Risk Update

Have Some OCGs and a Smile — Coca Cola Issues New Outside Counsel Guidelines Addressing Diversity Matters

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.”
  • “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.”
  • “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.”

Some of the interesting details in the letter, which worth reviewing in full to understand how the client is prioritizing and addressing specific elements of compliance:

  • Quarterly Evaluation: The responsible KO attorney for each New Matter will review performance against your commitment for New Matters each quarter. For New Matters failing to meet the commitment, you will be required to provide a plan to meet your commitment. Failure to meet the commitment over two quarterly reviews will result in a non-refundable 30% reduction in the fees payable for such New Matter going forward until the commitment is met and, continued failure may result in your firm no longer being considered for KO work.”
  • Collaboration with Other Firms: If your firm cannot internally meet the above commitments, we encourage you to work collaboratively with other firms, including member firms of the National Association of Minority and Women Owned Law Firms, to assemble matter teams that meet the commitments. We can assist you in this regard and provide introductions and suggestions.”
  • Publish Diversity Plans: Your Managing Partner will publish a personal commitment to diversity, inclusion and belonging and related action plans setting forth measurable goals.”
  • Relationship / Matter Credit: You will provide transparency as to how origination, relationship, and matter credit is apportioned on KO matters, or if the firm does not use origination, relationship, and matter credit as a compensation or evaluation metric, how work on KO matters is factored into a firm attorney’s performance evaluation and compensation.”
  • Preferred Firm Panel: KO expects to select a panel of preferred firms within 18 months following implementation of the revised guidelines. Meeting the commitments above will be a significant factor in determining your firm’s inclusion and ongoing status on the panel.”
If you liked this post, please share it: