Law360 (October 12, 2018, 5:50 PM EDT) -- A new California law to open the boards of public companies to more female members presents general counsel in the state with a chance to lead the way in meeting the requirements, but it should also signal to in-house attorneys nationwide that the time is now to press C-suites about diversity.
Under the landmark bill signed by Gov. Jerry Brown on Sept. 30, public companies based in California must have at least one woman on their board of directors by the end of 2019. Companies could pay a fine if they don't follow the law, which also mandates boards with five members have two female directors, and those with six or more have at least three female directors, by 2021.
Legal professionals urge top lawyers at any public corporation to be proactive about helping to assess board composition and determine the best approach to diversify, especially in the wake of the #MeToo movement.
While a handful of U.S. states have adopted nonbinding resolutions aimed at improving gender parity on corporate boards — and European countries such as France, Norway and Spain have similar quotas — this legislation is the first of its kind to pass on the state or federal level.
Even without a mandate, this topic is one that any forward-thinking public company should be focused on, said PJ Harari, a partner and co-global leader for the in-house practice group at Major, Lindsey & Africa LLC.
"People don't like to be told they must do something," Harari said. "It's easier if they're given reasons why it's good for them and for their organization, and that's where a GC can play a role."
General counsel can educate the C-suite on this topic and push executives to think about replacing retiring board members with a wider group of people — not just for the public relations aspect but also for potentially greater success.
"If you can see there's a benefit to you as a business, then it doesn't feel like an onerous requirement that's being forced down your throat," Harari said.
Experts recognize that change takes time, especially when it involves company boards with set terms and rules. The California law says studies predict it will take as many as 50 years to achieve gender parity if no initiative is taken.
"They can't just get up tomorrow and change a third of the board," Harari said.
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