HP has announced a new mandate to its outside law firms, implying that the company will withhold up to 10 percent of invoiced fees, in the case of failure to meet its diversity standards. Kim Rivera, HP's chief legal officer and general counsel, informed the law firms of her "diversity holdback" mandate in a Feb. 8 letter, Corporate Counsel reports.

The mandate won't be enforced for the first year during the company's engagement with a law firm. Rivera's letter that was published in ABA Journal, states that an ample time will be given to those firms that do not immediately meet minimal diversity staffing, for them to work toward achieving the metric. While the mandate takes place, HP is planning a pilot program to test the new initiative.

All U.S. based law firms, comprising of 10 or more lawyers will be subjected to the diversity mandate. The firms will be required to "field at least one diverse firm relationship partner who is regularly engaged with HP on billing and staffing issues"; or comply to "having at least one woman and one ethnically diverse attorney, each managing or performing at least 10 percent of the billable hours worked on HP matters".

HP defines a diverse lawyer to be limited to race/ethnicity, gender, LGBT status, and disability status. A lawyer can be a woman, ethnically diverse and manages or performs at least 10 percent of the billable hours worked on HP matters, and that in the fullest sense, satisfies the minimal diversity staffing requirement.

The idea of a fee holdback from HP definitely appears new to lawyers, including some who spoke with Corporate Counsel. Gary Sasso, the president and CEO of Carlton Fields Jorden Burt, also the vice-chairman of talent development for the Leadership Council on Legal Diversity, said I haven't seen anything like this."

He explained that general counsels have had discussions about favouring law firm that successfully display diversity and inclusion. Some extreme firms, have even decided to work less with law firms that were not very supportive of diversity, he said.