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Will the post-Pledge field be pale, stale and female?

Lacey Yong

18 May 2018

Will the post-Pledge field be pale, stale and female?

Mark Levy, Sophie Nappert, Ed Poulton, Juliet Blanch and Stavros Brekoulakis

Two years after the launch of the Equal Representation in Arbitration Pledge, delegates at GAR Live London considered whether the current focus on gender diversity in international arbitration needs to be accompanied by equal attention to ethnic and socioeconomic diversity for real change to be achieved.

The event considered diversity in light of the recent survey by Queen Mary and White & Case, launched the night before GAR Live.

This revealed that 40% of participants believe a diverse tribunal will bring some or significant improvement to decision-making. However, a combined 34% said that diversity will have no effect or worsen the quality of decision-making or that the enquiry is irrelevant, because diversity is inherently valuable in and of itself. A further 26% thought it would depend on the dispute in question, with some participants in the survey suggesting a diverse tribunal would be valuable only if the dispute itself has an element of diversity.

According to Stavros Brekoulakis, a professor at Queen Mary who led the research for the survey, this 26% figure is troubling, as it suggests that some members of the arbitration community still believe that "pale, male and stale arbitrators the best people to do the job" for all disputes that do not involve an element of diversity that might be reflected in the tribunal.

He noted that the absence of ethnic diversity in the arbital community is also problematic. In the survey, 60% of participants agreed that progress has been made on gender diversity thanks to ArbitralWomen and the Equal Representation in Arbitration Pledge but less than one-quarter (23%) perceived improvements in ethnic diversity.

While the arbitration community is likely to see greater Asian representation as a result of the rising popularity of international arbitration in Hong Kong and Singapore, there are doubts as to whether the same can be said of Africa or the Middle East, he noted.

Brekoulakis went on to suggest that those survey participants who agreed that progress has been made on ethnic diversity may be deluded given the absence of initiatives to promote multiculturalism in the arbitral community. "Where is our pledge for ethnic diversity?  Where are our arbitral ethnic initiatives? Look at this room, this lovely conference here, and you will see the problem of ethnic diversity has not been taken up by the community," he said.

The arbitration community also lacks socioeconomic diversity, said Mark Levy, partner at Allen & Overy in London and moderator of the panel. Increasing university fees and heavy student debt prohibit all but white middle-class students from attending university and entering the legal profession.

Levy went on to ask whether a growth in gender diversity without a parallel increase in ethnic and socioeconomic diversity will result in a cadre of female arbitrators who are "just female versions of all the pale, male, stale arbitrators of yesteryear."

Juliet Blanch, an independent arbitrator in London and steering committee member for the Pledge, acknowledged that it has faced criticism for focusing exclusively on gender diversity. Last year John Gaffney, a senior associate at Al Tamimi & Co in Abu Dhabi, argued in an article that the Pledge does not do enough to increase diversity in ethnicity, race, colour, culture, geography, political beliefs, age, religious beliefs, sexual orientation and socio-economic status – and Blanch said there is growing recognition that this is true.

She noted that the members of the Pledge steering committee are necessarily limited in their time and ability to represent all minorities as their work and the support provided by Freshfields Bruckhaus Deringer is done on a pro bono basis. However, she confirmed they have promised to share resources with any individual in the arbitration community seeking to establish a similar initiative for ethnic diversity and to encourage those individuals to begin their own movement.

Calls for greater diversity are not just affecting lawyers and arbitrators, but expert firms as well. According to Chris Clements of Deloitte in London, "diversity gives diversity of opinions, and opinions are precisely what experts provide." One also has to consider the appeal that a diverse group of experts will have for a diverse tribunal, noted Sophie Nappert, a Canadian arbitrator at 3 Verulam Buildings in London.

Delegates noted that female experts are not often given the opportunity to gain experience as lead expert in a cross-examination during an arbitration and many leave the field because of motherhood.

So what can be done and who should take the lead in encouraging diversity? 45% of survey participants said that institutions are in the best position to ensure diversity across tribunals. In contrast, only 27% and 23% believed the burden should fall on parties and external counsel, respectively. An even smaller percentage (7%) thought that co-arbitrators are best placed when selecting a chair – a figure that concerned Brekoulakis, who argued that arbitrators have a critical role in promoting diversity, because of their ability to pick a chair from a minority group.

According to Nappert, institutions need to take practical steps to encourage parties to share the value of diversity, even though they do not generally have a vested interest in the integrity of the international arbitration system beyond their own dispute. For example, institutions may require parties to consider a diverse list of arbitrators when issuing their request for arbitration. Institutions should also provide parties with the option of vetoing the appointment of a particular arbitrator in the interest of having a diverse panel, as well as because of nationality, expertise or age.

Institutions can also provide women, minorities and younger practitioners with their first opportunity to sit as arbitrator by recommending them to users who want a quicker dispute resolution process for smaller-value disputes.

Blanch, who sits on the steering committee of the Energy Arbitrators List established by Nappert, said she explored the idea of creating a "secondary" list of younger arbitrators who would be willing to hear lower-value energy disputes at cheaper rates and in a guaranteed short time frame. In this way, energy companies can have their low-value disputes decided cheaply and efficiently while younger arbitrators can gain experience. While the idea has not gained traction yet within the sector, she expressed hope that it could take root in the larger arbitration community.

There are further practical steps institutions can take to encourage diversity across regions. For example, institutions could establish a mentoring scheme alongside their young member organisations that pair experienced practitioners with younger lawyers of a different gender and ethnicity in another region, suggested Paula Hodges QC, the London-based head of international arbitration at Herbert Smith Freehills and co-chair of the conference.

Delegates further agreed that law firms need to take greater responsibility for promoting diversity. Maria Frangeskides of Orrick in London said that firms need to cooperate with each other to establish flexible working arrangements and unconscious bias training to ensure women and other minorities have the same opportunities as their male, white counterparts.

Firms also need to find new ways of valuing work and defining success to enable women and other minorities to progress to senior partnership – a key stepping stone towards becoming an arbitrator, argued Blanch. In past years, firms used "lockstep" compensation so that once women reached the partnership, they progressed and were paid at the same rate as men. In the absence of lockstep, however, firms have typically begun valuing "rainmaking" in a narrow sense that can make it harder for women and other minorities to enter into the equity partnership.

Blanch cited the example of male partners who have traditionally received credit as rainmakers because of their connections to clients through historically male sports, such as golfing or shooting. These partners were more likely to make the connection because they have been in the right circles, she observed.

However, as clients become increasingly sophisticated and as in-house counsel who instruct lawyers become more diverse themselves, firms need partners who can relate to clients in varied ways and provide different types of services. These include the "soft skills" that help to maintain a stable, well-trained legal team. "It's not just the person that grabs the client and drags them through the door that should get all the recognition,” she argued.

Blanch added that a law firm that only consisted of “alpha males” competing for billing credit and that did not equally value softer ways of ensuring client satisfaction would not be sustainable in the long term, as those who undertake those roles will stop doing them if their contribution is not recognised as being equally valuable in finding and retaining clients.

Edward Poulton, partner at Baker McKenzie in London, observed that external trends are forcing the evolution of the traditional view of rainmaking and the traditional makeup of partnerships. Companies are increasingly aware they are more profitable and successful when they have a diverse board of directors, he said. Accordingly, companies expect their own service providers, such as law firms, to have diverse leadership.

Poulton added that anti-bribery and corruption laws have made it impossible for traditional forms of rainmaking to occur. "In the 80s, you could fly a client in a private jet to play golf in Scotland. You just can't do that anymore!  Most corporations now have anti-bribery and corruption policies, which has led to a change in the way business development happens”.

Poulton further observed that firms need to address the ways in which unpaid internships at top arbitration practices are shutting out lawyers from different socioeconomic backgrounds. Traditionally, in England, an individual started his or her career as a trainee lawyer before gradually moving in the direction of arbitration. But a second route into the practice has since emerged: students now find they have to spend "an absolute fortune" obtaining a Master of Laws before doing internships at top practices for very low pay. This is a hindrance to social mobility, because it requires individuals to have independent means, he said.

As for expert firms, they can become more flexible to accommodate the pressures placed on female experts when they are having children, said Hervé de Trogoff, partner at Accuracy in London. Firms can also ensure that female experts gain experience through co-testifying – a common practice in civil jurisdictions where senior partners testify alongside junior experts on the same issue.

However, not all delegates were convinced that diversity could sit easily alongside other concerns. Wolfgang Peter, founding partner of Peter & Partners in Geneva, argued that institutions still have an overriding duty to ensure they appoint people of real experience and that the pool of competent female arbitrators (and law firm partners) remains relatively small.

Blanch challenged these arguments. "I don't think any woman would want to be appointed just because they were a woman. We all understand that it is counsel's duty to choose the best person – we just want counsel to recognise there are several capable women, ethnic minorities and younger men!" she said.

Peter, however, agreed that firms have a key role in promoting gender diversity. Instead of swamping the few female arbitrators who exist with more disputes than they can handle, law firms should enlarge the pool by promoting more women to the partnership, he said.

Nappert also rejected an argument from Levy that diversity could lead to fractured tribunals. "What you call consistency and homogeneity, others would call circularity," she said, before arguing that diversity is necessary to counteract confirmation bias in tribunal members.

Blanch concluded that the arbitration community is a club, but an "incredibly welcoming" one. "There is a really genuine desire to help each other. So yes, there is an element of a club, but it is a club that is so porous and so welcoming that I would hope it doesn't put people off,” she said.

Ultimately, Brekoulakis argued, there has to be a real will for change and a belief that it will improve the arbitral process.

"Unless we are convinced that diversity brings about a better decision-making process, we are not going to shift from the current status quo – where diversity is an aspiration – to [a stage] where we are actually convinced that we have to do it to improve the system," he said.

GAR Live London was held on 10 May at Allen & Overy. Hodges and Steve Finizio, partner at Wilmer Cutler Pickering Hale & Dorr, chaired the conference, which was sponsored by Herbert Smith Freehills, 3 Verulam Buildings, BDO, Orrick and Therium. Further reports on the conference will be forthcoming.

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