The chief legal officer and general counsel for American company HP Incorporated has issued a letter to prospective firms, introducing a new “diversity holdback” mandate.
General counsel Kim Rivera used her 8 February letter to appeal to private practice colleagues “to help make a positive impact on the profession.”
“We have invested in driving diversity at all levels, and I expect no less from our outside law firm partners,” Ms Rivera said.
The fee provision allows for HP to withhold as much as 10 per cent of fees invoiced by law firms that fail to meet HP’s minimal diverse staffing requirements.
The mandate applies to all US-based law firms with more than 10 lawyers and requires that the business have fielded one “diverse firm relationship partner” as identified by HP for billing and staffing issues.
Otherwise, private firms must employ “at least one woman and one racially or ethnically diverse lawyer” who has responsibility of at least 10 percent of the billable hours worked on HP matters.
A summary of the program limits the definition of a “diverse attorney” to disability status, race, ethnicity, gender and LGBT status.
According to HP, the staffing requirement is set as a baseline and “more diverse composition of HP teams than required by the diversity holdback provisions will be viewed more favourably.”
In a document annexed to Ms Rivera’s letter to prospective legal service providers, the company said that the diversity mandate will apply from the second year that HP engages a law firm. The time period is being trialed so as to ensure private practices have sufficient time to meet HP’s diversity metric, documents suggest.
Ms Rivera added that HP planned to track the diverse makeup of the teams from all law firms. Those firms unable to meet the provision would also be affected in a performance review to be considered among HP’s “preferred providers”.
“I am counting on your courage and vision to support both the letter and spirit of the diversity holdback provision. We hope it will serve as a meaningful tool to improve diversity in our organisations and our working teams,” Ms Rivera said.