CSR in law firms

Part 4 in the series CSR and Lawyers

What do law firms need to do when it comes to CSR? Read on…for more on the most relevant CSR issues in law firms.

This is the fourth in a series on CSR and lawyers. The first three investigated: the distinctiveness of lawyers, an example of a quite different law firm and CSR governance. This post looks at the CSR issues that are most relevant to law firms.

CSR in Law Firms

When determining relevance of CSR issues in Law Firms, there are several tools that are relevant, but the one that seems to get the most traction is the Materiality Matrix. Constructing a materiality matrix involves identifying, for each CSR issue, the Importance to the Firm and Importance to Stakeholders.

Materiality Matrix

PwC’s Materiality Matrix

[If you want to know more there are some good tips in my book, Making Sustainability Matter.]

Importance to the Firm

When it comes to determining importance to the firm, usually it means profitability (in the form of increasing/preserving revenue and cost reduction), and although other frames might be useful (such as Value Chain analysis) they are frequently too sophisticated and/or resource intensive for firms.

Stakeholders

In order to determine the relevance to stakeholders, the first step is to determine who they might be. Law Firms have been remarkably slow to identify their stakeholders, at least publicly. Perhaps as 3rd party advisers, law firms have escaped attention from NGOs and others who argue for more transparency of corporate conduct. But that doesn’t seem like to last forever, and increasingly law firms are expected to talk about what their stakeholders care about.

As a non-controversial starting list, law firms will usually accept the following as relevant to their operations:

  • Clients
  • Employees
  • Regulators
  • Suppliers
  • Local communities (in the sense of the area bounded by the shadow of their building).

In my experience, law firms rarely ask their stakeholders about CSR, to their detriment. In 2013, corporate clients started rejecting law firms on the basis of underperformance on CSR (perhaps earlier, but at least as early as 2013). Employees (particularly trainees) have been choosing law firms on the basis of CSR credibility for at least 10 years. Regulators are increasingly targeting CSR issues, for example the Solicitor’s Regulatory Authority in the UK is currently focussing on diversity and making some threatening noises about barring lawyers that don’t take diversity seriously.

Importance to Stakeholders

The issues that are important to stakeholders should come directly from stakeholders themselves, rather than from Partner’s perceptions of stakeholders views. Stakeholders important issues will frequently be very different to the issues that partners think matter.

The range of issues is extensive, too much so to address here.

SASB and Materiality

The Sustainability Accounting Standards Board have published their Professional Services sector guide on the most relevant CSR issues. It (through a consultation of sector experts based on a set list of CSR issues) says that for Professional Service Firms, the most relevant CSR issues are as follows, along with expected reporting criteria:

  • Professional Integrity
    • Description of management approach
    • Amount of legal and regulatory fines
  • Data Security
    • Discussion of management approach
    • Discussion of policies and practices
    • Number of breaches involving client confidential information
  • Workforce Diversity and Engagement
    • Percentage of gender representation for
      • Executives
      • All other non-contingent staff
      • Contingent staff
    • Percentage of racial/ethnic group for
      • Executives
      • All other non-contingent staff
      • Contingent staff
    • Turnover Rate
      • Voluntary
      • Involuntary
    • Employee engagement
      • Percentage of engaged employees

SASB is one of the more right-wing pro-CSR organisations, and the above list are the things that would be material in the formal legal sense. That is, if a law firm were listed on a stock exchange the list identifies the key CSR things that investors would expect to be disclosed as relevant to investors when making decisions such as buying or selling shares. That’s not to say that other CSR issues aren’t relevant, just to say that all of the SASB issues are important to the firm in a direct financial sense.

Most Relevant CSR issues

I mostly agree with SASB in relation to its list of legally material issues, which is why it is so surprising that law firms rarely disclose any of the metrics they identify. In a recent benchmarking exercise for a client, all the law firms I reviewed (all of which are in the top ten of the world’s largest law firms) don’t disclose levels of Employee Engagement. The highest threshold I identified was the response rate for employee surveys (without any evidence of actual levels of engagement, nor if relevant questions were asked).

In my view (not in any particular order, and I reserve the right to change my mind and this list), the most important CSR issues for law firms are:

  • Purpose beyond Profit
  • Employee Engagement (including talent retention)
  • Wellbeing and Resilience
  • Gender diversity
  • Ethnic Diversity
  • Knowledge Management
  • Return on Community Investment
  • Greenhouse gas emissions from Business Travel
  • Professional Integrity
  • Compliance with Firm Values
  • Data Security
  • Advising clients to be more Responsible (CSR)
  • Client selection (and rejection) [for more on this see ‘Is CSR A double-edged sword for law firms‘ by a Marketing Director of a mid-tier law firm]
  • Brand and Reputation
  • Talent attraction
  • Social Mobility
  • Access to legal services
  • Charitable donations

To be clear about it, I’m saying that all of the above issues are relevant to the business (either in terms of reducing risk or maximising financial opportunity) and relevant to key stakeholders of law firms.

There are also CSR issues that are not the most important to law firms, but have significant traction among key clients, and therefore should be on the radar of any firm:

  • Total greenhouse gas emissions
  • Greenhouse gas reduction targets
  • Business and Human rights due diligence
  • Energy Use
  • Resource Use

Burgeoning Areas

The burgeoning area of Business and Human Rights, and its implications cannot be ignored by any law firm hoping to stay relevant. In addition to having the attention of all of the largest law firms, it has profound implications for law firms as suppliers to large companies.

Perhaps notable by its absence in the above list is Pro Bono work, which is so often the frontline of CSR programmes in law firms. I’ve not identified it separately from Charitable donations, because that’s where I see it most comfortably fitting. I like what Nick Patrick has to say on pro bono and why it’s important to law firms. He identifies the connection between effective pro bono initiatives and lawyers wanting to “make a difference” in their professional lives, and how that is part of employee engagement at DLA Piper.

Oh, and for anyone who has to motivate Partners within firms who don’t appear to be motivated toward CSR, remember that Lawyers are used to coming first and, generally speaking, hate coming last in any kind of league table.


By the way, much of this post applies equally well to professional service firms, on the basis that law firms really aren’t all that different.

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