The Federal Trade Commission (FTC) has sent warning letters to 42 law firms claiming their participation in a diversity, equity, and inclusion (DEI) certification program could potentially result in unfair and anticompetitive employment practices. The letters, signed by FTC Chairman Andrew N. Ferguson, were sent Jan. 30 and maintain that the firms’ participation in the Mansfield Rule Certification Program is anticompetitive because participants agree to follow certain DEI-based employment standards.
The recipients of the FTC letters include many large law firms, according to an FTC press release. The 42 firms receiving letters employ more than 50,000 attorneys. The letter adds that hundreds of other law firms, employing tens of thousands of additional attorneys, also appear to have received Mansfield certification. The letters are a part of the Trump administration’s continued crackdown on DEI initiatives it argues are discriminatory.
According to the Ferguson letter, law firms and in-house legal departments can participate in the Mansfield program created by Diversity Lab, which he describes as a for-profit DEI-consulting business. Additionally, he noted that the Diversity Lab website claims the business “writes the unwritten rules” by asking organizations with Mansfield certification “to make all advancement processes and practices transparent and accessible to ensure everyone is aware of how pathways to leadership decisions are determined.”
Letters were sent to the following firms: Alston & Bird, Arnold & Porter, BakerHostetler, Cooley, Covington & Burling, Davis Polk, Debevoise & Plimpton, Dentons, DLA Piper, Faegre Drinker, Fox Rothschild, Gibson Dunn, Goodwin Procter, Gordon Rees, Greenberg Traurig, Hogan Lovells, Holland & Knight, Husch Blackwell, Jackson Lewis, K&L Gates, Latham & Watkins, Lewis Brisbois, Littler, Mayer Brown, McDermott Will & Emery, McGuireWoods, Morgan Lewis, Nelson Mullins, Ogletree Deakins, Paul Weiss, Perkins Coie, Polsinelli, Reed Smith, Sheppard Mullin, Sidley Austin, Skadden, Troutman Pepper, White & Case, WilmerHale, Wilson Elser, Wilson Sonsini, and Winston & Strawn.
Diversity Lab Says Court Upheld Program
On its website, Diversity Lab notes that a recent federal court ruling found its Mansfield certification practices to be lawful and comply with anti-discrimination laws. Despite Mansfield certification not being an issue in that lawsuit, the judge still noted that “the Mansfield Rule expressly does not establish any hiring quotas or other illegally discriminatory practices, requiring only that participating law firms consider attorneys from diverse backgrounds for certain positions.”
Diversity Labs says Mansfield certification does not require that any underrepresented group be selected for any specific leadership roles. Additionally, it does not require that any person be excluded from consideration for leadership roles based on race, gender, or other demographic.
FTC Focuses on Information Sharing
Ferguson said in his letter that law firms have explained that the path to achieve Mansfield certification include monthly knowledge-sharing calls between participants. He claims this practice involves competitors sharing information to hire and promote legal talent.
Antitrust laws protect citizens who are participating in the economy as both workers and consumers, which includes protecting employees from anticompetitive agreements in labor markets, Ferguson said.
According to the letter, collusion or unlawful coordination on DEI metrics could constitute anticompetitive practices. That would include the sharing DEI metrics that incorporate quotas for panels considering talent pools based on the panelists’ race, sex, or other characteristics other than merit. “The effects of such DEI coordination can infect all aspects of law firm hiring: for example, the goal of reaching agreed-upon DEI quotas can determine firms’ decisions not only about who makes partner, but also the makeup of incoming classes of associates (and even summer associates) and the assignments that junior attorneys are given,” the letter said.
Additionally, the sharing of competitively sensitive information about pay and other benefits between employers can also be unlawful under antitrust statutes because it can harm competition for labor, Ferguson said. Employers should compete with one another to create attractive compensation packages, he explained.
Civil Rights Questions
Other federal agencies will need to assess whether the Mansfield Certification Program violates civil rights laws, Ferguson said. He said he was only notifying recipients of the letter that participation in the program could result in liability under the laws enforced by the FTC.
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