'Sustainability' is latest cause to earn hourly credit at corporate law firms

The Reed Smith offices in Manhattan, New York City, U.S. REUTERS/Andrew Kelly
  • Reed Smith says it is the first to offer attorneys billable hour credit for sustainability work
  • Industry watchers said it could expand to other firms, as with billable hour credits for diversity and inclusion efforts

(Reuters) - At least one major U.S. law firm will soon grant billable hour credits to attorneys for non-legal work related to sustainability—a move industry experts predict will catch on as firms compete for clients' attention and lawyer recruits.

Reed Smith, a 1,700-lawyer international firm founded in Pittsburgh, said Wednesday that starting in June attorneys can count up to 25 hours of leadership, training, advocacy and development work tied to environmental sustainability towards their billable hour targets.

Qualifying work could include serving as a leader on the firm’s internal “Green Team,” organizing sustainability-focused meetings and initiatives, working on client partnerships or joining groups such as the Net Zero Lawyers Alliance, the firm said.

Law firms use annual billable hour targets to set performance expectations and allocate bonuses to associates and other salaried attorneys, who may bill up to several hundred dollars per hour for client work. Leaders at Reed Smith said they believe the firm is the first to count non-client sustainability activities in such calculations. But law firm consultants said it may not stay that way for long.

“I wouldn’t be surprised if others follow suit, particularly among firms with global platforms where clients are looking to their suppliers for ESG credentials,” said Lisa Smith, a law firm consultant with Fairfax Associates, referring to the environmental, social and governance concerns that have become a growing focus among corporate boards.

The new 25-hour allowance at Reed Smith is part of a larger sustainability initiative at the firm that includes reducing carbon emissions and stepping up recycling.

Reed Smith, which counts ExxonMobil and Dominion Energy among its lobbying clients, did not announce any changes in its approach to client work as part of the initiative. Advocacy group Law Students for Climate Accountability gave the firm a "D" rating on its latest Law Firm Climate Change Scorecard, which evaluates firms based on their representation of fossil fuel clients in transactions, litigation and lobbying.

The firm did not respond to requests for comment on that rating or its representation of energy sector clients.

Law firms have long given attorneys billable hour credits for pro bono legal work. In recent years they have extended the practice to other activities that are not necessarily related to client matters, most notably connected with diversity, equity and inclusion. Several firms now offer lawyers 50 billable hours for DEI efforts, including Dorsey & Whitney; Hogan Lovells; Sidley Austin, and Latham & Watkins.

Reed Smith also added 50 hours of diversity and inclusion credits in 2021. In addition, it offers billable hour credits for "innovation" activities, such as designing technology to optimize legal costs or aid with regulatory compliance. Orrick, Herrington & Sutcliffe has a similar innovation initiative, though such programs are not yet widespread.

Robert Kamins, a law firm consultant with Vertex Advisors, said it would make sense for sustainability credits to gain traction the way diversity and inclusion programs have. It gives attorneys more flexibility in the kinds of non-billable hour work they can do for hourly credit—especially transactional lawyers who don’t always have the same pro-bono opportunities as litigators. And it looks good to clients, he said.

“I think there’s an element of firms trying to make a statement to the world, their clients, and attorneys about the values of their organizations,” he said.

Reed Smith’s chief administrative officer, Rebecca Hammond, said the firm's new program could also help it stand out from competitors in the current tight lateral hiring market.

“It’s good, relevant work, which I think lawyers are looking for,” Hammond said.

Sara Merken contributed reporting.

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Reed Smith set to give 50-hour billable credits for diversity-related work

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Karen Sloan reports on law firms, law schools, and the business of law. Reach her at karen.sloan@thomsonreuters.com