Coke Sets Diversity Targets, Financial Penalties for Outside Lawyers

Coca-Cola said it will require diversity among law firms who bill it for work in the United States — and reduce payments if they don’t comply.

The Atlanta-based beverage giant’s general counsel, a recent hire from the top ranks of Ford, disclosed the changes in a letter Thursday to law firms the company uses.

“Quite simply, we are no longer interested in discussing motivations, programs, or excuses for little to no progress — it’s the results that we are demanding and will measure going forward,” Bradley Gayton wrote.

And he told The Atlanta Journal-Constitution that he hopes other major companies make similar moves to “change the trajectory” of diversity in the field.

The specific targets and penalties come after many Fortune 500 companies pledged to address racial inequality more aggressively in the wake of last year’s widespread Black Lives Matter protests.

Coke said it will require quarterly reporting about the makeup of legal teams that do work for it and self identify as American Indian, Alaska Native, Asian, Black, women, Hispanic/Latinx, LGBTQ, Native Hawaiian, Pacific Islander or persons with disabilities. For those working on new matters for Coke, “at least 30 percent 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.”

It said the percentages, which are roughly equal to those of the U.S. population overall, will be adjusted over time to eventually hit at least 50 percent of billed time coming from diverse attorneys, with half from Black attorneys.

Firms that fail to meet the targets will be docked 30 percent of their fees, and those who continue to come up short may no longer be considered for Coke work.

Other major U.S. companies have pushed for greater diversity among their law firms, with some saying they will cut fees for those who don’t comply.

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It’s common for big law firms to stress on their websites how much they value inclusion and diversity. Yet U.S. law firms tend to be far less diverse than the nation as a whole, according to a 2019 report by the National Association for Law Placement.

About one-fourth of law firm associates are people of color, according to the report. Less than 5 percent of all associates were Black, compared with more than 13 percent of the overall U.S. population. Among law firm partners, just under 2 percent were Black and less than 10 percent of all partners were people of color.

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