Latest / The Diversity Career Podcast with Fexingo: Inclusion, Equity, and Underrepresented Professionals / How One Law Firm Doubled Partner Diversity in Three Years
Transcript
- Lucas: There's this stat that has haunted diversity efforts in law firms for years: women of color make up roughly a third of law school graduates, but something like three percent of equity partners. That gap has been basically frozen for a decade. Luna: Three percent. I've seen that number. And every year there are task forces and pledges and yet the number barely budges. Lucas: Right. So when a mid-sized firm called Manning & Reed — around 400 lawyers, headquartered in Chicago — decided they were going to actually do something about it, they started by asking a different question. Not 'how do we train people to be more inclusive,' but 'how does money actually flow through this place.' Luna: They looked at the compensation system. Lucas: Specifically, origination credit. In most law firms, when a partner brings in a new client, they get a percentage of the revenue from that client — often for life, even if they do zero work on the matters. It's called 'origination credit' and it's the single biggest driver of partner compensation and, by extension, who gets promoted to equity partner. Luna: And historically, that credit has been awarded for activities that look a certain way. Golf outings. Board memberships at Fortune 500 companies. Relationships built in spaces where women of color are systematically underrepresented. Lucas: Exactly. So Manning & Reed's managing partner, a woman named Carla Espinoza, did something pretty rare. She published the firm's origination credit data internally. Not just totals — the breakdown by gender and race across all partners. And the gap was stark. White male partners held eighty-two percent of total origination credit. Women of color collectively held under two percent. Luna: And she published that? Internally? That takes a certain kind of nerve. Lucas: It does. And the reaction was — well, some partners were furious. They felt like their compensation was being exposed. But Espinoza's argument was: you can't fix what you don't measure. And if the origination system is the engine, we have to know who's getting fuel. Luna: So what did they change? Lucas: They broadened the definition of 'origination.' The old rule said you got credit if you were the first lawyer to contact the client. The new rule, phased in over 2023, added three alternative paths. First, credit for 'significant relationship development' — things like serving on a nonprofit board where a general counsel also serves, speaking at industry events where potential clients attend, or publishing thought leadership that directly leads to a conversation. Luna: That sounds hard to track. Who decides what counts? Lucas: They created a small committee — three partners, one of whom rotates annually — that reviews claims. They also required that any origination credit over a certain threshold be accompanied by a short narrative of the relationship-building activities. And here's the key: activities that involve mentoring junior lawyers or sponsoring diverse associates can now count toward origination credit if those associates later bring in clients. Luna: That's a direct link between inclusion work and compensation. That's the kind of structural change people talk about but rarely implement. Lucas: It took about eighteen months before the numbers started to shift. By the end of 2024, the share of origination credit held by women of color had gone from under two percent to just over eight percent. And the equity partnership composition followed — from six percent women of color in 2022 to fourteen percent as of this past January. Luna: Fourteen percent is still low in absolute terms. But doubling in three years is not nothing. Lucas: Not nothing at all. And the firm also saw a drop in attrition among senior associates of color — down about forty percent from 2022 levels. People started to believe that the path to partnership was real, not just a line in a recruiting brochure. Luna: I want to push on something, though. If the new system gives credit for board service or speaking engagements, doesn't it risk rewarding people who already have access to those opportunities? The same old networks, just relabeled? Lucas: That was exactly the criticism from some associates internally. And it's a fair one. Espinoza's response was to add a requirement: at least one of the three credit paths must involve an activity that the partner did not previously have a track record in. So if you're a white male partner who already sits on three boards, you can't claim credit for a fourth board seat unless you also take on a mentoring relationship that leads to origination. Luna: That is clever. It forces experimentation. Lucas: It does. And it created some unexpected outcomes. One of the firm's top rainmakers, a white male partner in his late fifties, started mentoring a Black female associate who had a background in intellectual property. Two years later, that associate brought in a mid-sized tech company as a client. The partner got origination credit for the mentoring. The associate got a path to partnership. Both benefited. Luna: That's a win-win. But I wonder about the sustainability. When Espinoza steps down, does the system hold? Lucas: They tried to bake it into the partnership agreement. The alternative credit paths are now in the firm's governing documents, not just a policy of the managing partner. Changing it would require a vote of the equity partners. So it's harder to undo. Luna: That's a good institutional safeguard. I also wonder whether this model works for firms that don't have a champion at the top. Lucas: Yeah, that's the open question. Manning & Reed had a managing partner willing to take political heat. Not every firm has that. But the data is now public enough that other firms are starting to look at their own origination gaps. I've heard of at least three Am Law 200 firms that have begun internal audits since Manning & Reed released their numbers. Luna: Speaking of data being useful — if today's episode helped you think about how compensation systems can either block or enable diversity, that's exactly the kind of conversation we try to have here. And the reason we can keep doing it without ads is listener support. Lucas: Yeah, it's pretty simple. If you find value, buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. No subscription, no paywall — just a way to keep the episodes coming. Luna: And it genuinely makes a difference. Okay, back to Manning & Reed. One thing I haven't asked — what happened to the partners who were initially furious about the transparency? Lucas: A few left. Three partners, all white men, moved to firms that still use the traditional origination model. But the firm also hired laterally three women of color from other firms who cited the new system as a reason for joining. So net talent flow was positive. Luna: That suggests the system is actually changing the market for talent, not just internal optics. Lucas: I think that's right. And there's another effect: client pressure. Several of Manning & Reed's corporate clients — particularly in tech and healthcare — now ask about the diversity of the legal teams working on their matters. The firm can point to a system, not just a statement. Luna: Clients are asking? That's a powerful lever. Lucas: It is. One general counsel told Espinoza that her company's supplier diversity policy now includes a question about whether the law firm's compensation system rewards inclusive behavior. That's a direct line from a policy change inside one firm to a procurement criterion at a Fortune 500 company. Luna: So the origination credit reform creates a feedback loop. More diverse partners bring in more diverse clients, which reinforces the credit system, which leads to more diverse partners. Lucas: Exactly. And that loop is what makes it sustainable. It's not a training program that gets cut in a budget cycle. It's the compensation structure itself. Luna: I want to zoom out. Do you think this approach — changing the definition of rainmaking — is replicable outside of law? In consulting, accounting, architecture? Lucas: Absolutely. Any partnership-structured profession where origination credit determines advancement. Consulting firms have the same dynamic. So do some architecture firms. The principle is the same: if you broaden what counts as bringing in business, you open the door to people whose networks and relationship styles differ from the traditional model. Luna: But it requires transparency, which a lot of firms resist. Lucas: It does. Manning & Reed's willingness to publish internal data was unusual. But they didn't start there. They started with a diagnostic. Any firm can do that internally: look at the distribution of origination credit by demographic group. Then decide whether the gap is acceptable. Luna: And if it's not, change the rules of the game rather than just the players. Lucas: That's the headline. Too many diversity initiatives focus on getting diverse candidates in the door, then leave them in a system built by and for a different group. Manning & Reed's story is a reminder that the system itself might be the problem. Luna: And changing it can actually work. Thanks, Lucas. Lucas: Thanks, Luna. Talk next time.