What is the background?
Bradley Gayton, who was the general counsel for Coca-Cola, announced a new diversity plan in January that promised to punish outside law firms seeking to work with Coca-Cola.
Under Gayton's plan, outside law firms would be required to use "diverse attorneys" for at least 30% of their billable hours with Coca-Cola, half of whom were required to be black. Firms that did not meet the diversity quota would be financially penalized.
The plan stated:
Failure to meet the commitment over two quarterly reviews will result in a non-refundable 30% reduction in the fees payable for such New Matter going forward until the commitment is met and, continued failure may result in your firm no longer being considered for KO work.
Last month, Boyden Gray, writing on behalf of the Project on Fair Representation, said the "policy of discrimination is illegal," and demanded it be immediately revoked. Gray said the quota violated federal law that prohibits racially discriminatory hiring practices.
In fact, Gray said Coca-Cola was aware the quotas are "indefensible" because of Gayton's sudden departure as Coca-Cola's general counsel last month. Gayton had joined Coca-Cola less than one year ago on Sept. 1. Gayton transitioned to a consultant role, which is worth $12 million, according to Bloomberg Law.
