Coca-Cola debuted a new policy this year implementing a diversity quota for the outside counsel it retains, saying it will only hire law firms that commit to providing 15 percent of billed time from black attorneys, higher than the percentage of African Americans in the U.S. population.
On January 28, the soft drink titan’s legal department wrote a letter to the company’s U.S. outside counsel outlining Coca-Cola’s new requirement that law firms must “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.”
Those requirements will tighten over time, with the “ultimate aspiration” that “at least” 50 percent of billed time will be from “diverse” attorneys, and 25 percent from black attorneys. Firms are expected to work to apply that standard to their existing work with Coca-Cola as well.
African Americans make up about 13 percent of the U.S. population. The percentage of black lawyers is much lower, African American attorneys making up just five percent of all U.S. lawyers, the American Bar Association reported last year.
Failure to comply with the diversity requirements on new legal engagements over two quarterly reviews could result in Coca-Cola slashing compensation for the firms by 30 percent for the new work, and continued failure could result in firms no longer being considered for work with the mammoth soda company.
Coca-Cola will also incentivize law firms to meet the diversity requirements by making compliance “a significant factor in determining” whether firms are included on the company’s upcoming panel of “preferred firms.” The company encouraged firms to reach out and work with outside firms if they are unable to meet the diversity requirements internally.
“I write you with a heavy heart,” Bradley Gayton, senior vice president and general counsel of the Coca-Cola Company wrote in his letter to the company’s outside counsel.
Gayton declared that Coca-Cola’s previous efforts to promote diversity “are not working” as apparent from the “alarming number of new partner headshots” with an “obvious lack of diversity.”
“We have a crisis on our hands” that requires “specific actions that will accelerate the diversity of the legal profession,” he wrote.
“The time has come for us to stop championing good intentions and motivations, and instead, reward action and results. Quite simply, this is now an expectation,” Gayton wrote in a statement accompanying the letter, adding that his hope is that Coca-Cola’s law firm partners “view this as an opportunity to effect real systemic change.”
Hans Bader, a longtime civil rights lawyer who served a stint in the federal Office for Civil Rights, described Coca-Cola’s policy as “illegal.”
“Affirmative-action goals are supposed to be tied to the qualified labor pool, which is less than the general population for skilled jobs such as legal jobs,” Bader told The Daily Wire, citing the 1984 case Janowiak v. South Bend, which emphasized that the skilled labor force is what matters in affirmative action, not the general population.
Bader also noted that Coca-Cola’s policy goes against the purpose of affirmative action in that it appears to be “a permanent demand and aspiration.”
“Affirmative action goals are supposed to be temporary, and used to ‘attain’ but not permanently ‘maintain’ racial balance,” Bader said, citing the Supreme Court’s 1979 decision in Steelworkers v. Weber, which held that the Civil Rights Act did not bar employers from favoring women and minorities.
Bader also said Coca-Cola’s policy likely violates another law that was “interpreted as flatly prohibiting racial quotas” by the Supreme Court in 2003.
Retired attorney Paul Mirengoff wrote in a blog for Power Line that Coca-Cola has left itself vulnerable to being sued for racial discrimination with its new diversity policy.
“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,” Mirengoff wrote.
Correction: A previous version of this article incorrectly referred to Janowiak v. South Bend as a Supreme Court case. Janowiak v. South Bend was a federal appeals court case at the U.S. Seventh Circuit Court of Appeals.