By Aebra Coe

Law360 (April 6, 2020, 10:33 AM EDT ) The COVID-19 pandemic and resulting economic crisis pose a potential danger to efforts to improve diversity and inclusion in U.S. law firms, leading experts to caution firms to tread carefully when making staffing decisions during this uncertain time.

As law firms look for ways to cut costs to weather the economic downturn, financial investments in diversity and inclusion initiatives may suffer as a result. And as firms cut pay and even lay off some attorneys, the choices they make could have a disparately negative impact on attorneys of color and women, industry experts said.

"We are going to see whether diversity and inclusion initiatives are in the DNA of law firms or whether those firms view them as just discretionary," said Stephanie Scharf, name partner at Scharf Banks Marmor LLC and principal at law firm consultancy The Red Bee Group.

Many U.S. law firms dealt with the economic fallout of the recession in 2008 and 2009 by conducting associate layoffs. Data published by the National Association for Law Placement suggests that attorneys of color and female attorneys may have been disproportionately impacted by those cuts.

Between 2009 and 2010, the percentage of associates of color across the industry fell from 19.67% to 19.53%, the association found. Women of color in the associate ranks fell from 11.02% to 10.9% and the percentage of female associates declined from 45.66% to 45.41%. In the 14 years leading up to 2009, neither category had seen a decline in any year.

Looking back, many law firms would probably say they made their layoff decisions in 2008 and 2009 based on how busy an associate was staying or how many hours the individual had worked during the previous year, according to Sharon Jones, a law firm diversity consultant at Jones Diversity.

But making a decision based simply on how many hours an associate bills may not take into account unconscious bias, which can creep into work assignment systems at law firms, Jones said.

"Even in good times, racial and ethnic minorities have challenges getting work in law firms, and I believe that's often due to unconscious bias," she said. "In bad times or times of economic stress, it can be even more stark in terms of the work handed to racial and ethnic minorities compared to white associates."

Law firms must be vigilant, especially now that work is more scarce, to put in place a fair and equitable system for distributing assignments to associates, one that aims to interrupt potential unconscious biases, she said.

Additionally, when law firms make decisions about whom to lay off, they need to make sure they are not damaging their diversity in the process, said Manar Morales, president and CEO of the Diversity & Flexibility Alliance.

"You can't make these decisions in a vacuum," Morales said. "Are people being disproportionately impacted? If so, why is that the case?"

Women may be particularly vulnerable to layoffs if firms act the way they did in 2008, according to Roberta Liebenberg, a senior partner at Fine Kaplan and Black RPC and co-author with Scharf of a report on women in the legal profession.

When those layoffs were implemented, part-time attorneys were more likely to be let go, and then, as now, women in law firms were more likely to be working part time, Liebenberg said.

Women are also more likely to take on a disproportionate share of the burden of child care in the U.S, and because children are home from school because of the pandemic, female attorneys may be juggling child care and work, something employers need to be sensitive to as they set billable hour requirements and evaluate associates on their performance, she added.

Leslie Richards-Yellen, Hogan Lovells' director of inclusion for the Americas, said her firm is thinking about how the economic downturn and pandemic could negatively impact female and minority attorneys and is working to counteract those forces.

The firm's National Diversity Committee is working to come up with a system to source billable hours to work for women, minority and LGBT lawyers, she said.

Hogan Lovells is also sending an email to those lawyers expressing solidarity and understanding during the difficult times and directing them to resources that may be of help and people who can offer advice, Richards-Yellen said.

Such direct communications are important, according to Scharf, who says her research has shown that lawyers from underrepresented groups often feel isolated within law firms in normal times, something she said could be amplified when the entire staff is working from home.

"Firms really have an obligation to make sure their communication is inclusive and keeps everyone involved and everyone engaged," she said.

During difficult times, it is important for law firms to double down on their diversity and inclusion efforts rather than back away from them, emphasizing a commitment to those values, said Morales of the Diversity & Flexibility Alliance.

"I think it's an opportunity for law firms to lead right now. How firms and companies react to this will create loyalty or lose loyalty, and people will remember how they were treated," Morales said.

--Editing by Jill Coffey and Kelly Duncan.

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