$10 million in 1998. Based on a recommendation from the people with disabilities task force, in October 2001 IBM launched an initiative focused on making all of its products more broadly acces sible to take advantage of new legislation—an amendment to the federal Rehabilitation Act requiring that government agencies make accessibility a criterion for awarding federal contracts. IBM executives estimate this eff ort will produce more than a billion dollars in revenue during the next fi ve to 10 years.” Workforce diversity helped IBM attract a more diverse
base of customers that included women and minority- owned businesses. As T omas put it: “IBM’s eff orts to develop the client base among women-
44
owned businesses ... quickly expanded to include a focus on Asian, black, Hispanic, mature (senior citizens), and Native American markets. T e Market Development organization has grown revenue in the company’s Small and Medium- Sized Business Sales and Marketing organization from $10 million in 1998 to hundreds of millions of dollars in 2003.” When IBM became more diverse, its revenues skyrocketed.
DIVERSITY: THE POTENTIAL FOR MUCH HIGHER LAW FIRM PROFITS
T e benefi ts corporate America reaps from diversity apply to law fi rms. Douglas E. Brayley and Eric S. Nguyen, authors of “Good Business: A Market-Based Argument for Law Firm Diversity” in T e Journal of the Legal Profession in 2009, studied the data from the 200 highest-grossing fi rms (the Am Law 200). Highly diverse law fi rms report, on aver- age, much higher profi ts per partner and revenue per lawyer than the rest of the Am Law 200 fi rms. Even controlling for hours, location, and fi rm size, the
study’s authors found that “diff erences in diversity are signifi cantly correlated with diff erences in fi nancial perfor- mance.” In fact, according to the study, “a fi rm ranked in the top quarter in the diversity rankings will generate more than $100,000 of additional profi t per partner than a peer fi rm of the same size in the same city, with the same hours and leverage but a diversity ranking in the bottom quarter of fi rms.” What is stunning about these fi gures is that the most
diverse of the Am Law 200 fi rms could be far more diverse and inclusive than they currently are. All of the top fi rms are not bringing minorities into the partnership ranks at the numbers they should. For example, the fi rm Wilson Sonsini
DIVERSITY & THE BAR® MAY/JUNE 2013
Goodrich & Rosati has 25.4 percent minority lawyers, but less than one in fi ve (18.5%) minority partners. T e $100,000 per partner additional profi t diff erential could presumably be far greater. In addition, money at law fi rms is of course not equally
distributed among partners. T ose at the top are paid far more than the partners below them. T at means those in the highest positions of law fi rms, those in the best position to change the direction of their fi rms, have the greatest eco- nomic incentive to embrace diversity and inclusion. T ey stand to profi t the most from it. To do so, they should not only recruit diverse talent, but retain it, engage it, promote it, and invite it to the management table. T e reason diversity works is that when a company’s
leadership becomes more diverse, far more changes than the fact the people in it become a melting pot microcosm of their community. Studies show the company performs better. T ere may be a host of reasons why. Perhaps women and
minorities see that they have a real opportunity for advance- ment and become more motivated to not only stay in the company, but invest themselves in its success. Maybe when companies become more diverse, they are
better able to solve problems and seize potential opportuni- ties. T ere is data suggesting so. According to Scott E. Page, author of the 2007 book T e Diff erence: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, on almost every measure, greater racially, ethnically, and culturally diverse workplace teams function more eff ec- tively than more homogenous teams. In fact, Page found diverse thinkers (defi ned as those with diff erent educational backgrounds, experience levels, and/or racial, gender, and ethnic identities) are markedly better at solving problems than teams selected for their intellectual ability. T e diverse team’s collective intelligence, he found, is generally signifi cantly greater than a team whose individual mem- bers are uniformly “smart.” According to Deloitte, Only skin deep? “Re-examining the Business Case
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