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The Future of Diversity, Equity, and Inclusion in the Private Sector


It’s no secret that historically, the legal field has long been one of the least diverse professions in the US. Between 1950 and 1970, a mere 3% of lawyers were women. Since then, the percentage has steadily increased, reaching 20% in 1991, and ultimately 37% in 2021. While the gender gap has waned over the years, racial diversity has remained comparatively sparse. Lawyers of color made up 12% of the profession in 2012, reaching a mere 19% over the past decade. In spite of these low numbers, various studies have underscored the positive impacts of a diverse workplace––from increased profitability to higher engagement levels. Over the years, numerous law firms have introduced diversity fellowships to address this issue, aiming to attract talented candidates from non-traditional backgrounds. Concerned with ameliorating the lack of diversity in professional settings, these initiatives possess certain practical characteristics similar to college admission’s affirmative action programs. These practices came under fire this June.

In Students for Fair Admissions v. Harvard (SFFA), the U.S. Supreme Court addressed the use of race in college admissions. The Court overruled precedent, holding that universities may no longer use race by itself as a “plus factor” when granting admission. The Court argued that using race as a plus factor would inevitably result in impermissible race stereotyping. Quickly after the Court’s decision, State Attorneys Generals from around the country sent a letter to Fortune 100 CEOs arguing that “[t]reating people differently because of the color of their skin, even for benign purposes” is unlawful and may result in serious legal consequences. Two days later, Senator Tom Cotton wrote a letter to 51 law firms warning them that race-based hiring practices commonly found in Diversity, Equity & Inclusion (DEI) initiatives are “unlawful.” On August 22, 2023, the American Alliance for Equal Rights (AAER) filed separate lawsuits against two major law firms––Perkins Coie and Morrison Foerster––alleging that the firms’ diversity fellowships are “unlawful in light of the U.S. Supreme Court’s recent decision overturning affirmative action.” The question facing law firms across the country was: how might the SFFA decision impact the private sector?

State Action Doctrine and Federalism-Based Limits on Congress’ Authority

Typically, private companies fall outside the scope of the U.S. Constitution. Meaning, a private company cannot violate an individual’s rights granted by the Constitution. For example, the First Amendment only safeguards an individual’s freedom of speech from government censorship. Therefore, a private company could fire an employee for saying things on the job that the company doesn’t agree with. This idea––that the federal government may only regulate government actors––is referred to as the state action doctrine. The federal government also has restrictions on what it can force states and private businesses to do. The anti-commandeering principle of the Tenth Amendment grants any powers not specifically laid out in the Constitution to state governments and prohibits the federal government from forcing states to take specific actions. This essentially means that the federal government cannot pass a law and require states to enforce it in their sovereign capacity. However, in situations involving interstate commerce, Congress may use the Commerce Clause to pass regulations that apply to states and private businesses (see Heart of Atlanta, Inc. v. United States).

When the Supreme Court decided SFFA v. Harvard, the Court was focused on the actions of colleges and universities. SFFA brought claims against the universities under the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act of 1964. The Court analyzed whether the universities had violated federal law by using race as a factor in their admissions decisions. When determining how the laws applied to private colleges (like Harvard), the Court stated that “[t]he Equal Protection Clause operates on States. It does not purport to regulate the conduct of private parties. By contrast, Title VI applies to recipients of federal funds—covering not just many state actors, but many private actors too. In this way, Title VI reaches entities and organizations that the Equal Protection Clause does not.” The Court ultimately held that use of race as a “plus factor” when making admissions decisions violates federal law. While the Court did not directly address the use of race-conscious initiatives in corporate programs, the final conclusion arguably opened the door to reverse discrimination claims.

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AAER Takes On Diversity Fellowships

Not long after the SFFA decision, the AAER sued Perkins Coie and Morrison Foerster, arguing that the firms’ diversity fellowships violated the Civil Rights Act of 1866. Perkins Coie created its Diversity & Inclusion Fellowship for first-year law students in 1991 and has continued to offer the program every summer. In 2020, the firm introduced a second-year law student diversity fellowship. To qualify for these prestigious fellowships, candidates must meet a diversity requirement specified by the firm. This requirement was listed as “member[ship in a group] historically underrepresented in the legal profession, including students of color, students who identify as LGBTQ+, and students with disabilities.” Perkins Coie invited applications from candidates who are diverse in one or more of the ways listed above. Similarly, Morrison Foerster (“MoFo”) began its Keith Wetmore Fellowship for Excellence, Diversity, and Inclusion in 2012. The fellowship criteria had indicated the firm was looking for candidates who are members of historically underrepresented groups in the legal industry.

The complaints in relevant part claimed that the diversity fellowships were exclusionary, noting that applicants “do not qualify unless they are ‘students of color,’ ‘students who identify as LGBTQ+,’ or ‘students with disabilities.’” For the reasons discussed above, the AAER could not bring suits under the Equal Protection Clause or Title VI of the Civil Rights Act of 1964. Rather, the group brought the case under the lesser-known Section 1981 of the Civil Rights Act of 1866, a federal law prohibiting discrimination on the basis of race, color, and ethnicity when making and enforcing contracts. Congress used its power under the Commerce Clause to allow Section 1981 to apply to all private employers. While Section 1981 requires a heightened standard for causation, the SFAA decision likely created a more concrete path towards satisfying this standard.

Lawsuits Dropped

While the firms intended to defend the lawsuits, they also made changes to their fellowship applications––ultimately leading AAER to drop the suits. MoFo amended the language for its fellowship, which now invites applicants with a “demonstrated commitment to diversity and inclusion in the legal profession” to apply. Not long after, Perkins Coie opened its Diversity & Inclusion Fellowship to all students who are in good standing in their first year at an ABA-accredited law school. Perkins Coie further clarified that the firm “welcomes applications for the Diversity & Inclusion Fellowship Program from all eligible applicants regardless of race, color, religion, sex, age, national origin, veteran status, sexual orientation, gender identity/expression, disability status, or any other identity.” Both firms also indicated that they were in the process of changing the fellowship requirements in the wake of SFFA v. Harvard, before the lawsuit from the American Alliance for Equal Rights was filed.

While the claims were ultimately dropped, AAER achieved its primary goal by effectively ending recruiting methods that affirmatively seek out racially diverse candidates. These “spite suits” have been percolating since SFAA was decided in June, leaving many wondering whether this holding could truly be applied to private law firms. Even now, the matter remains speculative as the Perkins and MoFo’s cases never reached adjudication. While this outcome may seem bleak for the future of diversity in the legal profession, diversity initiatives may be able to proceed so long as firms are cautious to employ broader language to avoid future claims similar to AAER’s.

*The views expressed in this article do not represent the views of Santa Clara University.


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