Can Lawyers be Conscious Capitalists?
By Soledad Matteozzi
We are used to identifying conscious businesses with companies that take ownership over their impact on the planet and are built around values to make positive change. Great companies such as Patagonia, Unilever, Natura come to mind. However, we may not tend to think of law firms as conscious organizations.
I will argue that today, the law profession is shifting and it is a great place for any Conscious Capitalist to create positive change. Being a lawyer myself, and after joining the Board of Conscious Capitalism Connecticut, I conducted research on what law firms are doing in terms of sustainability and what role they are playing in helping their clients adapt to new Environmental, Social and Governance (ESG)/Sustainability demands. I was glad to learn that many law firms are deeply invested in incorporating ESG/Sustainability into their practices leading the way to a different way of doing business. Yet, there are many firms that need to better understand how to transition their practice to this new paradigm. With the idea of learning from what leaders in the industry are doing, I co-moderated a panel discussion with Gayatri Goshi, the Executive Director of the Law Firm Sustainability Network where speakers Pamela Cone, Founder and CEO of Amity Advisory, and Alison Torbitt, Partner at Energy and Environmental Group at Nixon Peabody law firm, shared their valuable perspectives on the challenges and opportunities for law firms today.
We had a one-hour highly active discussion, with great questions from the audience, who seemed engaged and eager to learn.
The following items are the main takeaways. It is my hope that this information is useful for you and that more law firms locally get inspired to take the leap and join this movement:
- The results from a survey conducted by the Law Firm Sustainability Network showed that 96% of law firm respondents affirm that clients are demanding them to report on their ESG/Sustainability efforts in Request for Proposals. Why? Because today law firms are considered part of their client’s supply chain and therefore a key element in their ESG efforts, especially when measuring scope 3 carbon emissions. To remain compliant with their own targets, most clients require law firms to demonstrate their ESG/Sustainability measures and credentials in their Requests for Proposals. Therefore, it is fair to say that the absence of a sustainability strategy and ESG reporting presents a risk for business continuity. I understand that a solid ESG strategy could not be the main selection criteria when hiring a lawyer, but the absence of it could put your firm at a serious disadvantage.
- Clients are becoming more sophisticated in ESG and they are demanding knowledge and understanding of ESG from their advisors to help them transition to more sustainable practices. Buyers of legal services confront a growing list of environmental and social issues that pose serious risks and opportunities for their businesses. Lawyers today have the opportunity to work with their clients to ensure they address these risks and maximize opportunities. But, to do that, lawyers need to be knowledgeable on ESG issues.
- The regulatory landscape is shifting to incorporate elements of ESG. Clients need their lawyers to help them mitigate risks and identify opportunities. As lawyers, we need to be prepared to advise clients on thinking through and considering the impact, and the financial and reputational risks associated with environmental and social issues arising from new regulations affecting our clients’ businesses.
- The new generation of lawyers is demanding law firms to walk the talk. Entry-level associates are increasingly requiring law firms for their ESG credentials. The younger generation of attorneys and potential new hires ask questions about diversity, equity, inclusion, and environmental policies. New generations of talent want something more than just a paycheck; they want to join law firms and organizations that reflect their values and beliefs. Having a clear Sustainability/ESG strategy can help differentiate firms bidding for conscious talent.
- Law Firms are moving away from a “good to have” policy, to make it part of their business strategy. Historically law firms have seen their social and environmental impact as not material but as a nice program to have. Today, they are developing robust programs that actually generate a positive impact. Alison Torbitt explained that at Nixon Peabody, they started by classifying their sustainability initiatives into three buckets: internal, external-billable, and external-non billable. Internal mainly includes diversity, equity, inclusion, and wellness initiatives. External billable is their consulting work regarding sustainability/ESG mitigation, and contamination remediation. Finally, their external non-billable category represents their pro bono commitments and their donations to socially and environmentally friendly nonprofits and start-ups. She explained that today their current efforts are focused on their purpose and impact. Leadership is reflecting on: As a law firm, how can they positively impact everything they do? They are working on a strategic impact that brings all sectors of the business together – every practice group, management, business development, marketing, communications, operations, procurement, and compliance.
It is not about reinventing the wheel but seeing the law profession through a new perspective. For this purpose, it is crucial to have a cross-sector approach and stop acting and thinking in silos. Law firms need to connect the dots and practices and get everyone involved.
Law firms and lawyers have always had an important role in our society. Lawyers are trusted advisors to their clients and have historically helped shape and drive change and business behavior.
Today, as Pamela Cone mentioned on our panel, they have the opportunity of a lifetime to help their clients transition to more conscious practices and behaviors. This transition is both the most significant challenge and the biggest opportunity for the legal profession. While doing so, they also need to build their internal sustainability programs and lead by example.
Lawyers that become conscious capitalists will not only help save our world but also be successful while doing so.
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