It’s common knowledge that the legal industry has long had a diversity and inclusion problem, and law departments are still struggling to improve diversity in their outside counsel.

The good news is that legal departments can go a long way toward addressing these struggles in their hiring decisions.

The days when law departments had only two choices – keeping work in-house or sending it outside to a law firm – are over.

Today, law departments have the additional option of turning to alternative legal service providers (ALSPs), particularly interim counsel providers.

ALSPs’ Role

The legal industry’s diversity problem recently took center stage when Coca-Cola General Counsel Bradley Gayton criticized “highly unproductive” industry efforts to achieve diversity, and said that good intentions were no longer enough. 

Coke’s law firms must now staff at least 30% of new matters with diverse attorneys or risk a reduction in legal fees or complete removal from the roster.

This is only the latest in a string of initiatives designed to spur in-house legal departments to advance change by committing to making decisions when retaining outside legal services that help increase diversity and inclusion. 

For nearly four years, Diversity Lab’s Mansfield Rule has been working to close the industry’s gender gap, with 117 participant firms signing onto Mansfield Rule 4.0. Similar rules now exist for midsize firms and legal departments. Numerous other diversity initiatives exist across the corporate legal industry.

Law department initiatives directed toward outside counsel are only one piece of the puzzle, however. 

That’s because law firms are exerting less unilateral control over the landscape when it comes to providing legal services. As of the end of 2019, ALSPs had a $13.9 billion legal sector market share, up $3.2 billion from the preceding two-year period, according to Thomson Reuters’ 2021 Alternative Legal Service Providers report. The report also shows that 71% of corporations now use ALSPs.

This means that ALSPs are poised to play a significant role in diversity and inclusion efforts in the legal industry. More and more legal departments today are tracking how their ALSPs perform in terms of hiring, mentoring, and promoting diverse talent. Legal departments can be, and indeed should be, putting as much attention on diversity when hiring ALSPs as they have been in law firm hiring.

In fact, legal departments arguably have more power than ever to impact diversity in the profession through their hiring decisions. Having options beyond the traditional in-house/law firm dichotomy opens the door to selecting legal service providers who prioritize diversity.

Legal tech is also playing a significant role in helping law departments boost their diversity efforts. 

From technology platforms designed to assist organizations achieve greater diversity, inclusion, and equity in their ranks to AI tools that help users define and measure bias to build more diverse teams, innovation is starting to make real strides on the diversity front. 

A consortium of ALSPs, legal departments, and law firms has even launched a data analytics dashboard to help organizations monitor non-financial intelligence, including diversity metrics.

Empowering GCs

If more diversity and inclusion is the goal, law departments need to expand their view beyond law firms and look for legal service providers on all fronts who share their commitment to addressing these issues.

By now, most know the benefits ALSPs can offer in the cost-savings and efficiency departments, but their importance doesn’t end there. 

ALSPs can make a significant difference when you’re looking to diversify your legal representation. 

In 2020, for example, Paragon Legal placed over 100 attorneys on client engagements. More than 60% of these lawyers are women, and more than 40% are from racial minority groups. 

At Paragon Legal, we are very proud of our diversity, but we also know there’s more work to do. 

By expanding the staffing choice beyond hiring a law firm or keeping things in-house, law departments are not only empowered to make better business decisions, they also have new avenues for making real change in industry diversity.