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Directing next-level diversity.

Summary: The business case for diversity and inclusion has been made,” says Alan Bryan, associate general counsel, outside counsel management at Wal-Mart Stores Inc. He's not ...

The business case for diversity and inclusion has been made," says Alan Bryan, associate general counsel, outside counsel management at Wal-Mart Stores Inc. He's not wrong. A 2014 Gallup study of more than 800 business units found that gender-diverse business units increased profits by at least 14 percent over those dominated by one gender. Other studies have resulted in similar findings for racial diversity.

And yet, many corporations struggle to initiate diversity programs. For some, the output seemingly wouldn't match the return. Others may not see the potential benefits. Still others may be interested in such a program, but may not know where to start.

Now more than ever, the legal department has been tasked with driving business initiatives, and taking the lead on corporate diversity programs is perhaps the most innovative way of doing just that. The legal departments at Morgan Stanley and Wal-Mart have led the charge in promoting diversity initiatives for other business units to follow, and lessons from these companies provide other in-house counsel with the best way to jumpstart a company's diversity program: a healthy mix of top-down and bottom-up approaches.

Tone from the top

Every action a company considers is supposed to be performed with broader business goals in mind. The legal department is no exception. Mike Henry, chief compliance officer of Morgan Stanley's Merchant Banking and Real Estate Division and the chair of Legal and Compliance's Diversity & Inclusion Committee, says that his team's goal isn't all that different from a business objective.

"At its core, the goal of the committee is to really be in line with the core of the broader Legal and Compliance Division," Henry says. "In that regard, the Legal and Compliance Division is looking to deliver high-quality advice to its clients and the business."

Part of that high-quality advice includes diversity. The firm leaders at Morgan Stanley specify certain diversity metrics that all business units need to hit, Henry says, but his committee seeks to go above and beyond. "The general counsel is extremely proud compared with the rest of the firm in how we've performed. We are definitely viewed as a thought leader, and due largely in part to the people that have preceded me, we've gone from being a group of four of five people in a room who were passionate about it to really being a part of the fabric of the firm," he explains.

Now, he says, his committee includes 260 members as of the beginning of May. Meg Cimino, executive director of legal and compliance with Morgan Stanley Wealth Management, adds that members cannot simply join the team, but rather must make a commitment to be engaged and join a subcommittee. In that way, she says, the committee demonstrates consistent value to the rest of the firm.

Nate Saint-Victor, an executive director in Morgan Stanley's Legal and Compliance Division and the committee's former chair, agrees that it starts with a top-down approach. "Our chief legal officer in meetings will highlight main areas of focus. Points like the Volcker Rule will be on there, but diversity has been one of the main focus areas each of the past two years, if not before then. If you're giving it from the top down, then it's an important area of focus for everybody, starting with the managers," he explains.

At Wal-Mart, Bryan's capacity as AGC of outside counsel management has allowed him to partner with a more diverse spread of outside counsel, including women- and minority-owned law firms. He says that his company's emphasis on diversity, particularly when it comes to outside suppliers, allows him to promote diversity within the legal department.

"Being more diverse gives us certain perspectives, makes us more talented, and makes us more well-rounded, not just as a legal department but as a company," Bryan says. He also adds, "Having diverse counsel is important because we think that everyone matters, and there's a certain strength in diversity and inclusion that allows us to have better business results."

Started from the bottom

But of course, a top-down mandate to increase diversity means nothing if the people of the legal department do not accept it. Bryan says that beginning diversity efforts within the company can begin with a single meeting.

"Simply put, I believe in the power of the small," Bryan says. "By that, I mean taking inclusion down to a relationship level. That's where it starts for me: ensuring that you have personal and professional relationships with diverse individuals, ensuring those relationships are meaningful and not just one-off meetings."

To that end, Bryan used his association with the National Association of Women Lawyers (NAWL) to begin the NAWL Challenge Club. Only one year old, the program's initiative, he says, is to build relationships between corporate counsel and women outside counsel, with the ultimate goal of seeing more women promoted as equity partners in law firms.

"We want to build personal and professional relationships," Bryan says, "because relationships lead to trust; trust leads to that first work assignment; that first work assignment leads to a book of business; that leads to empowerment of a woman attorney in a law firm, and empowerment leads to partnership and leadership positions."

At Morgan Stanley, Henry says that his committee looked at one key question when looking for diverse candidates: "How do you partner with organizations that are already out there to deal with that demographic, so that we can help build that pipeline?"

The Morgan Stanley committee breaks its efforts down into three main buckets: short-term, intermediate, and long-term. Of particular interest is the long-term planning, as Morgan Stanley goes so far as to offer high school internships for diverse candidates through programs such as Legal Outreach. The main benefit with these programs, though, comes after the actual internship is over.

"We don't just see these folks during that time of the year, but we try and build the long-term relationships that we can ... see how they're faring throughout their career, and maybe one day, they could be hired full-time for the firm," Henry says. "It seems like a very theoretical approach that we're taking, but we're starting to see some tangible possibilities of hiring people."

Creating the perfect blend

When mixing both top-down support and grassroots diversity efforts, the results can be strong. Many legal departments often have one or the other, but for true diversity to occur, GCs and other senior-level attorneys need to work hand-in-hand with the lawyers who will eventually carry out the diversity initiatives on the ground.

Mixing both relationships with institutional support, Henry says, is how Morgan Stanley's program both continues to grow and provides value to the company. "I think the real energy and vibrancy comes from the bottom up--the people on the front lines are really passionate about what they're doing--but ultimately in terms of gaining real traction company-wide, clearly you need buy in from people at the top." Henry also adds that the people on the front lines should be "excellent lawyers and compliance people," as having them support diversity "brings with them a certain credibility."

Over time, he says, the results will get there, even if they're not readily apparent at the start of a program. "It gets to a point where it becomes a positive feedback loop," Henry says. "That's what we're seeing now; we're 10+ years in, and we're at the point now where there's a real ownership and pride over what we're doing here. It's not just a check-the-box thing."

Bryan agrees that combining senior leadership and smaller personal relationships is necessary, and he cautions to make sure that all interested parties can be involved with a legal department's efforts. He adds, "You must be intentional in your efforts to diversify internally, which means everyone, I mean everyone, must have a seat at the table and a voice at the table to ensure you get the best results internally."

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Author:Zach Warren
Publication:Inside Counsel
Date:Jun 1, 2015
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