallets of its primary firms to keep the initiative progressing. Corp. Counsel, Vol. 14, Dec. 2007 at 19, reports that GM set firm-specific diversity goals for six of its more than 500 outside counsel. “If a firm fails to meet its target, GM will get an extra discount of about 1 percent of total billings.” An example of a goal is to increase the percentage of minority lawyers working on GM matters by a certain amount.

I am torn about this directive, but to explain my unease I will invoke the US tax code. Some people argue that taxes should be value free: our government needs to raise money, but it should not do so – to the extent possible – in a way that overtly promotes policies and political choices. Interest deductions for mortgage payments is one example since it favors home owners over renters. Similarly, some people argue that law departments should retain the best legal talent, not use the hiring of law firms to promote values of diversity demographics, environmental activism, pro bono enthusiasm, technological advancement, telecommuting, or otherwise.

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