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In-house: Novartis to withhold 15% of fees if new panel firms miss D&I requirements

As in-house legal departments continue to push their law firms to be more diverse, Swiss pharmaceutical giant Novartis has pledged to withhold 15% of fees if diversity and inclusion (D&I) levels are not met by its 22 panel firms.

The measure introduced as part of the company’s panel review, announced yesterday (12 February), has seen a host of advisers, including Magic Circle firms Freshfields Bruckhaus Deringer and Linklaters, pledge that no fewer than 30% of associate time and 20% of partner time on a legal matter will be provided by ‘females, racially/ethnically diverse professionals, or members of the LGBTQ+ community, with an expectation that such commitments will move to parity over the next several years.’

Should a firm fail to meet its D&I commitments for a piece of legal work, Novartris will withhold 15% of fees.

Other panel firms include Alston & Bird, Arnold & Porter, Bird & Bird, Brinks Gilson & Lione, Gibson, Dunn & Crutcher, Goodwin Proctor, Greenberg Traurig, Hogan Lovells, Kirkland & Ellis, Latham & Watkins, Mayer Brown, Morgan, Lewis & Bockius, Morrison & Foerster, Munger, Tolles & Olson, O’Melveny & Myers, Sullivan & Cromwell, Troutman Sanders, Williams & Connolly, Wilmer Cutler Pickering Hale and Dorr and Womble Bond Dickinson.

‘We recognise that corporate legal departments have an incredibly important role to play in ensuring that the legal profession accelerates its efforts to make meaningful progress when it comes to [D&I],’ said Novartis group general counsel (GC)Shannon Thyme Klinger.

She added: ‘Building on our company’s public pledge to achieve pay equity and transparency by 2023, and supporting the UN’s Human Rights global LGBTI business standards, the third iteration of our preferred firm program prioritised in its selection process firms with a demonstrably strong commitment to D&I and who were willing to stand by this commitment from a financial perspective as to all Novartis matters.’

Thyme Klinger took the helm in 2018 following the abrupt retirement of long-standing group GC Felix Ehrat who become entangled in a controversy involving US President Donald Trump’s personal lawyer.

Novartis’ D&I pledge also follows two high-profile pledges from US and UK GCs urging law firms to improve their diversity efforts. In the UK, close to 100 GC have written to their law firms with the pledge, in an initiative led by Unilever GC Ritva Sotamaa and supported by Vodafone’s Rosemary Martin, Shell’s Donny Ching, Richard Price at Anglo American and Caroline Cox at BHP Billiton.