USA: FTC issues antitrust warning to law firms over diversity certification program

The US Federal Trade Commission (FTC) on Friday issued warning letters to 42 law firms, explaining that their participation in a diversity certification program may violate federal antitrust laws.

The letters from FTC Chairman Andrew Ferguson targeted firms enrolled in the Mansfield Certification program, operated by consulting company Diversity Lab. According to the company’s “Meet Our Team” page, 18 of Diversity Lab’s 19 listed employees are women. The Mansfield program requires participating firms to ensure at least 30 percent of candidates considered for leadership roles and promotions come from “underrepresented” groups. According to Diversity Lab, more than 360 law firms have achieved “Mansfield Certification.” The recipients of Friday’s warning are some of the largest law firms in the nation, collectively employing over 50,000 attorneys. 

Ferguson’s letter argued that the coordinated implementation of hiring benchmarks among competing firms may constitute anticompetitive collusion efforts. The FTC chairman cited monthly “knowledge-sharing” calls where participating firms discuss strategies for meeting diversity goals. This signals a traditional antitrust plus factor, the exchange of competitively sensitive information, because the participating firms are presumed to be competing within the same pool of available talent. The FTC explains that this exchange of information may violate antitrust laws by depressing wages below market rates. In a statement, Ferguson noted:

Potentially anticompetitive collusion between law firms on DEI metrics can include quotas by which they agree to compose panels of job candidates based on race, sex, or other personal characteristics other than the candidate’s merit, or by which law firms agree to make final decisions about hiring and promotions based on those personal characteristics…Such agreements can distort competition for labor in legal professions, including along dimensions like hiring decisions, pay, and promotions.

Friday’s warning points to Section 1 of the Sherman Act and Section 5 of the FTC Act, laws which are traditionally applied to prevent price-fixing and market manipulation. Ferguson extended these legal protections to labor markets, arguing that coordinated hiring practices might suppress competition for legal talent and impact compensation and working conditions. The letter emphasized it is not an accusation of wrongdoing but instead a notification of potential legal exposure. The letters recommended that firms review their relationships with Diversity Lab and competitors to ensure compliance with antitrust obligations.

This comes amidst ongoing efforts by Donald Trump’s administration targeting Diversity, Equity, and Inclusion (DEI) programs both in the government and the private sector. Last March, the Equal Employment Opportunity Commission (EEOC) issued letters to 20 prominent “Big Law” firms expressing concerns that their DEI initiatives may violate federal anti-discrimination laws; the following month, Executive Order 14263 was signed, focusing on alleged “unlawful discrimination” at the law firm Susman Godfrey. Last August, the US Supreme Court upheld a National Institute of Health (NIH) policy terminating grants for research related to DEI objectives.

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