Coke demands that its law firms engage in unlawful discrimination

In January 2021, the general counsel of Coca Cola sent a letter to the law firms that represent it. The letter demanded, among other things, that these firms “commit that at least 30% of each of billed associate and partner time will be from diverse attorneys, and of such amounts at least half will be from Black attorneys.”

To enforce this demand, Coke’s general counsel warned that failure to comply on a given new legal engagement over two quarterly reviews “will result in a non-refundable 30% reduction in the fees payable for such New Matter going forward until the commitment is met and, continued failure may result in your firm no longer being considered for. . .work.” Meeting Coke’s diversity requirements will also “be a significant factor in determining. . .inclusion and ongoing status on [Coke’s soon-to-be -released] panel” of “preferred firms.”

Except in very limited circumstances, it is illegal for an employer to make hiring, staffing, and assignment decisions based on race. It is also illegal for a company to require its contractors to do so. If a company demanded that law firms staff its matters with only White attorneys, no one would deny the illegality of the mandate.

What is Coke’s basis for imposing quotas on its law firms? The general counsel’s letter expresses alarm over the color of the “new partner headshots” he sees on law firms’ websites. He claims that at the rate things are going, the representation of Black equity partners at law firms won’t reach parity with Black representation in the U.S. population until 2391.

But racial quotas can’t be justified based on a gap between the percentage of Blacks among law firm partners and the percentage of Blacks in the general population. Law firm partners aren’t selected from the general population, they are selected, by and large, from the population of law firm associates, partners at other firms, and high-ranking lawyers at corporations.

Black representation in that population is way below such representation in the general population.

Law firm associates aren’t selected from the general population, either. Big law firms choose their associates mostly from the pool of graduates with good grades from good law schools. Black representation in that population is less than Black representation in the general population.

In fact, according to the ABA’s 2019 report, Blacks make up only 5 percent of Americans licensed to practice law. Yet, Coke demands that Blacks account for 15 percent of billable hours on its work. In other words, it is demanding that law firms deploy Blacks in wildly disproportionate numbers under any non-frivolous legal analysis.

It’s also worth noting that Black representation even in the general U.S. population is less than 15 percent. Yet, Coke has set its requirement for Black representation on its matters (in terms of hours billed) at 15 percent.

Coke’s demand that 30 percent of billable hours go to “diverse” lawyers is also curious. The general counsel’s letter does not provide any indication — even a frivolous one — that racial/ethnic groups other than Blacks are underrepresented at the law firms it uses.

Before firms lawfully should even think about making hiring, staffing, and assignment decisions based on race or ethnicity — and before their clients can lawfully demand this — there must be clear evidence of past racial discrimination by law firms. Under a 1979 Supreme Court decision, United Steelworkers v. Weber, discrimination can be justified “to eliminate manifest racial imbalances in traditionally segregated job categories” where “the plan is a temporary measure [and] it is not intended to maintain racial balance, but simply to eliminate a manifest racial imbalance.” An “absence of any reference to or showing of past or present discrimination in the [relevant] industry is fatal” to a racially discriminatory program. Schurr v. Resorts Int’l Hotel, Inc., 196 F.3d 486, 497 (3rd Cir. 1999). [Note: The original version of this post mistakenly attributed the language of the preceding sentence to the Supreme Court.]

Coke’s letter cites no past or present discrimination in the legal industry. It does not point to any manifest imbalances in Black representation at the law firms it utilizes. And it does not tie its discriminatory program to any reasonable measure of imbalance.

Nor, of course, does Coke suggest that it has a history of selecting law firms in a racially discriminatory manner.

Finally, Coke’s letter does not describe a “temporary measure.” The letter describes a quota regime of indefinite duration.

In fact, it promises a quota regime that will become more onerous over time. Law firms will be expected to increase the percentage of hours billed by Blacks and “diverse” lawyers as a whole to 25 percent and 50 percent, respectively.

Coke has brazenly announced that it is basing contracting decisions on race. Based on race, it will decide which firms to continue doing business with and how much the firms will be paid. Coke will pay firms that make race-based assignment decisions more for the same work than firms that don’t discriminate in this manner.

Coke has made it clear that its decision to rely on race is unmoored to findings of discrimination, past or present. It has done so by setting its racial quotas at a levels that do not measure discrimination.

Accordingly, Coke is vulnerable to being sued for racial discrimination. So are the individuals at the company who are behind its discriminatory policy. They can be held personally liable under Section 1981 of the Civil Rights Act of 1866.

Coke can take comfort from the fact that no law firm is likely to sue the company or its officers. Similarly, no lawyer at one of these firms is likely to challenge Coke’s practice.

However, I invite anyone with knowledge about how Coke’s policy is being implemented at law firms and/or the effects of that implementation to email us at Power Line. Requests for anonymity will be honored.

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