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As Social Impact Becomes The Test, Firms Asked To Step Up

By Jacqueline Bell for Law360

The past few years have been boom times for advocates of socially responsible business practices. The impacts of climate change, a global pandemic and a national reckoning on racial justice have pressed businesses of all stripes to take stock of their own practices, and renew their commitments to do good in the world and do better by their own employees.

These forces are putting new pressures on law firms to dust up their social impact bona fides — and some are finding that making social responsibility a strategic imperative is not just doing good, it may also be good business.

A sense of social responsibility has always been part of the legal profession. Pro bono work, the practice of providing free legal services to those in need, is built into the rules of professional conduct, with the ABA recommending that lawyers “aspire” to deliver at least 50 hours of pro bono legal services every year.

But firms are increasingly being pressed to view their social responsibility mandate as far broader than just the number of hours each attorney works on pro bono matters. Clients, attorneys, advisers and advocates are urging law firms to view social responsibility as a core part of their business strategy, rather than as a side project or something extra attorneys can do in a few hours a year.

“What law firms mostly so far have missed is that their biggest impact on society is the work they’re doing for clients,” said Pamela Cone, founder and CEO of Amity Advisory. “The real solution is not a few days of working on something meaningful and the rest of your life, you know, going back to the grind.”

Under Pressure

Prospective clients are asking law firms for ever more detailed reports on their internal environmental, social and governance performance, or ESG, pushing firms to look within, and reassess, their own practices.

“One of the things that’s forcing change is client audits and assessments,” said Cone. “They’re asking questions about your labor and human rights policies. They’re asking questions about your environmental practices, your ethics and your sustainable procurement practices. And most law firms don’t have a clue how to answer those audits.”

Some corporations are also eager to suss out just how seriously a firm is applying itself to its social responsibility goals, pressing firms on how their ESG efforts are organized and whether top leaders are regularly monitoring those efforts.

“Who is responsible for it? Do they have a partner in charge of it? A team? Or is it a junior administrative person? If it is, then they are probably not taking it that seriously. You want management, top level buy-in,” said Olga Ivannikova, director and founder of Private Goodness, a U.K.-based consultancy.

But clients aren’t the only ones turning a demanding eye on a law firm’s social impact goals. Calls for increased attention to social responsibility are also coming from law firms’ own legal and nonlegal workforces.

A paycheck is only part of what the up-and-coming generation’s attorneys are looking at when considering their next position. Many are looking to work for firms with well-defined approaches to social issues, from diversity and inclusion, to environmental sustainability, to helping those in need. Potential hires are asking far more probing questions about those efforts during the interview process.

“If they want to have the correctly matched talents for their firms, they have to address this if they want to continue the legacy of their firms,” said Gayatri Joshi, executive director of the Law Firm Sustainability Network, a nonprofit focused on environmental sustainability and corporate social responsibility in the legal industry. “That’s become a huge sort of awakening for many law firms, recognizing that it’s important for their legacy.”

The cost for firms that are behind the curve on their answers to questions about their internal workings and values can be high.

“Recruitment and retention are hugely expensive, and it can be disruptive if people leave,” Ivannikova said. “If you have a responsible company, if you look after your people, if you give people opportunities to live their values and if you are a diverse organization, that’s purpose driven, that’s flexible, people are more likely to stay.”

Making it Your Business

Law firms have been slow to realize that doing good can also present good business opportunities, advisers say. Yet, opportunities abound for law firms to do good by focusing on what they do best: providing legal advice and counsel to companies increasingly looking for guidance on ESG matters.

“This whole movement towards ESG is a huge opportunity for law firms to collaborate with their clients for the greater good, because every company is trying to figure out whatever the next normal is going to be. And lawyers are the hub of every industry in the world,” Cone said. “They can affect change, influence better business practices and collaborate with clients on special projects.”

Tim Wilkins, Freshfields Bruckhaus Deringer LLP’s global partner for client sustainability, confirmed that over the past few years, clients have increasingly made sustainability and other ESG principles part of their core strategic initiatives.

“It was clear clients saw that their core business models were going to thrive through their sustainability approach,” Wilkins said. “We wanted to be there to advise them.”

But the sustainability practice is part of the firm’s broader social impact strategy, Wilkins said, and part of the answer to an ongoing question of how the firm can have the greatest social impact.

That cohesive strategy involves making sure the firm is thinking about its own sustainability and ESG practices as well as advising clients. But it also involves taking ESG one step further, and using the firm’s connections and expertise to help bring together a wide range of stakeholders that could include clients, government officials, other public sector players and academia, to address large scale problems.

In one recent example, Freshfields convened the New York Circular City Initiative, bringing together members of the mayor’s office, clients, think tanks and others to work on ways to address some of New York’s greatest challenges by using the concept of circular economics, or sharing and reusing resources for as long as possible to address issues of climate change, waste and pollution.

The result was a report describing how circular economic approaches could spur thousands of jobs and millions of dollars in economic growth.

Freshfields has been down this road before, most notably in its work in 2005 to produce a legal framework for integrating ESG concepts into institutional investment. The report, now commonly known as “The Freshfields Report,” laid the groundwork for the United Nations to launch the U.N. Principles for Responsible Investment. The principles now have more than 3,000 signatories representing more than $100 trillion assets under management.

“That was obviously not a revenue-generating approach, but a way the firm saw its unique skills in having a global firm that could deliver advice … together with partners, local firms that we work closely with, for that type of impact project,” Wilkins said.

Firms looking to jump into more holistic ESG advising services can begin by looking at what their particular skills are in the marketplace, said Wilkins.

“I think that’s the most important piece. What have you been offering as your unique selling points to your clients? And then see how those can fit into clients’ ESG agendas,” he said.

Law firms increasingly see the available opportunities to help clients be ready for market transitions and other changes that are coming, Joshi said. But it’s also important for firms that want to have an ESG advisory practice to also internalize those concepts into their own operations and make sure they focus on their own ESG issues.

“It’s really important for firms to be able to say they have also integrated that into who they are as a law firm,” Joshi said.

Firms can also build a practice that specifically serves social entrepreneurs who launch for-profit businesses that aim to create positive change related to social issues or the environment, said Norman Clark, a lawyer and a co-founder of Walker Clark, an international legal management consulting firm based in the U.S.

Clark, along with co-author Carmen Pombo, founder and CEO of the Fernando Pombo Foundation, the first pro bono clearinghouse in Spain, made that case in a July publication by the International Bar Association, describing a wide range of potential benefits, both to a firm’s own social impact goals as well as long range business prospects.

“Because of the complex and frequently new needs of social entrepreneurs, a social entrepreneurship practice can give a firm valuable experience in assembling multidisciplinary legal services into a package that precisely meets the needs and promotes the objectives of any client,” Clark and Pombo wrote.

In the U.S., firms are all over the spectrum on where they are in their ESG journey, Clark said. But the firms that are the furthest along have integrated socially responsible values into the fabric of the firm and have a clear strategic vision of the way forward.

“They view support for social development and the eradication of poverty or any of the other U.N. sustainable development goals as an ethical responsibility, and say, ‘This is how we’re going to carry this out,'” Clark said.

One of the clearest markers of firms with a strong approach to social impact is a written strategy incorporating it into their strategic objectives, Clark said.

“What are your targets? What are your goals? How much do you plan to invest in this? What are the financials that are involved in this? That’s the best way to make sure something gets done — have a plan,” Clark said.

The Future Is Now

Many law firms are getting creative in response to pressure to put social responsibility front and center

“There’s a lot of threads to this and firms that are in this area tend to pick a thread that’s right for them,” Clark said.

Advocates and professionals working on law firms’ approach to social impact say the key is to have a person or even a team focused on the issue who can help marshal time and dedication of resources, and listen to the aims and goals of the firm as a whole.

“I think my role begins with hearing from all corners of the firm — the partnership, the nonpartner attorneys, the nonlegal staff — hearing from them what it is that they care about for their employer to really support and identify the priorities where we want to really invest our resources, whether they’re human or financial, toward these social impact causes,” said Samir Abdelnour, director of pro bono and social impact at Hanson Bridgett.

At Davis Wright Tremaine, a team of people working on these issues also includes a senior manager for social impact, said Joanna Plichta Boisen, director of pro bono and social impact.

“Her entire job is dedicated to being familiar with the biggest social issues that are happening, and to be creative and innovative with how to problem-solve for these issues, to work across organizations already doing this work, and see how we can plug in,” Boisen said.

While firms are increasingly being pressed to push beyond just having a pro bono program, and think more holistically when it comes to social responsibility goals, pro bono work is still a foundational piece of every firm’s social responsibility practice.

Clients, too, are interested not only in the nature of the pro bono work being done by the firms they hire, but also whether they can help.

“One of the things that we’ve been able to do is go into in-house legal departments of our clients and say to their leadership, ‘We want to help you structure and scale your pro bono practices.'” Boisen said. “I can tell you that in-house legal departments are some of the fastest growing pro bono players. They want to understand how to structure and scale their in-house pro bono programs and what opportunities exist.”

Many corporations have legal departments packed with attorneys who would love to do more pro bono work and are looking for ways to partner with those with expertise. Beyond the good work a team of in-house and private practice lawyers can do, from a business perspective, that collaboration has other benefits, Boisen said.

“The kinds of relationships that are being forged between our lawyers and in-house lawyers on matters that matter in a way that changes the world is pretty incredible. It is more valuable than taking them out to coffee or dinner or a game. It is more meaningful than just a conversation,” Boisen said.

The pandemic has also put a new focus on law firms’ own work on environmental sustainability, said Joshi, helping advocates for greater sustainability practices within law firms to draw connections between rethinking how and where work is done, and how it can happen in a more sustainable way.

While often that work in the past was done by small teams in each office trying to find ways to limit environmental impact, now firms are increasingly focusing on broader sustainability goals, and pulling in a higher level of internal leadership that can reassess and draw a new roadmap.

“We’re starting to see more firms putting equity owners behind sustainability programs to have that level of leadership and oversight. For a while we were seeing that just in name, but there’s this transition to really have those individuals bring their own expertise to the internal operations. So you might find a climate partner or an energy partner heading up the program.” Joshi said.

For any path a law firm picks to follow on its social responsibility journey, it’s critical that top leadership is thinking about the effort in a core strategic way, setting goals, and monitoring progress. For clients, employees and other stakeholders, that’s an important way to know if the firm is likely to make progress.

Firms that are slow to adapt to the new reality are ensuring that they will be left behind by firms that are able to align their purpose with those of their clients, employees and communities.

“The world is moving in one direction: more sustainability, more accountability, more responsibility. You can no longer be just left alone and pretend that nothing’s happening around you,” Ivannikova said.