Most clients do not believe law firms “genuinely committed” to ESG

Hart Shepherd: General lack of transparency

Only a third of clients believe large law firms are genuinely committed to environmental, social and governance (ESG) issues, a report has found.

Researchers said the average law firm website was “simply not showing enough responsible business activity”.

Consultants Lamp House Strategy found that 51% of clients had asked their law firms to report on specific ESG metrics, with most of the rest planning to do so in the coming year.

However, only 32% believed their law firms were genuinely committed to ESG.

“Partners rarely talk proactively about their firm’s responsible business efforts. When questioned, they may not have the answers, or they provide an incohesive response (which can sometimes do a disservice to the true breadth of a firm’s responsible business strategy).

“In this sense, firms need to step up. Responsible business needs to be embedded across the firm, and partners need to be armed with the knowledge to articulate their firm’s responsible business credentials to clients in the same way they do their expertise.”

Researchers said that, like most opportunities, firms would benefit “from early adoption rather than being in catch-up mode”.

The inaugural Lamp House Strategy Responsible Business Annual Report was based on information drawn from the websites of 125 leading law firms in the UK, US and Canada on 238 different activities relating to ‘planet’, people and governance, and separate research it did earlier this year with clients.

The best-performing firms were conducing 82 of these activities, against an average of 35 across all those surveyed.

It described responsible business, in a law firm context, as meaning a “genuine focus on creating a sustainable positive impact for all stakeholders”, going “beyond prioritising equity partner profit and other interests”.

There was “a clear difference of approach” on each side of the Atlantic, with UK leading the way in all the categories of ‘governance’ and ‘planet’, and neck and neck with US firms on ‘people’.

On ‘people’, researchers said the US focused “more heavily on a smaller number of diversity characteristics”, while the UK took a “broader” approach.

UK firms were “far more transparent about how responsible business features in their approach to governance”, partly because of more reporting requirements. Canadian firms trailed in all three areas.

Researchers said: “The average law firm website is simply not showing enough responsible business activity.

“Naturally, there will be a gap between what is happening in reality at the firm and what is communicated externally; how big these gaps are remains to be seen until we receive more ‘behind the scenes’ information directly from law firms.”

Almost all firms (96%) did not talk about how they formally reviewed taking on clients and matters from an ESG perspective.

Just under seven out of 10 firms were not clearly applying ESG criteria to their supply chain, while 58% of firms were not transparent with their total pro bono hours. The figure for the UK was higher, at 68%.

Almost four in 10 law firms were not showing through their websites “any efforts towards supporting people with a disability and/or neurodiversity”.

Just one in five firms had stated targets for increasing the percentage of women partners.

Researchers scored the law firms for their published ESG performance, finding Burges Salmon the only firm to make the top 5% in all three areas. Addleshaw Goddard and Baker McKenzie made two, and DWF, Freshfields, Linklaters and Slaughter & May also in the overall top 5%.

DLA Piper came top of the planet category, with Reed Smith top for people and DWF for governance. Law firms that failed to make the top 25% were not named.

Lisa Hart Shepherd, CEO of Lamp House Strategy, commented: “It is terrific to see all law firms doing something to demonstrate they are acting in a responsible way to their people, communities and the planet.

“Yet it is disappointing to see a general lack of transparency and commitment by way of measures, targets and reporting. Clients and talent want firms to step up in this area, and firms are simply not doing enough.”

Another research project Lamp House conducted earlier this year found that partners and associates who perceived their firms to make authentic claims around responsible business were happier, more motivated to perform at their best, and more likely to recommend their firm as a place to work.

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