[Cross-post from The Bencher, American Inns of Court]

By Kevin R. Johnson

As anyone understands, the global pandemic has greatly complicated legal education and the practice of law.  As a law school dean, I can attest to the fact that just keeping law schools operating over the last two years has been no easy feat.  As the pandemic shows nascent signs of subsiding, law schools still face roughly the same challenges that existed before the shutdown of U.S. society in 2020.  One of the most formidable challenges no doubt will continue to be legal education’s pursuit of diversity, equity, and inclusion.

The benefits of student and faculty diversity are well-known.  For years, law schools have sought to diversify their student bodies.  The ultimate hope has been to diversify the legal profession.  Despite those efforts, attorneys of color remain sorely underrepresented among attorneys nationwide.  In addition, law schools have been called upon to add to the racial and gender diversity of their faculties.  Hiring and retention of faculty of color has changed a bit, but not that much in the last thirty years. 

Put simply, progress on improving student and faculty diversity has been slow, uneven, and at times downright frustrating.  Unfortunately, the future challenges facing law schools in pursuit of the goal of diversity, equity, and inclusion appear to be just as daunting as they have ever been.  Fissures to the fabric of the community caused by stresses and strains of the pandemic have made achieving diversity goals even more challenging than they once were.  The pandemic has had especially adverse impacts–economically, health-wise and in other ways–on people of color.  Moreover, many observers predict that the Supreme Court will put an end to any consideration of race in law school admissions in Students for Admissions Inc. v. President & Fellows of Harvard College.  The end of affirmative action would restrict efforts to pursue law student diversity in the post-pandemic world.

Student Diversity and Calls for the Teaching of Racial Justice

For years, law schools have made efforts to increase the diversity of law student bodies.  The goal has been to produce a corps of lawyers that looks more like the overall population than it has for decades.  Diversity among students facilitates student learning outcomes by allowing students to hear from a variety of different perspectives in the classroom.  Pressures for increased diversity have escalated over time and will likely remain for the foreseeable future.

The Supreme Court in Grutter v. Bollinger, 539 U.S. 306 (2003) upheld the University of Michigan law school’s carefully calibrated admissions system that considered race as one factor among many in the admissions process.  For the last twenty years, many law schools have relied on Grutter in fashioning admissions systems and pursuing affirmative action to diversify law student bodies.  That may cease with the Supreme Court’s re-assessment of the constitutionality of such programs in a case argued at the end of October 2022.  The demise of affirmative action would require considerable soul searching, restructuring, and rethinking law school admissions by law schools.  

The American Bar Association (ABA) today considers student diversity in the accreditation of law schools.  In addition, the ABA House of Delegates earlier this year voted to require law schools “provide education to law students on bias, cross-cultural competency, and racism” at “the start of the program of legal education” and “at least once again before graduation.”  (Amended ABA Standard 303).  The ABA standards make clear that racism and racial discrimination must be a part of the law school curriculum for all students as well.

Employers of all types also demand that law schools enroll more diverse law student bodies.  That in no small part mirrors demands from clients that employers staff their matters with a diverse staff of attorneys.  Law schools have responded to employers’ demands.  Although progress has been made, much work remains.

Recent highly publicized deaths of African Americans at the hands of police have generated controversy.  To the surprise of many, much discussion has focused on the elimination of systemic racism from U.S. social life.  Students are pressuring law schools to respond by teaching students more about racial justice.  They also consistently have sought more diverse faculties and student bodies.  Such student advocacy will likely continue in the future.  Some schools also have asked that issues of racial justice be better integrated into the law school curriculum. 

Resources are available to law schools seeking to increase the teaching of racial justice and promote a more inclusive law school environment.  For example, a group of African American women law school deans started the Law Deans Antiracist Clearinghouse Project, which includes resources for law schools interested in embracing an anti-racism program.  Anti-racist pedagogy, diversity and implicit bias training, and other programs (as well as consultants to advise law schools) are readily available.

As law schools seek to diversify student bodies, efforts at retention are important.  Academic support and other programs help to integrate and include first-generation law students and students of color.  Such programs represent a marked improvement over the prevailing “sink or swim” approach that dominated how law schools traditionally responded to student learning and the stresses of legal education.  Such an approach is starkly out of step with modern DEI sensibilities and does a serious disservice to students of color and first-generation law students.

Importantly, Inn of Court chapters may help promote the diversification of the legal profession.  Student members gain measurably from networking with, and mentoring from, judges and lawyers.  Inn chapters should continue to consciously strive to ensure that their student members, who gain from networking and mentoring, come from a diverse cross-section of the law student community.  Building a pipeline into the legal profession can be effective, rewarding, and fulfilling.

Faculty Diversity

A diverse law faculty also makes it easier for law schools to recruit and retain diverse student bodies.  A diverse law student body understandably does not want to learn from predominantly white faculties.  With role models at the front of the classroom, students gain from seeing teachers who look like them.  The days of the patrician (and entirely Socratic) Professor Kingsfield of The Paper Chase are long gone.  Law schools have stepped up to the challenge and committed themselves to changing their hiring.

As I have written (How and Why We Built a Majority/Minority Faculty, Chronicle of Higher Education, July 24, 2016), law schools must act intentionally if they hope to hire more women and people of color faculty members.  Law schools often long for stratospheric credentials in law professor candidates, such as a prized clerkship with a Supreme Court justice and grades at the very top of the class.  Besides the fact that these credentials might not be a good measure of law professor potential, relatively few people of color satisfy these elite credential demands, which makes diversifying law faculties a task easier said than done.  The number of faculty of color has stabilized and remains smaller than one would hope.  Nonetheless, there here have been improvements.  Perhaps most notably, the last few years have seen a marked increase in the number of women of color assuming deanships at law schools. 

Diverse faculties may bring diverse perspectives to the classroom, including the teaching of Critical Race Theory (CRT).  As mentioned previously, that is precisely what students are demanding.  Although controversial at its birth, CRT now is taught in law schools across the country and views law as part of the system of racism that persists in the modern United States. 

Future DEI Challenges

The pandemic has hindered diversity, equity, and inclusion efforts by law schools.  With remote instruction teaching over much of the pandemic, there was less informal, in-person interaction between students and professors.  For similar reasons, law schools held fewer in-person open houses for prospective law students.  Outreach programs conducted virtually in all likelihood are not as effective as in-person programs. 

Moreover, maintaining a sense of community, which is especially important in retaining and ensuring the success of students of color and first-generation students, proved difficult in a fractured remote or hybrid environment.  During the pandemic, student organizations understandably put almost all in-person activities on hold, with the lack of a sense of community provided by such events missed especially by students of color.   

If the Supreme Court ends race-conscious affirmative action, law schools will need to engage in much introspection and adaptation.  Examples of race-neutral means to increase the diversity of student bodies do exist.  In California, Proposition 209, passed by the voters in 1996, ended affirmative action at public colleges and universities in the Golden State.  Outreach programs, stepped up recruiting of applicants, and similar measures have enjoyed a degree of success in ensuring diverse student bodies.  Law schools across the nation can learn from the efforts in the state’s public law schools to continue to enroll diverse student bodies.

Efforts to build a community devoted to diversity, equity, and inclusion are by necessity a work in progress.  There are no quick fixes or easy answers.  Dedication, vigilance, and simple hard work are essential.  To improve, law schools must regularly consider and evaluate how they might best promote a positive climate for all students. 

DEI Efforts at UC Davis Law

The UC Davis School of Law is proud of its diversity, equity, and inclusion (DEI) achievements.  They include a “majority-minority” faculty and student body, a program supporting first-generation students, and extensive wellness programing (including a trained on-site psychological counselor).  The school requires implicit bias training for first-year students and annually offers a social justice-minded community “book read” and a “Critical Perspectives” lecture series organized around the first-year curriculum presented by the Aoki Center for Critical Race and Nation Studies.  This year, the community focused on the book Defund Fear:  Safety Without Policing, Prisons, and Punishment (Zach Norris, 2020), which advocates reform of the criminal justice system.  

In 2021, the School of Law added a DEI fellow, a position that was transformed into a director of law school DEI programs.  The new position provides students a clear path for registering concerns about any and all law school climate issues and develops innovative DEI and community-building programming.  At the same time, the law school continues to strive to integrate DEI sensibilities into every office in the law school, from admissions to faculty appointments to career service, and financial aid. 

As protests over police brutality and systemic racism have swept the nation, UC Davis School of Law reaffirmed its commitment to racial justice.  For three years running, the law school has offered a Racial Justice Speaker Series examining some of the most urgent racial justice issues facing our nation and world today.  The series has gathered leading voices on civil rights, criminal justice, and civic and governmental responsibility to inform, enlighten, and–most important–engage in meaningful conversation with our community and the public.

In 2021/22, as part of the continuing efforts in the pursuit of ensuring diversity, equity and inclusion, two law school committees completed reports addressing matters ranging from curriculum reform to student recruitment to DEI training for all.

The school created a diversity, equity, and inclusion committee of staff, students, and alumni to prepare a strategic plan and recommendations for DEI measures.  At the end of the 2021/22 academic year, the DEI Committee released its inaugural strategic plan.  The plan urges that, among other things, the law school continue to:

1.       Cultivate an inclusive atmosphere and sense of belonging;

2.       Support community mental health;

3.       Continue to recruit diverse staff members and students; and

4.       Develop and provide more resources to students from lower-income backgrounds.

In addition, the law school’s Educational Policy Committee, composed of faculty and students, suggested a series of initiatives highlighted by a new graduation requirement that every law student complete a course touching on racial justice.  The committee’s recommendations, which the faculty unanimously approved, also include the following:

1.       The first year Intro Week anti-bias and sensitivity training be retained and potentially expanded and improved;

2.       Further steps be taken to add critical and antiracist perspectives to the 1L curriculum;

3.       The seminars for externships and clinicals offer a session on bias, cross-cultural competency, and racism; and

4.       Opportunities for faculty training on DEI-related matters be explored and expanded and that each faculty member commit to a training in 2022-23.

Conclusion

In certain respects, the stars are in alignment with the collective view of the importance of DEI matters in legal education.  Law schools are responding to employer, student, and ABA concerns with DEI.  The pandemic has made achieving DEI goals all the more challenging.  More work is needed and more undoubtedly is coming.

[Cross-post from The FinReg Blog]

By Afra Afsharipour

Few major deals happen without the engagement and advice of investment bankers. Whether a company is undertaking an initial public offering (IPO) or engaging in a large merger or acquisition deal, investment bankers play a critical role in advising corporate executives. Bankers routinely cultivate and build close advisory relationships with executives in the hopes that such relationships lead to lucrative advisory and service roles connected with corporate dealmaking. 

Building relationships is critical for success as an investment banker. But investment bankers’ constant endeavors to nurture relationships with executives, while also maximizing their ability to enhance fees, commonly leads to allegations of banker “double-dealing,” “self-dealing, blatant conflict of interests and other chicanery.” 

Beyond such conflicts, however, investment banking faces two additional issues as society grapples with rising expectations around diversity, equity, and inclusion (DEI). First, as examined in my forthcoming article, investment banking has a deeply rooted gender gap. While corporations face significant pressure to increase diversity in both boardrooms and C-suites, investment banking has faced much less pressure to do so. Even though women only accounted for 17% of senior leaders in investment banking in 2018, these low numbers may overstate women’s leadership at the top tiers of investment banking. The hand-collected data presented in the article reveals a grim reality, including at the most prominent boutique investment banks advising corporate executives. Second, as my article also explores, the culture and accepted practices of investment banking reinforce masculine norms and biases against women in banking. 

The article argues that not only do these issues hinder gender equity in investment banking as a profession, but they also influence the relationship between bankers and corporate executives. Bankers often serve as one of the most crucial advisors to executives, and the norms and divides of investment banking calibrate corporate cultures and values in the C-suite—enabling the continued gender gap in corporate America. The article’s case study of the WeWork saga is an emblematic example of the relationship between investment bankers and corporate executives; namely, that bankers’ self-interested behavior advances toxic masculinity in the C-Suite and relates to the gender gap both among bankers and at the top rung of the C-Suite. 

Investment Banking’s Gender Gap 

Over the past decade, corporations have been under increasing pressure from various stakeholders to diversify their boards of directors and managers. However, gender disparities remain widespread in the leadership of the most prominent investment banks that advise corporate boards and executives on key transactions. 

Compared to other advisors, there are few systematic industry, firm, or deal-specific disclosures about diversity in leadership in investment banking. The limited information available regarding firm diversity reflects a long-standing gender gap in the banking and finance industry. While there are signs of change in leadership at the largest financial services firms, this growth “is partly due to the rise of nontraditional C-titled roles, such as chief diversity and inclusion officer.” These non-traditional positions rarely represent the most powerful and highly compensated positions at firms. 

The prospects for women’s continued progress in the financial service industry remain unclear. Despite some progress at the largest firms, the industry “still struggles to retain and promote its talented female professionals.” Moreover, women leaders report greater burnout as they undertake additional, typically devalued and unrewarded, responsibilities. 

The Gender Gap at Elite Boutique Banks 

In addition to the involvement of the largest investment banks, elite boutique investment banks— regularly lauded for their ability to provide less conflicted and more independent advice—have recently gained a higher share of advisory fees in transactional advisory work. News stories documenting the rise of elite boutique investment banks focus on the star bankers—almost exclusively men—at the center of the boutiques without examining how these boutique firms perpetuate investment banking’s significant gender gap. 

To examine the leadership gap at elite boutique investment banks, the article presents hand-collected data on the makeup of senior investment bankers at ten leading boutique investment banks based in the United States. The findings show that the percentage of women in senior financial advisor positions remains very low. Cumulatively, seventy-one women represented 10.6% of this survey’s total 666 senior financial advisor positions. This finding likely overstates the representation of women as senior investment bankers since three of the surveyed firms (Guggenheim Partners, Houlihan Lokey, and Lazard Financial Advisory) had limited information regarding their partners or other senior investment bankers, and instead only identified their officers and directors, or executive leadership team.

The Intersection of Investment Banking Culture and the Gender Gap 

The gap in women’s leadership in the financial services industry reflects the deeply entrenched culture of investment banking. Portrayals of the industry paint it as a “testosterone-fueled,” competitive environment where the performance of masculinities is the norm, and “homosociality” is prevalent. Successful women bankers are treated more poorly than men, regardless of whether they go along with banking culture. For example, Sallie Krawcheck, once referred to as “the most powerful woman on wall street,” described her experience working at a leading investment bank as a “boys club” where her male coworkers “contributed to a culture of toxic masculinity by communicating that she wasn’t wanted there.” Bias against women and the “cut-throat” competitive atmosphere of banking are significant contributing factors to the gender gap in banking, exacerbated by the bonus-driven compensation regime of the industry as well as sexual discrimination and harassment in the workplace. 

The norms and practices of investment banking often inhibit women’s promotion and advancement. Women in finance report that “mediocre” men are more easily promoted than women with comparable or superior capabilities due to various factors. Furthermore, women who use parental leave or work-family policies risk severe negative career consequences. Many studies confirm research findings suggesting that tournament-like cultures prevalent in investment banking acutely disadvantage women. 

Implications of Investment Banking’s Gender Gap and Culture for Inclusive Corporate Leadership 

While serious and pervasive, the impacts of the hyper-masculine investment banking culture on women investment bankers are far from the only issue facing the industry. 

The Advisory Role of Investment Bankers & Conflicts of Interest 

The culture of investment banking also affects the services and practices of bankers with respect to clients. In many transactions involving public companies, investment bankers assist the company through a myriad of roles, locating potential mergers,  or sales counterparties, providing fairness opinion letters setting forth their judgments of “fair” deals, or assisting in negotiations to help close the deal. 

Despite their prevalence in the corporate transactional landscape, investment banker conflicts are widespread. Compensation-contingent, tainted banker advice and banker competitiveness—including investment banking rankings on league tables—may negatively affect the quality of banker services to clients. Bankers can push corporate leaders to undertake decisions for their own financial incentives. In addition, especially in deals where management stands to receive personal gain, the close relationships between company management and financial advisors can influence advisors’ recommendations to curry favor with management. 

The pervasiveness of conflicts of interest in investment banking, undeterred by even the harsh criticisms of the courts, is connected with the masculine ethos of the industry. Masculinity norms influence hyper-competitive workplaces such as investment banks, impacting the power structure and hierarchies at these firms and undermining the success of women. These norms feed into a culture of conflicts at investment banks, leaving women to face a “triple bind.” That is, women “lose if they do not play by the same terms as the men,” but also face disproportionate punishment if they engage in the same conflicted behavior as men, and “over time become less likely to apply for such positions and thus more likely, individually and as a group, to be perceived as lacking what it takes to succeed in such environments.” 

Investment Banking’s Effects on the C-Suite 

A less-explored aspect of the relationship between bankers and corporate executives is that the self-interested behavior of bankers may also advance toxic masculinity in the C-Suite and undermine inclusive corporate leadership. The WeWork saga is emblematic. Not only did WeWork’s CEO, Adam Neumann, engage in unethical business conduct, but there were numerous reports—and eventually lawsuits—alleging sexism and discrimination by WeWork’s senior management. The company’s “making-the-world-a-better-place rhetoric” masked a culture where women and people of color were marginalized, harassed, and demeaned. 

Investment bankers—chasing large fees and continued business with the overvalued unicorn—enabled and funded Neumann’s reckless conduct and mismanagement of the company. Banking giant JPMorgan Chase was one of Neumann’s most ardent enablers, “supercharg[ing] WeWork’s visions of grandeur,” along with other banks, including Goldman Sachs and Morgan Stanley who served up even more astronomical valuations. Instead of curbing Neumann’s excesses and hubris, competition among bankers to win the lead role for WeWork’s high-profile IPO resulted in senior bankers emboldening Neumann. 

WeWork’s executive team was dominated by a mentality that exacerbated masculinity contests. Neumann encouraged bravado, and male executives competed to impress him. With a nearly all-male executive team, male-bonding activities such as surfing and sitting in a sauna with him left little room for women to ascertain valuable less-formal time with Neumann outside the office. Women employees, including the few women executives at WeWork, were marginalized, and those who complained were pushed out. In fact, throughout 2018—months before the company began to embark on its failed IPO process—several lawsuits by WeWork women executives shed light on the company’s “frat-boy” culture. Neumann also faced claims of gender discrimination, including one from Medina Bardhi, his previous chief of staff. Bardhi filed a complaint with the Equal Employment Opportunity Commission, alleging that she experienced pregnancy and gender discrimination at WeWork. 

There is little indication that bankers—likely aware of the suits alleging gender discrimination at the highest levels of the company—expressed any concern about WeWork and Neumann’s treatment of women. And when Neumann’s bankers did begin to express concerns with Neumann’s excessive partying at work, they expressed no concern about the company’s gender discrimination or how Neumann perpetuated a toxic environment for women at WeWork. So long as the prospects of large fees seemed imminent, Neumann’s investment bankers tolerated his well-documented “party boy” persona. 

WeWork’s investment bankers were not functioning in a manner atypical to others in the industry. Bankers had similarly indulged other founder CEOs known for creating workplaces rife with discrimination and sexual harassment.  

Conclusion 

Investment banking faces two key issues that are only recently becoming more widely recognized as society is shifting to become more conscious of the importance of DEI. The first issue is a widely acknowledged and deeply rooted gender divide. An examination of leadership at investment banks, including at the most prominent boutique investment banks, indicates that women’s success in banking remains elusive. As the hand-collected data presented in this article shows, investment banking’s gender gap is larger than what is suggested by the industry’s public pronouncements about the value of DEI. The second issue is a culture and set of practices that reinforce masculine norms and perpetuate biases against women in banking. Investment banking is an industry rife with environments hostile to women, and the industry has been slow to recognize and ameliorate a culture of toxic masculinity. 

These two issues have led to a lack of diversity in investment banking leadership, but they also have serious implications for the companies that rely on investment bankers as advisors in navigating important strategic decisions. Accustomed to a culture that tolerates—and even promotes—toxic masculinity, bankers may ignore and enable corporate leaders that are similarly hostile to women. 

Disclosure and transparency are critical to understanding gender disparities in investment banking and associated barriers and incentives. For example, without accurate diversity data, stakeholders have limited opportunity to pressure investment banks to invest in fostering diversity among their leaders, and firms have fewer incentives to prioritize inclusion. Consistent discussions about the inequities women face in investment banking and how they affect the services investment bankers provide to their clients must continue to occur for meaningful change to be enacted. Moreover, without client focus on the industry’s culture, practices, and makeup, investment banks face little pressure to increase the diversity of their leadership. As companies face greater pressures to address diversity in their leadership, they should think hard about who is advising those leaders.