‘Architect’ of Law Firm DEI Programs Dissolves

Diversity Lab LLC, a for-profit diversity, equity and inclusion (DEI) consultancy, has permanently ceased operations following a Federal Trade Commission investigation. The company informed the FTC that it filed paperwork to dissolve itself as a business entity with the California Secretary of State on Friday.

Earlier this year, the FTC opened a formal inquiry into anticompetitive behavior related to Diversity Lab's Mansfield Certification program. In Diversity Lab's own words, the Mansfield program "writes the unwritten rules" imposing discriminatory DEI employment practices among law firms and legal employers.

The investigation arose out of public statements showing that Diversity Lab awarded Mansfield Certification based on law firms' adherence to common DEI hiring standards, including quotas based on race, gender and other demographic characteristics. In particular, law firms would certify that they considered candidate pools made up of at least 30% individuals with particular characteristics for certain employment decisions.

The Mansfield program was founded in 2016 and grew to include over 360 law firms. More than half of these firms were also part of "Mansfield Certification Plus," which required them to certify that they actually implemented Diversity Lab's 30% employment quotas in their final employment decisions.

Participating law firms employed tens of thousands of attorneys who were subject to Diversity Lab's DEI rules. The FTC investigation sought information relevant to determining whether the Mansfield agreements were collusive in violation of Section 1 of the Sherman Act and Section 5 of the FTC Act.

"Hiring on the basis of protected characteristics rather than on merit is as immoral and un-American as it gets," said Chairman Andrew N. Ferguson. "Colluding with your competitors to set race-based quotas for hiring is not only immoral, but it also may violate the antitrust laws. The FTC will not tolerate agreements rigging the labor markets. I hope today's developments will encourage law firms to compete to hire the best talent, rather than to enter into agreements that exclude job applicants because of the applicants' race or sex."

In January, Chairman Ferguson issued warning letters to 42 law firms that participated in the Mansfield program.