Name: Legal Power Play: Why Attorneys Are Critical in Business in 2025
Uploaded: 2025-05-19
Duration: 16 min 46 s

Who will be the go-to business advisors in 2025’s legal climate? Attorneys. In- house counsel and employment litigators are tackling new political, social and legal headwinds related to workplace DEI. Join foremost legal mind Kenji Yoshino as he explores the implications of the new administration’s executive orders around DEI. Yoshino will also offer practical guidance on how leaders can mitigate legal risks by shifting DEI programs to meet contemporary challenges.   

Legal Power Play: Why Attorneys Are Critical in Business in 2025

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OK, well thank you all great start to the day so far. Um, my next point here is on President Trump's first day in office in January. He signed an executive order rescinding all diversity, equity and inclusion policies in the federal government. He also ordered government agencies to combat illegal private sector DEI preferences, mandates, policies, programs, and activities. Now, the government does not have the legal authority to tell private companies to get rid of their legal DEI programs, but still, the order rattled the corporate world, of course. Uh, our next guest is here to help us distinguish between the signal and the noise when it comes to DEI. Kenji Yoshino is the Chief Justice Earl Warren Professor of Constitutional law at New York University and the director of the Meltzer Center for Diversity, Inclusion and Belonging. He joins my colleague Fortune Leadership deputy editor and Workplace Innovation summit co-chair Azure Gilman with some important insights to share. All right, Kenji, thank you so much for joining me. I'd like to actually start with a question to the audience. Who here has felt that they've been put under pressure to change their DEI programs in some way over the past few years? OK, more hands, more honest people than I thought. OK, excellent. All right, so reminders to the audience, if you have a question, please raise your hand and someone will come over. Um, all right, so Kenji, you have a few different tools for companies to kind of think about the risk factors involved in some part of their DEI programs. The first is called a 2x2 matrix. Can you explain to me what that is? Of course. So first of all, thank you so much for having me. It's such a joy to be here and Uh, I am Kenji Oshino. I run a center on DEI that operates out of a major law school. So you can imagine that the first part of this matrix looks at anti-DEI legal risk, and that's what our phones and emails are blowing up about when the administration first came into place, and those include things like, Am I going to get sued under Title VII or Section 1981 or is Attorney General Bondi going to come after my organization and put the might of the executive branch behind these lawsuits, etc. etc. But the more we had these conversations, the more we realized that if we thought about the risk only as a legal risk, that that would be inadequate because as all of you know, the January 21st executive order said 120 days from now we're going to publish a blacklist of companies, by the way, for those of you who are counting, that's Wednesday, so it could be as early as this Wednesday. And companies are saying it doesn't matter if I know that I'm going to win all my lawsuits in the Supreme Court 3 years from now if I'm on that list. That's a social harm that I'm not going to be able to overcome. So we brought in our aperture to think about not just anti-DEI legal risk but also anti-DEI social risk. But if you think about it, right, the other thing that we need to worry about is the pro-DEI legal risks. So one of the things that we're seeing already is that companies are shutting down their DEI policies and then they're getting sued from the other side by traditional plaintiffs. Like what people of color, women who say, look, you know, we don't trust you anymore when you said you wanted to create an inclusive and equitable workplace, not just because you've retreated from DEI but also because you've retreated so quickly and you've pivoted on a dime. And then finally for those of you who love a 2x2 matrix and our completion, you know, compulsionist like I am, there's that bottom left hand box of pro DEI social risks where even if you're free of legal liability from the so-called left, right, then you could also encounter social risks. So those would include things like boycotts or bycotts, right, so individuals punishing, you know, major retailers, for example, for retreating too quickly from the. GI policies that's not legal, but it's certainly a cost to the organization or global risk for your uh global organization. Oftentimes what people want to do is to lower everything to the lowest common denominator, but then they get pilloried by jurisdictions abroad, the Canadas, EEAS, Australia's of the world that say we actually are still for DEI as much as ever, and we're going to push back if you try and lower your DEI standards globally because that's not where we are. OK, yeah, so it's not just a risk of being on Trump's blacklist, it's a risk of a boycott, a boycott, stuff like that. All right, um, the next one, it's really mouthful, stick with me, everybody. It's called the Three Ps. When a program confers a preference on a protected group with respect to a palpable benefit, so what would be an example of that? Yeah, so just to set that up, you know, we often get asked what's legal and what's illegal because the executive orders all talk about legal and illegal DEI, and the answer is the executive orders don't tell us that because they don't have the authority to do that. That is going to be defined by congressional statute, Title VII, Section 1981 as. Interpreted by the United States Supreme Court. So our North Star here is the Students for Fair Admissions decision that was decided in June of 2023, and it may look like it happened far afield in academia, but the Supreme Court gave us such a clear window into how it was thinking about discrimination that we developed these three pieces as a kind of heuristic, right, a rule of thumb to help all of us think about what's legal and what's illegal. So the three P's are they have to be a preference, as you said, for a protected group with regard to a palpable benefit. The preference means that you have to be favoring one group over another. It seems really obvious, right? But a lot of DEI policies don't do that. So if I have a really aggressive unconscious bias. Program, let's say I force every single person in the organization to do unconscious bias training. That may not be very popular, but it's absolutely legal because what you're doing is you're taking bias out of the of the organization rather than putting bias into it. Then with regard to protected groups, the group actually has to be protected by a civil rights law. So in the Title VII context, that's race, national origin, religion, color, gender, sexual orientation, and gender identity, and Section 1981, which regulates the contracting, uh, uh, uh, kind of, um, domain, so think about. Your supplier diversity programs that would involve just race. so you can actually do a lot more with supply diversity than you can with regard to employment, which is covered by Title VII. It's not covered by either of those statutes, you're totally fine. So veterans preference is totally fine, you know, first gen preference totally fine as long as it's not a pretext for engaging in a prohibited form of preference. And then finally with regard to palpable benefit like I can't sue an organization just because my feelings are hurt or because I have some ideological objection to the program. I have to show that it touched on my employment relationship in some way or I can't even get into court. In the Title VII context. This is called an adverse employment action. What the Supreme Court did last April in 2024 in the Muldrow case was to debate whether Or not it should zero that out and say you don't need to show any harm other than the distinction itself, but it ultimately settled on not significant or material harm, but some harm that a plaintiff needs to have encountered before they can advance a Title VII case in a lawsuit. So notice that all three of those elements have to be present. If one of those is missing, then there's no legal risk whatsoever, again suggesting that there's a lot we can do. Um, I think, you know, a lot of companies worked really hard on their DEI programs, years in the making, and they're trying to keep some part of it. They're just not sure which part to keep. So I'd like to play a game with you called Red Light Green Light. Are you ready? So red light means no, don't even think about it, it's off the table. Green light means yes for sure, yellow light means, you know, a little in between, tell us. Tell us what you think. All right, a women's ERG for women only, right, OK, because that's that keeps other people out. Yeah, it's, it hits a 3P. It's like it's a preference, right? Only women or a protected group woman with regard to a palpable benefit belonging to one of these ERGs is a benefit to your work environment. A women's group open to everyone. All right, an unconscious bias training that all employees must attend. A mentorship program for young people of color. Uh, red, it's only young people of color. It doesn't matter that they're young. The fact that they're people of color, white individuals are excluded is a problem. A mentorship program for young people. Totally fine. All right, recruiting at a job fair at an HBCU. Totally fine. Great. Sponsoring a ride festival. I would say green. OK, having a supplier diversity goal. Uh, depends on how rigid it is and for whom it is for. So if it's for women, totally fine because it's not a protected group if it's race. Also totally fine if it's aspirational, but if it's a hard edge goal that says we will have X%, you know, if that's red. Having a hiring quota based on race or gender, bright red, but it was bright red before SFFA, so no one has those quotas. So I don't know why we, I still, I mean, I know you know this. I don't know why the the press keeps talking about this because we haven't had those since 1978. Yeah, having the phrase diversity, equity inclusion written on your company website, fine. I mean that that might lead to social risk but legally completely fine. Um, doing an internal diversity survey. Totally fine, agree. All right, lovely. OK. That's a fun game. if anyone has a red light green light, please, this is your chance. All right, um, so you know this is a group of people from the most powerful companies in the United States. If you want them to leave this room knowing one thing for sure about DEI moving forward, what is that? It's a good question. I would say that I want you all to think about that risk matrix that I talked about and not to make any decisions. So I'm not advocating for a decision. I'm advocating for a process. I want you not to make any decision without going through the holistic process of talking through all four of those boxes. You would never engage in this kind of uh. Significant activity outside of DEI without engaging in a holistic risk analysis, right? So why should it be any different in the DEI context? So I want you to think about the pro-DEI and anti-DEI risks, and I want you to think about the legal risks and the social risks. It's only after you've thought about all of them that you act. If I had one message for you, that would be it. Um, you know, it's been quite a year, it's been quite a few months. Um, we've seen a lot of companies do a lot of things. Um, are there any responses to the new DEI landscape that are notable to you in one direction or another? Yeah, in both directions, the precipitous responses riffing off of what I just said have been dismaying. So some organizations have engaged in with the best of intentions, total stout denial, saying like this is nothing to do with us. We're not we're not changing anything, you know this is business as usual, right? And I worry about those companies being in the crosshairs of the administration or of anti-DEI activists, so I worry about that. Uh, in that direction, in the other direction, the organizations that have retreated often get really punished right by younger employees like Gen Y or Gen Z that we were just talking about, who seem to be unionized as a generation figuratively around a commitment to DEI or through these boycotts that have inflicted a huge amount of pain. The company that I want to praise that I'll call out here is uh McKinsey and Bob Sternfes there where he gave the best statement, you know, in the wake of these executive orders where he said, we believe in diversity and we believe in merit, and we believe those two things are inextricably intertwined. Because what that did was it reversed the spin of this narrative that says DI is about anti-meritocracy, right? And he said actually we believe that these two are intricated with each other and every time I use a diversity word diversity, I'm also going to use the word marriage. Yeah. Um, you know, Trump's executive orders have made a big splash. They're designed to make a big splash. Lists might be coming out this week of companies in his crosshairs. How freaked out should companies be about that? Do you have, you know, what would you say to the company that comes out on the list this week? Yeah, I think you should be, you know, appropriately concerned, right? I don't think. Need to tell you that I think that what I would say if you're on that list is take some instruction and solace in the fact that uh we've actually seen this happen before so go back and look at the law firms go back and look at the universities and think about what they have done because what we saw in both of those instances is that the first targets immediately caved and negotiated but as time. on more and more companies began to fight and then other companies took that kind of finesse, you know, position in the middle, right? So that's one thing to think about. Another piece that I really like is Sheila Hean's memo from the Harvard negotiation Project. It's the project that brought us the blockbusters getting to yes and getting past no, where she has this really insightful memo that says, I almost never tell people not to negotiate, but I'm telling you right now, don't negotiate with the administration, right, unless you have eyes wide open to the fact that this is not going to be the end, because what organizations often think is, oh, if it's just a, you know, $100 million or so, then there's a very low price to pay relatively for getting off of this, you know, blacklist or getting out from under the crosshairs, but it's never the end, right? That that that just exposes you as a soft target for more negotiation. So it may be, again, I'm not dictating a. You know, it may be that that's worth it to you, but the cost is not going to be $100 million. The cost is going to be the $100 million plus future demands made by the administration plus all the negative press and backlash that you're going to get from the other side. So thinking about the spread of reactions that we've seen from the law firms and the spread of reactions we've seen from universities and thinking about the reactions that people have had to all of them is very instructive, right, if you find yourself on that list later this week. Um, we have 20 seconds left. Are we headed to an inflection point? I think so. You know, let me end by saying, you know, I always think about DEI according to that old labor organization quote of first they ignore you, then they laugh at you, then they fight you, and then we win. So that's been my career. Right. Indeed, honestly, when I started this work two decades ago, people didn't know what it was. I'm sure many of you can relate to that, and they kind of laughed at me, right? They were like, You're in the most prestigious field of law. I teach constitutional law con law. Why would you go over and do this marginal thing that just seems very soft and fuzzy? And my response was I actually see much more continuity than rupture between the two enterprises because I've always cared about equality and dignity and inclusion. But nobody's laughing at me anymore, right? I mean, everyone understands that this is a fight and it's a fight for the identity and the soul of the nation, if not the world, right? So then the question becomes who wins that fight? In a world where talent looks like what it looks like, where more than 50% of college educated workers since 2019 are women, where by 2042 we'll be a majority minority nation with regard to race, where 23%, according to Gallup of Gen Z, self-identifies as LGBTQIA plus, not to mention trends about globalization and the like. Like, who do you think is going to win this fight? Is it going to be people who think about diversity, whatever we call it, and think about the importance of developing skills, about how to bond and how to connect and how to team with individuals who are different from ourselves no matter what that difference is, or people who are going to say, no, I don't really like this very complicated world. I want to go back to the way we never were in some kind of magical kind of imagined sort of 1950s era, thank you so much. I'm going to have to end there. Thank you so much for joining me.