Federal Trade Commission Chairman Andrew N. Ferguson issued warning letters Tuesday to 42 major law firms, cautioning that their coordinated diversity, equity and inclusion hiring practices through the Mansfield Certification program may constitute anticompetitive collusion under federal antitrust laws.
The warning letters target firms that participated in Mansfield Certification, a program created by Diversity Lab, a for-profit DEI consultancy that claims to "write the unwritten rules" establishing common race and gender-based employment practices across the legal industry. The 42 firms collectively employ over 50,000 attorneys subject to Diversity Lab's criteria, with hundreds of additional firms employing tens of thousands more attorneys also having received the certification.
To obtain Mansfield Certification, law firms must agree to follow specific DEI-based employment standards set by Diversity Lab. According to the FTC, public information suggests the firms meet regularly with Diversity Lab and their competitor law firms to discuss common implementation of these criteria, raising concerns about potential coordination among competitors.
"Potentially anticompetitive collusion between law firms on DEI metrics can include quotas by which they agree to compose panels of job candidates based on race, sex, or other personal characteristics other than the candidate's merit, or by which law firms agree to make final decisions about hiring and promotions based on those personal characteristics," Chairman Ferguson said in a statement.
The chairman emphasized that such agreements can distort competition for labor in legal professions, affecting hiring decisions, pay, and promotions. The FTC's warning specifically addresses concerns about competitors coordinating on the personal characteristics of their candidate pools and sharing sensitive information about compensation and benefits.
The letter recipients represent some of the largest and most prestigious law firms in the United States, including Skadden, Latham & Watkins, Davis Polk, Gibson Dunn, Paul Weiss, Covington & Burling, Sidley Austin, White & Case, WilmerHale, Arnold & Porter, Mayer Brown, and DLA Piper. Other notable firms receiving warnings include Cooley, Goodwin Procter, Hogan Lovells, Holland & Knight, K&L Gates, Morgan Lewis, Perkins Coie, and Reed Smith.
Additional firms targeted in the warning include Alston & Bird, BakerHostetler, Debevoise & Plimpton, Dentons, Faegre Drinker, Fox Rothschild, Gordon Rees, Greenberg Traurig, Husch Blackwell, Jackson Lewis, Lewis Brisbois, Littler, McDermott Will & Emery, McGuireWoods, Nelson Mullins, Ogletree Deakins, Polsinelli, Sheppard Mullin, and Troutman Pepper.
The FTC's action represents a novel approach to antitrust enforcement in the employment context, particularly as it relates to diversity initiatives. Federal antitrust laws generally prohibit agreements between competitors that restrain trade, including coordination on employment practices that could affect wages, hiring, or working conditions.
The warning comes as DEI programs face increased scrutiny across various industries following recent Supreme Court decisions limiting affirmative action in higher education. The court's ruling in *Students for Fair Admissions v. Harvard* has prompted organizations to reevaluate their diversity programs to ensure compliance with federal law.
Chairman Ferguson's letters remind the firms that collusion in hiring practices can violate antitrust laws, particularly when competitors coordinate on employment decisions. The FTC appears to be drawing a distinction between individual company diversity efforts and coordinated industry-wide practices that may restrain competition.
Diversity Lab, the company behind Mansfield Certification, positions itself as helping to establish industry standards for DEI practices. However, the FTC's warning suggests that when competitors adopt uniform hiring standards through a third-party intermediary, it may cross the line from permissible individual action to prohibited coordination.
The legal industry has been actively pursuing diversity initiatives in recent years, with many firms setting specific targets for recruiting, hiring, and promoting attorneys from underrepresented groups. The Mansfield Certification program has been one prominent mechanism for firms to demonstrate their commitment to these goals.
While the letters constitute warnings rather than formal enforcement actions, they signal the FTC's intent to scrutinize coordinated employment practices more closely. The commission has not announced any formal investigations or enforcement proceedings against the firms at this time.
The recipients of the warning letters now face decisions about how to respond to the FTC's concerns while maintaining their diversity commitments. Some firms may choose to modify their participation in industry-wide DEI programs, while others might seek legal guidance on how to structure diversity initiatives to avoid antitrust concerns.
This development reflects the complex intersection of antitrust law, employment practices, and diversity initiatives, an area likely to see continued attention from federal regulators. The ultimate resolution of these concerns may require firms to balance their diversity goals with antitrust compliance requirements, potentially reshaping how the legal industry approaches DEI initiatives.