FTC warns law firms about antitrust concerns with diversity certification program

The Federal Trade Commission (FTC) recently issued cautionary letters to 42 law firms regarding their involvement in a diversity certification program, hinting at potential violations of federal antitrust laws. These letters, signed by FTC Chairman Andrew Ferguson, were directed towards firms participating in the Mansfield Certification program administered by consulting company Diversity Lab. Notably, Diversity Lab’s team is prominently comprised of women, reflecting a strong commitment to diversity. The Mansfield program necessitates that firms ensure a minimum of 30 percent of candidates in consideration for leadership positions and promotions stem from “underrepresented” communities. Over 360 law firms have successfully attained “Mansfield Certification,” indicating widespread participation in the initiative. The recipients of the cautionary letters are significant legal establishments, collectively employing in excess of 50,000 attorneys.

Chairman Ferguson’s correspondence underscored the potential anticompetitive consequences of firms collectively establishing hiring benchmarks, insinuating collusion. A particular focus was placed on monthly “knowledge-sharing” calls among participating firms, where strategies for achieving diversity objectives are deliberated. Such interactions, characterized by the exchange of sensitive information, may lead to artificially lowered wages, a clear violation of antitrust regulations. Ferguson articulated concerns, highlighting the possibility of law firms engaging in agreements that prioritize personal characteristics like race and gender over merit when selecting job candidates or making pivotal hiring decisions. This practice could severely distort fair labor competition within the legal sector, impacting recruitment, compensation, and career progression.

By invoking Section 1 of the Sherman Act and Section 5 of the FTC Act, typically invoked to prevent nefarious market practices like price-fixing, Ferguson sought to extend legal safeguards to labor markets. He emphasized that orchestrated hiring norms might stifle competition for legal talent, thereby influencing salary structures and working conditions inappropriately. It is essential to underscore that the FTC’s communication does not insinuate any wrongdoing but serves as a cautionary measure aimed at heightening awareness of potential legal liabilities. The advisory letters advised firms to review their association with Diversity Lab and competitors to ensure adherence to antitrust regulations.

These developments occurred amidst broader governmental scrutiny of Diversity, Equity, and Inclusion (DEI) programs within both the public and private sectors under former President Donald Trump’s administration. Various regulatory bodies, including the Equal Employment Opportunity Commission (EEOC) and the Supreme Court, have previously scrutinized DEI initiatives for potential violations of federal laws, highlighting the immense complexity surrounding diversity efforts in contemporary legal contexts.