Discriminations

The Hishon v. King & Spalding clarifies that law firms' partnership decisions are subject to anti-discrimination laws.

Unfortunately, law firms might still try to get around these laws:

After the decision, Harriette Dorsen, then a partner in a New York City firm was quoted as saying: "I'm not sure what practical progress will be made. Partnerships can be awarded in ways so that prejudice is disguised."

Oddly, law firms are getting around anti-discrimination laws through a new shell game that should be familiar to readers here. That is, they have their Fortune 500 clients REQUIRE that their law firm have a certain number of diversity hires. They also often require that the law firms have a specific diversity human be assigned to the big ticket client. This way, the client forces the law firm to promote the diversity human, otherwise, the multi-million dollar account will be lost.

Using this scam, the law firms claim that they are not really illegally discriminating, but rather that they HAVE to discriminate because of business need (their clients require them to).

Now, does this seem legal? Why can't someone sue these law firms for violation of Title VII?

the company is making a rather silly legal argument, even if we accept that atlanta's minority partner requirement is unconstitutionally discriminatory. the argument basically ignores the distinction between a shareholder of a publicly traded company and a partner of a subsidiary of that company (in this case, the subsidiary would be the mercury LLC). in most cases, both the partner and shareholder would be considered "owners," but that's pretty much where the similarity ends. the rights, duties and liabilities are usually completely different, and the suggestion that a shareholder should be used as some sort of surrogate partner (of a subsidiary of the same company of which he's a shareholder) is kinda ridiculous.

macquarie's lawyers apparently tried to get around this problem by saying that anyone so inclined can acquire an "indirect" (as opposed to a direct) ownership interest in the parent company. therefore, under the spalding case, mercury's partnership decisions aren't discriminatory under title VII. admittedly i haven't read the complaint but that's how i'm reading your post and the article you linked.

of course, though, the company's position completely misreads the spalding. the obvious implication of the argument is that the mercury LLC subsidiary should be disregarded for purposes of atlanta's minority business partner law, kinda like how pass-through entities such as LLCs and partnerships are disregarded for federal and state tax purposes. (yes, i'm assuming macquarie is making an "even if" argument here: i.e., although mercury is arguably discriminatory when viewed as separate and independent entity, macquarie doesn't discriminate with respect to whom it sells its shares; thus, mercury can't be discriminatory.) it seems like macquarie is trying to attribute the racial makeup of its shareholders (or at least the fact that anyone of any race can buy its shares) to its subsidiary. but if such attribution is allowed under spalding, racist partnerships could easily completely avoid title VII simply by merging into a corporation whose shareholders are "diverse." (not to mention LLCs don't have shareholders.) i'm almost 100% sure there's language in spalding proscribing this result.

note though that i agree that atlanta's minority partnership law likely runs afoul of the spalding case. yet if macquarie prevails, which it probably should, it won't be because "anyone who 'desires' to acquire an 'indirect ownership interest can do so' by purchasing stock in Macquarie."

alas, it's late, and i may have missed a crucial detail in your post or in the article. i certainly hope that's the case, for if it's not, then macquarie's lawyers should be fined for making such a cooky argument.

addendum:

i guess i was right. and wrong. more wrong than right. right in that i missed a crucial detail, and wrong about macquarie's lawyers. is macquarie even relying on spalding for its attribution proposition?

Chauncey - I haven't seen the legal arguments and so don't know whether they're citing Hishon.

ACF - The legislative history of Title VII if filled with assertions that "customer preference" provides no license to discriminate. The the demands of clients, Fortune 500 firms or not, cannot make racial discrimination legal.

John,

Thanks for the Title VII info.

Yet again, I can't figure out why there are not massive class-action lawsuits against violators of anti-discrimination laws (Title VII in this case).

I can assure you that a large number of Fortune 500 companies REQUIRE their outside counsel to specifically assign "diverse" lawyers to their cases. They even have whole conferences where the companies and law firms get together to share their best practices for discrimination in this regard.

Chauncey, do you know if these behaviors are actionable?