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HP Holds Back Fees to Encourage Diversity

By William Vogeler, Esq. on February 17, 2017 | Last updated on March 21, 2019

Remember when we were kids, and our parents withheld our allowance or another privilege to compel certain behavior?

Or if you have kids now, and you turn off their cell phone to get across the message that you expect compliance with certain rules?

Well, say hello to some parental persuasion from Hewlett-Packard. Starting now, the rule is: be diverse or lose 10 percent of your fees.

According to Kim Rivera, chief legal officer and general counsel for HP, the company has implemented a "diversity holdback" mandate. "With this we can hold back up to 10 percent of all invoices billed by law firms that do not meet or exceed our minimal diverse staffing requirements," she said in a letter to law firm partners.

Whaaa, What!

But mom, Bill Gates pays his kids a bonus to encourage diversity. What does your "holdback" rule mean? Like, we won't get paid fees that we already earned?!

"In order to comply with the requirement, firms must (i) field at least one diverse Firm relationship partner, regularly engaged with HP on billing and staffing issues, or (ii) at least one woman or racially/ethnically diverse attorney, each performing or managing at least 10% of the billable hours worked on HP matters," the rule says.

That doesn't exactly answer my question. So, I guess we have to employ a "relationship partner" or two diverse lawyers?

No, "an attorney who is both a woman and ethnically/racially diverse, and performs at least 10% of the billable hours worked on HP matters, satisfies the minimal diverse staffing requirement."

But What About the Fees?

What does the "holdback" mean?

Let's break it down. HP is going to "hold" attorneys' fees "back" until the attorneys comply with HP's diversity requirement. To make it easier, HP will give attorneys a year to get organized. Here's the fine print.

We've said before that in-house counsel can lead the way in legal diversity. HP is taking this prospect seriously.

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