DEI: Anticompetitive, or a recruitment necessity?

Less than two weeks ago, US Federal Trade Commission (FTC) chair Andrew Ferguson issued a letter to 42 major law firms across the country regarding what the American consumer affairs watchdog suggested were potentially unfair and anticompetitive employment practices.

The recipient firms all participate in the Mansfield Certification program, created by for-profit consultancy Diversity Lab, which prescribes criteria for DEI-based employment standards and encourages law firms to liaise about common implementation of those criteria.

The FTC, in its letter to the law firms, warned that “potentially anticompetitive collusion between law firms on DEI metrics can include quotas by which they agree to compose panels of job candidates based on race, sex, or other personal characteristics other than the candidate’s merit, or by which law firms agree to make final decisions about hiring and promotions based on those personal characteristics”.

According to Reuters, Diversity Lab has offered a certification for law firms for almost a decade that ensures at least 30 per cent of their candidates for leadership roles are underrepresented lawyers.

Ferguson said, in a separate statement, that “such agreements can distort competition for labour in legal professions, including along dimensions like hiring decisions, pay, and promotions”.

Among the 42 BigLaw firms to receive the letter were Dentons, DLA Piper, K&L Gates, and White & Case – all of which operate in Australia.

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The move follows that of the US Equal Employment Opportunity Commission, which in March 2025 sent letters to 20 law firms, including some with offices in Australia, seeking information about their DEI-related employment practices.

It also follows Lawyers Weekly’s conversations with numerous national and global firms operating in Australia in 2025 (here and here), in which those BigLaw players detailed their commitments to DEI in the face of a shifting sociopolitical landscape.

Ahead of publishing this story, Lawyers Weekly reached out to the four aforementioned BigLaw firms operating in Australia that received the FTC letter to inquire about their response to the correspondence, how they plan to act moving forward, and whether the letter would influence their commitment to diversity, equity, and inclusion (DEI) Down Under moving forward.

Dentons and White & Case declined to comment, while DLA Piper and K&L Gates did not respond by the time of filing.

Candidate demands

However, while there is significant pushback in the United States to DEI, it appears to remain front of mind for candidates seeking employment with Australian law firms and in-house teams.

According to LOD director of people and development Sofia Khan, legal candidates are – now more than ever – seeking consistency and authenticity from prospective employers on the DEI front.

The global political landscape is increasingly becoming divisive, she mused, with many people feeling isolated and losing their “sense of belonging” in countries they have called home their entire lives, or new countries they have recently settled in.

As employers, she surmised, “our role becomes even more critical, and now is not the time to go backwards”.

“We need to continue with the progress we’ve made with providing diverse, equitable and inclusive workplaces. Candidates are increasingly seeking workplaces aligning with their values; cultures that are inclusive, supportive of varied learning, personal and family needs; equitable in remuneration and benefits; and genuinely invested in developing and advancing diverse talent into senior and leadership roles,” she said.

“If people can’t see people ‘like them’ succeeding in a workplace, it’s harder for them to envision a successful future there.”

“Law firms or organisations that pull back on DEI initiatives will face a real risk of losing high-quality, diverse talent from their recruitment processes, or a general decline in staff retention.”

“There’s also the potential for negative impacts on client relationships, as many clients expect clear, ongoing DEI commitments from their panel firms.”

nrol CEO and co-founder Jesse Shah said that, from what he’s observed, DEI is no longer a buzzword for candidates, but rather “a test on the firm’s leadership and culture”.

“Lawyers, particularly, are paying close attention to how firms behave when there’s external or political pressure. When firms quietly pull back on DEI or inclusive hiring, it’s noticed,” he said.

“Candidates read that as a lack of conviction, and it raises a simple question: ‘Will this firm genuinely back me when it counts?’”

Firms that stay clear and consistent are winning talent, Shah continued.

“In a tight market, lawyers have choice, and they’re choosing firms that stand for something,” he said.

And, Khan added, for alternative legal service providers like LOD, it creates a season of continued opportunity.

“The ‘new law’ space has been founded on challenging traditional norms within the legal profession, and creating alternative career pathways. For the ALSPs [that] have made a conscious investment into DEI, now is not the time to slow down,” she said.

“For those that are yet to start, it’s a great time to begin the investment. At LOD, DEI has long been a key part of our DNA, and we know our business is stronger for it. We recognise the responsibility we have to provide a safe environment for our people. That responsibility extends to ensuring our people feel seen, valued and included.”

Similarly, Khan observed, if people don’t see their values reflected in a workplace, they will simply go and look for one where they do.

“As a profession, we’ve finally started to make progress in this space, and the last thing we need to do is go back,” she said.

In December, Justice Dina Yehia of the Supreme Court of NSW spoke about the global backlash to DEI, arguing that Australian lawyers should “not be intimidated” by the tide against efforts to make the profession more diverse and inclusive.