The call from clients for law firms to diversify has grown louder over the past decade, but the issue of who receives origination credit within those firms continues to undercut that demand.

Nine years ago, the American Bar Association Commission on Women in the Profession, Minority Corporate Counsel Association and Project for Attorney Retention released a report that found women lawyers and lawyers of color had been bullied, threatened or intimidated over origination credit. It also found that pay for the entire or large portion of the work goes to the lawyers who originally brought the client to the firm.

The age-old system usually gives lawyers who originally brought the work to the firm—usually white males who received guidance and opportunities to meet with clients—the origination credit on a permanent basis.

That system remains in place at many firms, even if years later a woman or person of color is completing the client's work.

At the same time, the general counsel community may not know that the relationship partner they want to work with may not be the lawyer receiving the bulk of compensation for their matters.

Jeanine Wright, chief legal and administrative officer of Los Angeles-based podcast marketing startup Simplecast, shared on a recent Association of Corporate Counsel Southern California panel that it's an issue she keeps in mind when hiring outside counsel. In fact, once she learned about the issue, Wright revamped her selection process in 2015 while she was general counsel at Los Angeles-based credit underwriter ZestFinance. She started distributing a survey on the diversity points she was looking for in a firm.

She said she inserted the survey in her requests for proposals. It asked lawyers if they identified as a person of color, veteran, openly LGBT or disabled, and added which lawyers receive origination credit and billing credit for her company's matters. She then included a question about the firms' percentage of women, people of color and white men and how the compensation broke down within their positions as associates to partners with descriptions of any firm diversity and inclusion initiatives.

Michelle Banks, Senior Advisor & Executive Coach with BarkerGilmore.

"When I put this together, I thought there's no way they're going to respond to these questions; they'll get back to me citing privacy concerns, so I was pessimistic about what I was going to get," Wright said. "Every single one of them responded to the survey."

After reading the responses, Wright said she realized the column asking about origination credit and billing credit listed names she did not recognize.

"Two [firms] included people on the list that I had never heard of that were getting origination credit for my matters, so I was surprised by the category column in particular," she said.

One woman, she said, worked at a major Silicon ­Valley law firm whom she knew as the point of ­contact on her matters but was not receiving origination credit.

"This person I never met or spoken to [is receiving origination credit], and I asked who is this person, and I asked around internally, and it turned out that person very early on—before the company was a series A—had helped with early financial decisions," Wright said, adding she inherited that relationship from the previous general counsel. "That person back in the day originated the relationship, even though I hadn't met that person or had [that person] worked on our matters for years, so that person brought the relationship to the firm, that was the person getting the origination credit for my matters."

Upon this revelation, Wright said she tried to figure out a way the woman partner she knew could get the credit. "'Do I rehire you so you're getting the full or partial credit?' I had to advocate for her," she said. "She didn't have the power to advocate for herself."

Wright threatened to fire the firm and only come back if the woman partner received the credit, but she said the partner didn't want Wright to take those measures. So Wright said she made a call to the unfamiliar partner who was receiving the origination credit and the woman partner. After the call, the woman partner, whom Wright said still works at the firm, began getting a share of the origination credit.

In ALM's 2019 Diversity Scorecard measuring the full-time partners who identify in nonwhite racial ­categories, Fragomen topped the list but did not have any black partners.

The 55 firms surveyed had at least 20% minority attorneys, up from 43 last year, and three had at least 20% minority partners, down from five. Asian American lawyers comprise 7.3% of Big Law while Hispanic lawyers are at 4.1%, with both groups growing 1% since 2011. Black lawyers are underrepresented the most, in comparison to the U.S. population.

The idea of the updated survey, which Wright still uses, came from Michelle Banks, the former general counsel of San Francisco-based clothing giant Gap Inc. They met at an ACC Power of the Purse event that gives negotiation tips for women lawyers. While at Gap, Banks says diversity and inclusion was a ­priority when hiring outside law firms during her involvement with the ABA's Women in Profession commission.

"If you're working with a woman or person of color on your account, you think they're the important person, they're the person you call, they're the person you give new work, it turns out it could be a man you don't know well or who's not working on it currently who could be receiving the credits," says Banks, now a BarkerGilmore consultant. "Many general counsel who worked at law firms a long time ago don't know you should really ask questions: Who's the relationship partner and origination partner? Is it shared? Is the person you value getting credit for the relationship? It was surprising to me when I was at Gap when we were asking, who was getting credit on their accounts."

On the ABA commission, Banks worked with Patricia Gillette, a former Orrick, Herrington & Sutcliffe partner who said she received origination credit while at the firm and understood the big law compensation structure.

Patricia Gillette

"It ensconces lawyers in a position and rewards them over and over again, and it creates silos instead of teams," says Gillette, now a JAMS neutral in northern California. "You can get credit for the rest of your life; it doesn't give room for others. Women and minorities may be on my cases, but I get the credit. It's been a big issue."

Considered to be one of the architects of outside counsel diversity and inclusion, former Walmart general counsel Thomas Mars says a lawyer in his department brought up the issue by signing him up to be a speaker at an ABA Minority Counsel Committee event in 2002.

Serving in the top lawyer position from 2002 to 2009, Mars' legal department focused on the relationship partner. In 2005, Walmart published a report on its outside counsel hiring strategy.

The report announced the largest buyer of legal services at the time gave notice to its top 100 law firms, ranked by legal services invoices, to show evidence of institutional diversity or their working relationship would end. Walmart requested from the firms statistics on nonwhite lawyers and women lawyers: the number they comprise and their titles, their retention rates, ­percentage of them promoted to partner, and their leadership roles.

Walmart also wanted to know how active the firms were in diversity and inclusion organizations and the initiatives connected to the firms. The company then asked for a new slate of relationship partners, which had to include one woman and one lawyer of color who are guaranteed to receive pay for the matter. By September 2005, Walmart claimed out of the 100 firms, 40 new relationship partners identifying as women lawyers and lawyers of color were handling $60 million of legal work.

"Everyone came out a winner with the exception of a couple law firms, for whatever reason they thought we weren't serious or didn't embrace diversity," Mars says. "I think everyone was a winner. It was an absolute life-changing experience for me. It changed who my friends are, how I deal with people, how I approach leadership."

With Walmart's demand, Mars says several major law firms revamped their diversity and inclusion goals through adding more programs and promoting more lawyers on the diversity spectrum to partner. And as law firms focused on diversity, so did Walmart.

"The headhunters couldn't produce high-quality lawyers the way we needed. I came back from one of the diversity conferences with an epiphany: I'm meeting all these high-quality, diverse lawyers. I thought that was the thing to do," he says. "We started hiring some super talented lawyers out of these minority bar associations and learned a lot from being there. We wouldn't just fly in and go out. … We had an agenda when we were going."

When Mars assumed the general counsel role, he says the legal department had 66 members in 2002, with 56 at its headquarters in Bentonville, Arkansas, alone, and it grew to 176 when he was promoted to chief administrative officer in 2009. He left in 2010 and recently launched his own sports law firm.

While Walmart changed how it dealt with outside counsel, the model failed to be replicated on a large scale across other corporations. Sandra Yamate, CEO of the Institute for Inclusion in the Legal Profession in Chicago, says it's difficult to pinpoint why the message didn't go farther.