Dr. Silvia Hodges Silverstein, executive director of Buying Legal Council. Courtesy photo.

Many general counsel aim to bolster both legal and business strategies, but, according to procurement professionals, in-house leaders could actually be costing companies, losing out on government contracts by not meeting supplier diversity requirements.

Federal law requires companies with U.S. government agency contracts exceeding $700,000 to outline their plans to hit required targets for hiring disadvantaged small businesses, including those owned by Native Americans, women and veterans, for subcontracting work.

“Getting one diverse firm on a litigation could keep a very important government contract or reduce the risk of losing it,” said Adrienne Fox, a longtime procurement professional and member of Buying Legal Council.

Yet Fox and other procurement professionals said legal departments at companies vying for government contracts often don't pull their weight when it comes to meeting supplier diversity requirements, with some not participating at all, placing increased compliance pressure on other parts of the business.

At a Buying Legal Council webinar in March, nearly 60% of the 80 attendees reported their legal departments didn't prioritize diversity in supplier and firm selection, according to the organization's executive director, Silvia Hodges Silverstein. Around 80% of attendees reported less than 10% of their legal team's spend goes to diverse suppliers.

Legal departments have been “exempt from many things” when it comes to procurement, Silverstein said, but that could change as general counsel look to closer align their team's strategy with business goals, including supplier diversity requirements.

“For the rest of the business [supplier diversity] is just their reality. And if [legal departments] want to be aligned, walk the walk,” Silverstein said. She added that for in-house counsel at companies with government contracts, supplier diversity “is more than good business practice.”

Joel Stern, the chief legal officer of the National Association of Minority and Women Owned Law Firms and former deputy general counsel of Accenture, said he'd like to see companies with established supplier diversity plans “extend that to the legal realm.”

The gap between legal and other departments on supplier diversity could hinge on differing relationships with procurement, he suggested. Stern and other legal and procurement professionals said lawyers often want more control over outside counsel hiring, which can lead teams to choose the same Big Law firms over smaller competitors that would help meet supplier diversity requirements.

Stern, Keith King, the president of the National Veteran Business Development Council, and Jonathan Lovitz, the senior vice president at the National LGBT Chamber of Commerce, said in-house counsel have also raised concerns that not all firms are certified as diverse-owned and thus would not count toward supplier diversity requirements.

Their groups aim to combat those concerns by linking in-house counsel with certified diverse-owned firms led by qualified lawyers, many of whom got their start in Big Law.

“We give [companies] answers on the legal side, when they have to have a minimum amount of spend or percentage with minority- and women-owned enterprises,” Stern said. “Where better to go for legal support than through firms that have been vetted and count toward your obligations with the government?”