In-House Counsel

Coca-Cola Shook Up Diversity Efforts, Racist Shareholders Gushed Out

Asking outside counsel to improve staffing results in chaos.

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Coca-Cola Reports Strong Quarterly Earnings

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Back in January 2021, Coca-Cola’s then-new general counsel wrote a letter to every law firm representing the company in the United States. Bradley Gayton considered the legal industry’s chronic diversity problem and crafted a proposal to use Coca-Cola’s power as a consumer to create change in the market. In addition to seeking Mansfield Rule certification and joining ABA Resolution 113, Gayton’s new policy would require firms to “commit that at least 30% of each of billed associate and partner time will be from diverse attorneys.” At least half of that figure would be from Black attorneys — a reasonable ask based on census data.

So of course all hell breaks loose.

Gayton is out of a job within 3 months. By May, the company is publicly announcing that it’s put a pause on all of this. “People are scared. People in-house have received the message,” Donald Prophete, a partner at Constangy, Brooks, Smith & Prophete, tells Corporate Counsel at the time.

Fast forward to this week. Bloomberg Law has obtained a February 7, 2022 letter from Coca-Cola to a group of shareholders — names redacted — officially disavowing the policy. According to the Bloomberg piece, this group of shareholders threatened litigation claiming Gayton’s proposal amounted to an “illegal discriminatory” policy.

The letter is addressed to Offit Kurman partner Anthony Delcollo and the ironically named American Civil Rights Project. The ACRP issued this statement:

“It’s amazing that neither the General Counsel of a large corporation like Coke, nor the large, prominent law firms the policy involved, seem to have considered its direct conflict with American civil rights laws. It’s even more amazing that so many other sophisticated, American corporations have similarly disregarded obvious legal problems to adopt comparably ‘woke’ policies.”

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That WOULD be amazing! How could so many highly sophisticated Am Law 100 lawyers and Fortune 50 executives not see any legal problem with these policies?

As Occam’s Razor would suggest, it’s probably because there weren’t any legal problems with the policy. That’s why every smart person involved thought it was fine.

The policy didn’t say the company wouldn’t work with any group of lawyers, just that any lawyer they do work with should staff the matter with diversity. If the law firms are in compliance with existing laws — and firms of the size Coca-Cola works with should be — they would have enough attorneys on hand to meet these meager staffing requirements. It wasn’t discriminatory on its face nor did it require firms to discriminate.

Just about the only thing an aggrieved shareholder could say is that Gayton’s proposal might lead to more of the company’s legal work being handled by women and minority attorneys. Which would be an injury to the shareholders… why exactly? Go ahead and say the quiet part out loud, we all already know.

But unhappy shareholders don’t always need a cognizable legal theory to get action, just spineless corporations.

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Coca-Cola Scraps Diversity Policy for Outside Law Firms [Bloomberg Law]

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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