PayPal has told its external legal advisers that they risk losing out on work if they are not making "meaningful" progress on diversity.

Louise Pentland, the company's chief business affairs and legal officer, has led a review that has seen PayPal contact all of the law firms it uses to gather information on the diversity of their workforce, with a particular focus on whether they are supporting up-and-coming female and minority lawyers.

Pentland told Legal Week: "We will, in future, be making our decisions of where we put work based on firms that really do support and advocate diversity."

Firms that are unable to show evidence of "meaningful progress in a reasonable time" will not be used by PayPal in future.

PayPal does not have a formal legal panel, but firms it has worked with in recent years include Hogan Lovells, Olswang, Sidley Austin, Allen & Overy and Arthur Cox.

Pentland initially set out her intention to set diversity goals for PayPal's legal advisers not long after joining the company last April. In December 2015, she told Legal Week sister title The Recorder: "I will not just stand by and let this be another decade of only dealing with white men in law firms. This has to change."

Pentland joined PayPal as general counsel last year after 16 years at Nokia. She was recently promoted to an expanded role as chief business affairs and legal officer, taking on additional responsibilities for government relations, social innovation and communications.

On carrying out her plans, she told Legal Week: "It isn't meant to be a light switch you turn on and off, but there are firms showing that they are willing to make changes.

"It's things like: maybe the relationship partner today is a man but if you tell me you have a succession pipeline of three women, or two women and a man of colour; then ok, so now I feel like you're working to make a change."

The initial review has now been completed but Pentland and her legal team will continue to monitor the information in future.

Pentland discussed the initiative in a recent interview for Legal Week's Top 20 Legal IT Innovators report, saying: "There's a responsibility here to drive change… because that change isn't going to be homegrown in these big law firms – they've been at it, quite pathetically, for years. I still hear from these firms who parade diversity numbers of 20% or 25%, telling me all the reasons why it's hard, instead of focusing on striving for 50%.

"I have great diversity in my team – men, women, ethnic backgrounds… I am very focused on picking law firms that really emulate our company's values – diversity and inclusion. Some are trying, and some are telling me they're trying. All the big law firms have an incredible way to go."

Pentland is one of a growing number of in-house lawyers making efforts to push the legal profession forward on diversity, with Uber general counsel Salle Yoo recently calling on clients to support law firm diversity efforts by sending more work to female lawyers.

Speaking at an event for this year's 65 Women Leaders in Tech Law, Yoo said: "Women cannot become partners, and they certainly cannot become powerful partners – ones that could demand and effect change – without a book of business. If we fail to be intentional about who we call [with new work], we are failing to optimise the opportunity that we have, as clients, to effect real change in law firms."

Elsewhere, Microsoft's chief legal officer Brad Smith recently revealed that more than $100m (£81m) of the tech giant's legal spend since 2010 has gone to women and minority-owned law firms.

Legal Week Intelligence, in association with Fulcrum GT, recently published the first edition of its Top 20 Legal IT Innovators report, which profiles the law firm leaders, in-house lawyers and tech pioneers driving change in the legal profession. Click here to download the report from Legal Week Law (free registration required).