Diversity Articles

Wal-Mart `Conscientious Objectors' Push Lawyer Hiring (Update1)

By Carlyn Kolker

Nov. 28 (Bloomberg) -- To Wal-Mart Stores Inc.'s top lawyer Tom Mars, diversity is as important as always low prices.

Mars, 49, has built one of the most diverse corporate legal departments in the country, according to Veta Richardson, executive director of the Minority Corporate Counsel Association. Since he became general counsel at the world's largest retailer in May 2002, Mars's department has nearly tripled in size to 160 U.S. lawyers, of whom 70 are women and 57 are minorities.

Mars is leading changes mandated by Wal-Mart Chief Executive Officer H. Lee Scott Jr., who in 2004 said he would tie executive bonuses to diversity goals. Wal-Mart, often criticized over its employment policies, is attempting to reach out to a broader group of shoppers and investors by emphasizing diversity internally and at companies where it does business.

Scott, under pressure after Wal-Mart stock on Sept. 10 fell to its lowest point since 1999, is trying to transform the chain's image by promoting staff diversity and environmentally friendly policies. He is also reaching out to former foes such as labor unions by offering better health benefits for workers.

``I think they have actually gone the extra mile on this,'' Tim Smith, chairman of Washington-based Social Investment Forum, a trade association of socially responsible investor groups, said of the company's diversity efforts.

Wal-Mart, facing the largest sex-bias lawsuit in the U.S., has been criticized by institutional shareholders such as F&C Asset Management Plc and New York City pension funds arguing the retailer has violated U.S. labor laws and underpaid its workers.

Changing Minds

The diversity program, along with environmental ``sustainability efforts,'' may persuade investors who have shunned the stock to change their minds.

``Every saint has a past, and every sinner has a future,'' said Amy Augustine, senior social research analyst at U.S. mutual fund company Calvert Group Ltd., which focuses on socially responsible investing.

Wal-Mart has made a ``good-faith effort'' on diversity and now meets more of Calvert's screening tests than it did three years ago. The company still falls short of Calvert's investment criteria, said Augustine, declining to disclose specifics.

Improving Wal-Mart's image may also lure shoppers from competitors such as Target Corp. and Costco Wholesale Corp. Retail analyst Burt Flickinger of Strategic Resource Group said from one-fifth to one-fourth of U.S. shoppers avoid Wal- Mart because they are ``conscientious consumer objectors,'' who dislike its policies.

Lawsuits Over Pay

Wal-Mart faces more than 70 lawsuits over alleged hourly wage-law violations, as well as a class-action lawsuit in federal court in San Francisco, seeking to represent as many as 2 million female employees, accusing the company of paying women less and giving them fewer promotions than men.

Mars said the discrimination suit has no relationship to Wal-Mart's diversity program. ``Those allegations are just allegations,'' Mars said in an interview at Wal-Mart's Bentonville, Arkansas, headquarters ``Frankly, for six women to suggest that their experiences are representative of a group as large as the class that they seek to sustain and represent, is absurd.''

Whatever its practices with other workers, Wal-Mart is a diversity standard-setter among in-house counsel, making ``unheard of'' efforts, Richardson of the Minority Corporate Counsel Association said, citing 2005 data supplied by 200 corporate law departments.

Most Diverse

``I don't know of a large law department in the country as diverse as Wal-Mart,'' she said. The department has a higher ratio of women and minorities than the rest of Wal-Mart management, according to data the company released last year.

Its diversity also exceeds that of all U.S. lawyers. The department is 44 percent women and 36 percent minority, compared with 33 percent and 11 percent of attorneys nationwide, according to company and U.S. Labor Department data.

Debra Hughes, a 37-year-old black woman, joined Wal-Mart in 2005 from the Pittsburgh-based firm now called Kirkpatrick & Lockhart Preston Gates Ellis. She was impressed by Wal-Mart's ``genuine'' efforts to retain minorities, such as an invitation to dinner with Benjamin Hooks, the former executive director of the National Association for the Advancement of Colored People, during her first month at the retailer, she said.

Mars once worked for U.S. presidential candidate Hillary Clinton, whom he calls his mentor, at the Rose Law Firm in Little Rock. He later headed the Arkansas State Police under then- governor and now presidential candidate Michael Huckabee.

Quick Rise

Mars became Wal-Mart general counsel in May 2002, less than six months after joining the company. He inherited a department that didn't have enough lawyers to handle the retailer's legal matters, he said. After finding the lawyers that were there had been hired because they were ``handy'' or ``cheap,'' he went on a hiring spree.

``I confess diversity was not a top-of-mind issue for me,'' said Mars, who graduated first in his class at the University of Arkansas School of Law.

In 2004 a Wal-Mart lawyer signed up Mars to speak at a conference on diversity in Chicago. The meeting persuaded Mars to consider recruiting more women and minorities, in part, he said because he'd exhausted efforts to hire attorneys from his own social and professional networks.

Mars dispatched Wal-Mart lawyers to meetings for women and minority lawyer groups, eschewing executive recruiters. Last year Wal-Mart lawyers appeared at 53 such events, said Associate General Counsel P. Alex Vasquez.

Recruiting Link

``We created this nexus between our diversity involvement and our recruiting,'' said Vasquez, who chaired a Hispanic outreach program at NorthWest Arkansas Community College. Mars said he experienced an ``epiphany'' that left him convinced minority and women attorneys represent the best fit for Wal-Mart.

Mars spread the policy across Wal-Mart's $100 million-plus legal budget. One hundred and fifty outside law firms must disclose how many women and minority attorneys they hire, retain and promote. Since directing lawyers to do this, Wal-Mart has severed ties with four firms, said Mars, declining to name them.

Wal-Mart also changed the so-called relationship partner, or liaison who oversees the management of business between the law firms and company, from white men to women and minorities at 40 firms, Mars said.

One beneficiary is Mark Bryant, a partner in the Kansas City, Missouri, office of Sonnenschein Nath & Rosenthal who became the Wal-Mart relationship partner in April. ``As a practical matter, Wal-Mart has changed the complexion of law firms across the country,'' he said.

To contact the reporter on this story: Carlyn Kolker in New York at This e-mail address is being protected from spambots. You need JavaScript enabled to view it