The changing nature of law firm business models has left many general counsels in the dark when it comes to understanding who at their law firm is being rewarded for the dollars being spent with the firm.
In fact, a recent survey of general counsels and senior in-house lawyers found that over half of the respondents were completely unaware of how origination credit is awarded.
Given origination credit is the largest factor driving ownership stakes at law firms, this statistic is alarming.
But it’s particularly alarming considering that our latest report found that the average number of Black equity partners at elite law firms was just 1.84% in 2019. A less than one percent increase from where that number stood in 1991.
This lack of awareness by general counsels is detrimental to Black and other underrepresented attorneys that often get snubbed from origination credit. All too often the credit for client acquisition is “already spoken for”, resulting in lower compensation for the attorney and oftentimes, prompts the attorney to leave the firm altogether.
Clients – corporate legal departments – have the power to change this narrative. Data is helping drive the charge.
It’s increasingly important to companies that their vendors reflect their values – especially when it comes to diversity. But to ensure real progress among minority partners and associates, clients need to understand the implications of origination credit and the negative role it plays in holding back minority lawyers from achieving equity partner status.
Origination credit should not be doled out based on internal political games – though that is precisely how it is most often done. It should be consciously allocated by a client who clearly communicates which partners they consider core to the relationship.
Corporate legal departments keep BigLaw alive, yet most underestimate their leverage. Companies must hold their law firms accountable for how partners are compensated and how they prioritize diversity initiatives.
GCs, DGCs, and their teams must evaluate which partners are important to their portfolio of work, determine whether or not their firms are seeking out or nurturing minority partners, and monitor whether those partners are actually getting origination credit for the large sums of money being spent with the firm. If not, in order to promote real progress in diversity, companies must be willing to walk away.
These aren’t always easy conversations to have, but they’re necessary to drive change and create a system in which minority lawyers can thrive.
To help you get started, we have created a free template letter that corporate legal departments can utilize to kick off the conversation on diversity with their law firms. Download your free origination credit letter template today!
Get in touch with our team of legal billing and data experts to find out how Bodhala can transform your legal department.