Back in February, we told you the Trump administration was bullying one of Biglaw’s best diversity initiatives out of existence. At the time, Diversity Lab founder Caren Ulrich Stacy was calling it a “pause.” We were… skeptical that was the right word for it. Turns out, our skepticism was warranted.
Diversity Lab is shutting down.
The Federal Trade Commission, which launched its investigation into Diversity Lab in January with a splash, issuing a press release and 42 warning letters to law firm clients, has now completed its work of dismantling one of the most effective diversity initiatives the legal profession has ever produced. The FTC and Diversity Lab spent months in negotiations over a proposed consent decree. Stacy wouldn’t sign it. And honestly, it’s a corporate death sentence dressed up in regulatory language. Among other requirements, the decree would have prohibited Diversity Lab from hosting or participating in any meetings among employers in the legal industry for 10 years, banned it from collecting or sharing disaggregated data for a decade, and required it to end the Mansfield Rule entirely, while submitting compliance reports to the FTC every 150 days and paying for an FTC-selected monitor to watch over them.
“We lacked operating funds to continue. We lacked operating funds to outlast litigation, and even if we had had the operating funds, I certainly wasn’t willing to continue negotiating on a consent decree,” Stacy said. “And I certainly wasn’t willing to go into litigation with the possibility of having to hand over confidential client information to the FTC, knowing they would weaponize it, so the only remaining choice was dissolution.”
As Stacy wrote in her open letter closing out the organization, it wasn’t a stellar legal argument that tanked Diversity Labs, but resources, pure and simple, “The FTC didn’t need a valid legal argument to win. It just needed a bully pulpit, the resources of the federal government to outlast our small operating budget, and the leverage of threatening to drag our clients into a baseless investigation.”
Remember, The FTC’s position was, to use a technical term, bullshit. Arguing that the Mansfield Rule, a voluntary certification requiring law firms to consider diverse candidates for leadership roles, constituted an anticompetitive agreement among law firms. A federal court said as much; U.S. District Court Judge Beryl Howell, in the Perkins Coie executive order case, affirmed that Mansfield “expressly does not establish any hiring quotas or other illegally discriminatory practices, requiring only that participating law firms consider attorneys from diverse backgrounds for certain positions.”
Not that the FTC seemed particularly interested in what courts had to say. The agency’s chair had already made his priorities plain, writing in a press release that “DEI is a scourge on our institutions” and stating on X: “Under my leadership, the FTC is doing its part to end the DEI plague.” This was a political operation with a paper-thin legal theory attached to it, and it worked exactly as intended.
The work, to Stacy’s credit, isn’t entirely gone. As she wrote in her closing letter, the structural changes Mansfield drove don’t disappear just because the certification program does: “400 law firms and legal departments now have transparent advancement processes and promotion criteria that doesn’t go away, because Diversity Lab or Mansfield Rule goes away.” The OnRamp Fellowship returned more than 125 lawyers to practice after extended career breaks. The disability inclusion pilot drove a 3x increase in overall applicant volume at participating firms. The parental leave pilot brought men’s leave usage from 50% to 95%. These are documented results.
“All of the work we did wasn’t about programs with start and end dates — it was about fixing systems and leveling the playing field,” Stacy said. “So that lives on well past Diversity Lab.”
Maybe; hopefully. But let’s not paper over what happened here with optimistic framing. Diversity Lab was targeted by multiple federal agencies (DOJ, EEOC, and FTC) in coordinated succession, driven to financial ruin, and forced to close because it was doing work an administration with a “DEI is a plague” worldview didn’t like.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Bluesky @Kathryn1
The post It’s Official: The Trump Administration Finished What It Started With Diversity Lab appeared first on Above the Law.
Back in February, we told you the Trump administration was bullying one of Biglaw’s best diversity initiatives out of existence. At the time, Diversity Lab founder Caren Ulrich Stacy was calling it a “pause.” We were… skeptical that was the right word for it. Turns out, our skepticism was warranted.
Diversity Lab is shutting down.
The Federal Trade Commission, which launched its investigation into Diversity Lab in January with a splash, issuing a press release and 42 warning letters to law firm clients, has now completed its work of dismantling one of the most effective diversity initiatives the legal profession has ever produced. The FTC and Diversity Lab spent months in negotiations over a proposed consent decree. Stacy wouldn’t sign it. And honestly, it’s a corporate death sentence dressed up in regulatory language. Among other requirements, the decree would have prohibited Diversity Lab from hosting or participating in any meetings among employers in the legal industry for 10 years, banned it from collecting or sharing disaggregated data for a decade, and required it to end the Mansfield Rule entirely, while submitting compliance reports to the FTC every 150 days and paying for an FTC-selected monitor to watch over them.
“We lacked operating funds to continue. We lacked operating funds to outlast litigation, and even if we had had the operating funds, I certainly wasn’t willing to continue negotiating on a consent decree,” Stacy said. “And I certainly wasn’t willing to go into litigation with the possibility of having to hand over confidential client information to the FTC, knowing they would weaponize it, so the only remaining choice was dissolution.”
As Stacy wrote in her open letter closing out the organization, it wasn’t a stellar legal argument that tanked Diversity Labs, but resources, pure and simple, “The FTC didn’t need a valid legal argument to win. It just needed a bully pulpit, the resources of the federal government to outlast our small operating budget, and the leverage of threatening to drag our clients into a baseless investigation.”
Remember, The FTC’s position was, to use a technical term, bullshit. Arguing that the Mansfield Rule, a voluntary certification requiring law firms to consider diverse candidates for leadership roles, constituted an anticompetitive agreement among law firms. A federal court said as much; U.S. District Court Judge Beryl Howell, in the Perkins Coie executive order case, affirmed that Mansfield “expressly does not establish any hiring quotas or other illegally discriminatory practices, requiring only that participating law firms consider attorneys from diverse backgrounds for certain positions.”
Not that the FTC seemed particularly interested in what courts had to say. The agency’s chair had already made his priorities plain, writing in a press release that “DEI is a scourge on our institutions” and stating on X: “Under my leadership, the FTC is doing its part to end the DEI plague.” This was a political operation with a paper-thin legal theory attached to it, and it worked exactly as intended.
The work, to Stacy’s credit, isn’t entirely gone. As she wrote in her closing letter, the structural changes Mansfield drove don’t disappear just because the certification program does: “400 law firms and legal departments now have transparent advancement processes and promotion criteria that doesn’t go away, because Diversity Lab or Mansfield Rule goes away.” The OnRamp Fellowship returned more than 125 lawyers to practice after extended career breaks. The disability inclusion pilot drove a 3x increase in overall applicant volume at participating firms. The parental leave pilot brought men’s leave usage from 50% to 95%. These are documented results.
“All of the work we did wasn’t about programs with start and end dates — it was about fixing systems and leveling the playing field,” Stacy said. “So that lives on well past Diversity Lab.”
Maybe; hopefully. But let’s not paper over what happened here with optimistic framing. Diversity Lab was targeted by multiple federal agencies (DOJ, EEOC, and FTC) in coordinated succession, driven to financial ruin, and forced to close because it was doing work an administration with a “DEI is a plague” worldview didn’t like.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Bluesky @Kathryn1
