14 February 2018
There are many reasons why diversity and inclusion are important to us all. It is a wider public good, something that most people would agree is the right thing to do. It’s a matter of public confidence that the legal profession reflects the wider community. Importantly, diversity in the judiciary is key to maintaining confidence in the proper administration of justice and the rule of law. We can only achieve that if the legal profession provides a diverse and expert foundation.But there is also increasing evidence that a more diverse business is a more successful business. Diversity can widen and deepen the client base, support innovation and improve profitability. It's good for staff too, improving recruitment, progression and retention so that firms benefit from the best talent.That is why so many firms recognise that improving diversity gives them a real competitive advantage. And there is no doubt that more and more clients expect to see genuinely diverse teams supporting their needs.We know that the legal profession is changing and beginning to reflect the gender, ethnicity, disability and sexual orientation diversity of wider society. However, more needs to be done to improve the representation of all groups, particularly in senior roles. That means that the lack of a diverse and representative profession continues to be prominent in our Risk Outlook.Our own work to make a difference includes sharing the profile of the profession through our firm diversity data publication, our support for new routes into the profession, such as apprenticeships in law, and the introduction of a common examination for all aspiring solicitors, regardless of route and background. Part of what we can do is to encourage and share good practice. This paper is all about the business benefits of a diverse and inclusive workplace. It provides practical examples of the actions firms can take to realise those benefits and make the most of the opportunities it brings.I hope you find it useful and that it helps you to grow and develop your business.Paul Philip Chief Executive, Solicitors Regulation Authority
Equality and diversity in the legal profession is important for many reasons, including:
The Lammy Review 1 examined the treatment of and outcomes for black, Asian and minority ethnic (BAME) people in the criminal justice system. It highlighted that a representative workforce, including the judiciary and lawyers within the system, is important in achieving fair outcomes and improving trust in the legal sector. The judiciary is drawn from the legal profession, so it is important that solicitors are representative of the people needing legal help."To build trust and respect for the rule of law, there must be a step change in the diversity of the magistracy and especially the judiciary."The Lammy Review, 2017There is also a real commercial advantage to having a diverse workforce. There is growing evidence about the positive relationship between diversity and commercial performance. 2 For example, closing gender pay gaps has been estimated to add £150bn to the UK economy by 2025. 3 And an additional £24bn, representing 1.3% of GDP, could be added from full representation of BAME individuals across the labour market, through improved participation and progression. 4
Some law firms are taking positive actions to address differences in the balance of gender, ethnicity and sexuality, and to improve social mobility and the support given to disabled staff. However, there is still some way to go with both recruitment and career progression for the profession to be fully representative across all strands of diversity.This report shows that the proportion of women and BAME solicitors progressing to senior roles does not yet reflect the proportions entering the profession. And solicitors with disabilities or from state schools are under-represented across the profession.Embedding diversity and inclusion into law firms' culture is an important part of developing a modern, open competitive legal sector, providing accessible services for those who need them."Promoting and supporting diversity in the workplace is an important aspect of good people management - it's about valuing everyone in the organisation as an individual. However, to reap the benefits of a diverse workforce it's vital to have an inclusive environment where everyone feels able to participate and achieve their potential. While UK legislation – covering age, disability, race, religion, gender and sexual orientation among others – sets minimum standards, an effective diversity and inclusion strategy goes beyond legal compliance and seeks to add value to an organisation, contributing to employee well-being and engagement." 5
Chartered Institute of Personnel and Development, 2017
Diversity across all levels of staff, including senior leadership, has been linked to improved organisational performance. 6 For example, based on an international analysis of public companies, those in the top quarter for ethnic diversity are 35% more likely to have financial returns above their national industry average. And companies in the top quarter for gender diversity are 15% more likely to have profits above their national industry average. In addition, for every 10% increase in gender diversity in senior leadership, profits rise by 3.5%. 7
Unequal business performance within the same industry and country shows that staff diversity gives a competitive advantage, as market share shifts toward more diverse companies over time. For example, some insurance companies have indicated that they look to employ legal firms with diverse teams. 8
Some of the organisational benefits of a diverse workforce are: 9
Organisations with the best reputation for diversity will appeal to the widest talent pool of potential candidates. Removing the barriers that some groups face to entering, and progressing within, the profession and some organisations, maximises the chances of getting and retaining the best people for each role. This report sets out the barriers and how these can be removed through fairer recruitment practices to find the best talent.Some firms are widening their talent pool by taking on apprentices, which allows young people to earn an income while they train, as well as providing some firms with a financial incentive. 10
"It is simply good business sense to recognise the enormous potential of women and to take action to nurture and progress female talent. 11
Justine Greening, former Minister for Women and Equalities"Our business is all about our clients and our biggest asset is our people. […] Our partners are split 18% female, 82% male, and yet our intake is 50% female. That means we are losing a lot of talent which is both wrong and bad business. There is no easy fix. So, we have a whole series of initiatives to help us get to the root of the issue, find sustainable solutions and action change. We are determined to turn this around." 12
Large law firm
Organisations that have robust equality and diversity practices, which monitor the recruitment, pay and promotion of all groups, benefit from higher labour productivity and lower staff turnover. 13
Improved employee morale and engagement associated with a diverse and inclusive workforce improves retention rates of staff and talent. This lowers recruitment and severance costs and the risk of reputational damage from employment tribunals.Flexible working and home working are often seen as ways of supporting women in work, but can be used to help the work-life balance of all staff, support everyone with caring responsibilities and can increase productivity. Agile working also gives staff the flexibility to manage their work-life balance, as the focus is on outputs rather than the time spent at work. For example, firms we visited during our thematic review of diversity practices and experiences, told us that when offered flexible working, their staff became more flexible with them and were more able to meet clients' needs. 14 Senior managers can lead by example, such as showing that it is acceptable to work flexibly by noting in their calendar when they are out of the office for family commitments.Real life example: A firm where most of its staff work from home report that their overhead costs are much lower. And their solicitors report that, as well as gaining more time for themselves, they can respond to their clients quicker. 15
Staff with diverse backgrounds and perspectives will have insights about the widest range of stakeholders, for both domestic and international business. Diversity at all levels within a business can lead to addressing the customer needs and cultural sensitivities of untapped markets. This might be, for example, through improved market strategies or new products and services aimed at the needs of diverse communities. This can lead to higher customer satisfaction, as well as widening the customer base."Diversity at all levels in organisations builds strong foundations for long-term success, in both the private and the public sector. Making good use of the talent, skills and experience of all drives better corporate performance and a successful economy. Those businesses which reflect the diverse nature of the environment in which they and their stakeholders operate are the ones that employees, customers and other stakeholders value."Stephen Haddrill, CEO, Financial Reporting Council
A wider range of perspectives can be achieved when all staff are fully included within the organisation, and their differences are valued and respected. This means decisions will be more thoroughly considered and better informed, increasing the chance of more innovative ideas and solutions. 16 More diverse teams therefore give businesses the ability to better react to market changes.Embedding diversity and inclusion into the culture and systems of organisations allows firms to fully benefit from the creative problem-solving benefits that diverse teams bring."Having a diverse firm keeps our brand relevant to clients. From a business point of view, we recognise that there is a diverse client base that we want to provide services to. We want all our staff to be themselves and have the best development opportunities. This gives us creative capability in our business, as creativity comes from diversity, not from a conversation with 10 people the same as yourself."Large law firm
We collect diversity data from the law firms we regulate every other year, which can be found in our online law firm diversity tool. This helps others understand the diversity of the profession and allows firms to benchmark themselves against the rest of the market. The latest data, published in 2018, shows:
10% to 16% of all lawyers did not respond, or preferred not to give an answer, to the questions about disability, sexual orientation, religion, educational background and caring responsibilities. This is similar to previous years and indicates that the culture of the profession may be less open about diversity in these areas than about gender, age and ethnicity.Independent analysis of our diversity data explored solicitors' career progression. 22 It concluded that:
Entry into the profession is diverse but female, BAME and disabled lawyers continue to be under-represented at partner level. And BAME and disabled solicitors are proportionately more likely to work in smaller firms. Law firms have a responsibility to improve the diversity at all levels: by nurturing, valuing and developing all of the talent they recruit.
People's career paths and choices are influenced by their social background and education as well as barriers to entering, and progressing in, the profession.There are different barriers for different groups, and different barriers within groups. And some people face multiple barriers if they are a member of more than one disadvantaged group. So, it is important not to group all strands of diversity, or even all groups within a strand, together when trying to overcome the barriers. This means that it is best for firms to take more than one approach to improving diversity. 23
Firms can influence the educational barriers, for example, in the way they think about, and interact with, different schools and universities. We encourage all firms to get involved with initiatives where possible and to assess their own policies and ways of working.
School pupils from less advantaged backgrounds often make subject choices that negatively affect their prospects, and the quality of information, advice and guidance is weaker for these pupils. 24 And they lack access to wider opportunities, such as a variety of sports clubs and language classes, that help develop the non-educational competencies that are valued in professions. This can also apply to some of the minority ethnic groups who tend to come from lower socio-economic backgrounds.Attainment at school or college continues to be used as screening criteria by two thirds of leading legal firms, and it affects candidates' ability to secure a training contract. 25 However, these measures do not guarantee high performing candidates are recruited. 26 Some firms recognise this and remove school results from their selection criteria."Valuing differences is something that needs to be evident from the outset. A legal career has traditionally been seen as restricted for those from private education and elite universities. The legal industry is taking considerable steps to change this. [We] have dropped [our] grade criteria to CCC and any degree while CV's are blind to help level the playing field. 27
Large law firm
University law students from disadvantaged backgrounds and those that study part-time tend to have lower pass rates. And students who are a member of several different disadvantaged groups have a lower attainment than if they were a part of just one. 28
For example, BAME students that are from a low income background are less likely to do well than those who are either BAME from a wealthy background, or white from a low income background.Students at highly selective universities are more likely to have been educated at selective or fee-paying schools, or be from relatively affluent backgrounds. They typically have access to higher status professional networks, academic staff with links to leading firms and the money to support travel for placements and other work experiences. 29
In these ways, students from wealthy backgrounds are structurally advantaged over other students.Students need significant funds or employer support to complete the Legal Practice Course (LPC). Many students do not get a training contract as it is very competitive, so there is risk attached to their investment. Those that are less able to take financial risks are therefore less likely to take the LPC.The Solicitors Qualifying Examination, the common assessment for all potential solicitors, is likely to reduce the financial burden on potential solicitors. It will mean that some will not need to find a training contract if they already have relevant work experience, for example, as an apprentice. It should also increase the opportunities to access the profession, as candidates will have demonstrated their ability through the robust assessments, irrespective of the route they take. Some firms can access funds through the Apprenticeship Levy to reach potential, and train their own, talent. This may mean fewer students have to self-fund their way through the qualification process.Many firms target the most selective universities in their recruitment campaigns. But firms with a higher proportion of trainees from Oxbridge or Russell Group universities have lower levels of subsequent gender and ethnic diversity at associate and trainee level. 30 Some firms recognise that engaging with and recruiting from a wider range of universities adds value to their organisation.Real life example: The Fairness Project, run by three universities, equips students to maximise their employability through understanding inequality and unfair diversity barriers in the legal profession, helping them to develop personal strategies to overcome these. The students are encouraged to address their own biases to also help them to become fairer employers and managers in the future, and to help change the culture of the legal profession from within. 31
Other barriers to entering and progressing in the profession include the varied opportunities to gain experience, the availability of role models, recruitment biases and that some organisational cultures are not inclusive. The barriers within firms vary considerably depending on the area of law, and the size and status of the firm. 32
Law students' access to work experience can be affected by their social or family networks. And someone with caring responsibilities, or who needs to earn additional income, will have less time to be able to gain experience by volunteering in a law firm or law centre. 33 Unpaid internships are often inaccessible to those from disadvantaged backgrounds. 34
Firms can get involved in an initiative that gives work experience to students from disadvantaged backgrounds, such as PRIME, City Solicitors Horizon, and the Pathways to Law.
Many students from lower socio-economic backgrounds do not apply to law firms because they feel that they will not fit in, even when they have attended Russell Group universities. 35 And a lack of positive role models discourages disadvantaged and BAME graduates from applying to some professions and some organisations. 36 Role models are particularly important to the progression of black British employees. 37 But there are few BAME senior managers in large organisations.Initiatives such as Inspired by Law, Aspiring Solicitors, Sponsors for Educational Opportunity and the Social Mobility Business Partnershipwidens aspirations and gives students some role models, as well as expanding the potential talent pool. Some firms also recognise the value in having a website, and other marketing materials, that better reflect the diversity of the profession and students.Real life example: "[Our] Diversity Career Mentoring programme provides university students from diverse ethnic and socioeconomic backgrounds with mentors from within [our] business. The mentors provide students with insight on life at [our business] as well as sharing tips and advice on CV writing, job application skills, the firm's recruitment channels and general guidance on employability skills required for working life.We know that BAME staff are less likely to have career sponsors, which can impact their allocation to jobs, the roles they have and their career progression. To address this, we started an active sponsorship programme for high potential BAME and female directors and senior managers, called Talent Watch". 38 Large multi-disciplinary practice
Firms tend to use indicators to find the ‘brightest and best' recruits, such as type and name of institution attended, and qualification scores. Their use varies across the sector, or even within individual firms, and they are not as effective as many assume. 39 And the use of these may disproportionately disadvantage those from lower socio-economic groups.Unconscious bias and discrimination are barriers to diversity. 40 Several studies found that job applications using a name associated with a minority ethnic group are less likely to be successful in getting to the sift stage of recruitment. 41
Some firms are working to reduce their recruitment bias by updating their candidate screening systems, which could improve social mobility and diversity across all groups. For example, by removing school attainment criteria, as noted above, or by removing all university or school details from applications, so candidates are judged only on their performance and potential. Contextual recruitment, such as the system offered by Rare, also helps organisations identify candidates from disadvantaged backgrounds with the greatest potential.Behavioural science has been put to good effect in improving recruitment diversity in other sectors. For example, changing the phrasing of a job advertisement and job description to appeal to all applicants' values and sense of belonging, along with advertising through media that appeals to different groups, widens the diversity of recruits. And having a diverse team to make recruitment decisions increases the chances of finding the best candidate. 42
Real life example: A large graduate recruiter removed the need for applicants to have a minimum 2:1 degree pass or the equivalent of three B grades at A-level. It also introduced a blind CV policy, to reduce any unconscious bias. A year after the policy was introduced:
It is important for firms to monitor how different recruitment strategies affects their diversity, as some initiatives may work better in some firms and some areas of work than others. Firms should also assess whether their recruitment agency is helping or hindering diversity.Firms should make sure that their training contract tests are suitable for all students and make reasonable adjustments where needed. 44
"Race, gender or background should be irrelevant when choosing the right person for a role – few now would disagree with this. But organisations and individuals tend to hire in their own image, whether consciously or not. Those who have most in common with senior managers and decision makers are inherently at an advantage. I have to question how much of this bias is truly 'unconscious' and by terming it 'unconscious', how much it allows us to hide behind it. Conscious or unconscious, the end result of bias is racial discrimination, which we cannot and should not accept."McGregor-Smith Report on Race in the Workplace, 2017"We make three key recommendations for firms wishing to access the widest range of talent to benefit their business and their clients in future; first, amend attraction strategies to encourage higher numbers of applications from students with a wider range of educational and socio-economic backgrounds; second, ensure that these diverse students have access to similar levels of support enjoyed by their more traditional peers, in order to navigate the selection process effectively; third, interrogate current definitions of talent, including how potential is identified and assessed, to ensure that disadvantaged students are not ruled out for reasons of background rather than aptitude and skill."Social Mobility and Child Poverty Commission, 2015
There are large differences in the diversity of partners in large firms. For some solicitors, becoming a partner at a larger firm is not what they choose to do. However, the barriers set out above, along with unconscious bias and discrimination when deciding who to give opportunities and promotions to, affect partnership diversity.Mentoring programmes are proven to improve diversity at management levels, along with being more transparent with diversity statistics and practices. 45 Middle and senior managers can also celebrate and encourage people with diverse characteristics, call out biases, champion diversity initiatives, and challenge existing work practices. Increasing the interactions that managers have with all staff means they are more likely to recognise the value that people from different backgrounds bring to the business. 46
Our ' Unlocking the benefits of diversity' report sets out some of the actions firms can take to improve diversity at all levels, and therefore improve their organisational performance. A key action for improving the progression of all groups of people is to make sure that firms' cultures are inclusive, so that all staff feel able to be themselves. Maintaining a continued focus on improving diversity is also important. This can be achieved with minimal cost and resources, for example:
Business in the Community shares best practice and has online toolkits and guides to support employers. It is likely to develop a guide on discussing race in the workplace and a portal with case studies and unconscious bias training packages.Real life example: In 2009 BAME students made up 23% of one firm's overall student intake in 2009. They set a target of 30% and chose to:
"For us diverse teams are a business advantage and we want to reflect our clients and the wider world. We have monitored the diversity of our pipelines since 2011 but recognised that if we really want to move the dial on diversity we needed to make some systemic changes to how we attract, retain and promote our people. This also had to cover all aspects of difference, not just gender.These interventions are producing measurable results, but we recognise that we need to keep up the focus and attention on this important area of diversity to make a sustainable difference." Large multi-disciplinary practice 47
All businesses must comply with the legislation on equality and diversity. SRA Principle 9 supports the legislation and means that solicitors and firms must encourage equality of opportunity and respect for diversity.Since the Equality Act 2010, other changes to improve equality and diversity include:
There are also calls from the government for all companies to publish their gender pay gap data, make sure there is progress on female representation at senior levels, and make flexible working available for all employees from the start of their employment. 48 The government is also in favour of having publicly available data on ethnic diversity.There is a risk of reputational damage for eligible firms that do not meet the requirements. We encourage firms to take the lead by being transparent with their diversity data and use it to their advantage in developing their business."The government encourages all employers to adopt [the McGregor Review] recommendations to make the workplace more inclusive. As the proportion of British working age adults from BAME backgrounds is increasing, it has never been more important for employers to harness the potential of this home-grown talent and influence positive behaviour change in the labour market. As with any significant change in working practices, success will only be delivered if everyone in an organisation takes ownership of the issue." 49
Justine Greening, former Minister for Women and EqualitiesThe McGregor Review suggests that firms go beyond the government targets: "all employers with more than 50 people must set aspirational targets to increase diversity and inclusion throughout their organisations – not just at the bottom. Companies should look at the make-up of the area in which they are recruiting to establish the right target. For instance, the proportion of working age people from a BAME background in London and Birmingham is already over 40%, with Manchester not far behind."Real life example: "We have set ethnicity and gender targets for manager level and above, which provide direction and drive the promotion, recruitment and retention activities that underpin them. This year we have published our targets, and progress against them, in our digital annual report. We believe that greater transparency drives accountability and targets action where it is needed most. Business leaders are also accountable for these targets and for driving change where it is needed." 50 Large multi-disciplinary practiceReal life example: One firm publishes an annual audit of the diversity of their staff across all diversity strands. Their statistics have informed the development of their diversity and inclusion programmes. They focused on graduate recruitment to build a more diverse talent workforce by working with Rare recruitment, which specialises in top BAME graduates, and hosting graduate recruitment events on multiculturalism. Large law firm
We are committed to working with those we regulate to support them in achieving a more diverse and inclusive profession. We promote diversity by providing data, conducting research, providing guidance and engaging with firms and others about diversity and inclusion. And our regulatory and educational reforms will build on this and widen access to the profession.
Our collection of diversity data helps us shape our understanding of the diversity of the profession and we make this available online. We collected data from law firms about gender identity for the first time in 2017.Our diversity data was independently analysed to understand the career progression of women and BAME solicitors, and how their representation in senior roles can be improved. The research highlighted the large increase in female new entrants since 1970 and the increase in new admissions by BAME solicitors over the last 10 years.In 2017, we visited over 40 firms to find out how they promote equality, diversity and inclusion. Our report ' Unlocking the benefits of diversity' highlights the good practice among many firms.
The Risk Outlook and the resources pages have information on ways to increase the fairness of recruitment and promotion. We have also raised awareness of transgender equality in the profession with guidance and case studies.We support, attend and promote professional and community events that support diversity and wellbeing for all solicitors. For example, we brought firms together to discuss women in law and how to promote a lesbian, gay, bisexual and trans-friendly work place. We sponsor the UK's Diversity Legal Awards, support Pride events and raise awareness of diversity in the profession at conferences and with politicians.
The Solicitors Qualifying Examination will be introduced not before 2020. This should open up opportunities to access the profession, increasing the potential for social mobility and support diversity: 'since it will enable students to chart more flexible pathways'. 51
We have worked with firms and the government to encourage legal apprenticeships. More than 500 people who followed non-traditional routes into the profession have been admitted following our amendment to the Training Regulations in 2015. And we work with law firms and students through the Social Mobility Business Partnership, which gives opportunities and support for students from less privileged backgrounds.Our reforms to the Code of Conduct and Principles will reduce the regulatory burdens and costs on firms and solicitors. They will give more flexibility in how legal services are delivered, which may encourage a wider pool of people to join the profession and improve access to services.
The Legal Services Consumer Panel recommended that regulators:
Our reforms will help to address these recommendations. For example, we will develop the Legal Choices website and our law firm search toolto improve the information available to people and small businesses. We are also considering the types of information that we and firms might publish in the future.We will be evaluating the impact of our regulatory reforms on the public, law firms, individual solicitors and the wider market. It will specifically look at the effect of our reforms on equality, diversity and inclusion across all groups. This will allow us to amend or adapt any aspect of our policy changes, if needed.
Law firm diversity tool – 2017 diversity data from the people who work in the law firms we regulate.Unlocking the benefits of diversity – Our review of the career progression of individuals and diversity of firms, including the drivers and motivations behind career choices.Mapping advantages and disadvantages: Diversity in the legal profession in England and Wales – An independent analysis of our diversity data to understand the career progression of women and BAME solicitors.How to promote diversity in your firm – A set of questions to help you think about improving diversity.
The Lammy Review – An independent review into the treatment of, and outcomes for, Black, Asian and Minority Ethnic individuals in the Criminal Justice System, 2017Why diversity matters – McKinsey & Company, 2015The McGregor-Smith Review – Race in the Workplace, 2017
Sutton Trust – A foundation that improves social mobility in the UK through evidence-based programmes, research and policy advocacy. They equip young people with the support, knowledge and skills to make informed decisions about their futures by partnering with universities, employers and charities.Social Mobility Foundation – A charity that provides opportunities and networks of support for young people from low-income backgrounds. They also run the Social Mobility Employer Index which ranks Britain’s employers on their actions to access and progress talent from all backgrounds. All organisations get free feedback on their performance, which highlights areas where they performed well and where improvements can be made.The Behavioural Insights Team – A social purpose company that uses behavioural science methods. They have developed a recruitment platform, Applied, that aims to remove bias and stereotype threat from job descriptions, assessments and recruitment decisions.Rare – Their contextual recruitment system uses big data to help organisations identify candidates with the greatest potential.
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