Washington: The U.S. Federal Trade Commission (FTC) on Friday sent formal warnings to dozens of leading American law firms, asserting that certain diversity, equity and inclusion (DEI) employment practices may run afoul of federal antitrust law by diminishing competition in the legal job market.
In letters dispatched to 42 large law firms, the FTC cautioned that coordinated hiring strategies based on DEI criteria particularly when shared among competing firms or tied to agreed-upon benchmarks could be viewed as “potentially unfair and anticompetitive.” These letters represent one of the most visible regulatory tests yet of how longstanding DEI initiatives interact with competition rules designed to prevent businesses from colluding on employment terms.
The firms receiving the warnings include some of the most influential in the United States, among them Alston & Bird, Hogan Lovells, Perkins Coie, DLA Piper and White & Case. Collectively, they employ tens of thousands of lawyers and have in recent years been active participants in industry-wide diversity efforts.
At the core of the FTC’s concern is the Mansfield Certification program a widely adopted DEI framework created by Diversity Lab that encourages firms to expand recruitment and retention of attorneys from under-represented backgrounds. To obtain this certification, firms agree to follow shared standards and often communicate with each other about best practices. The FTC’s letters remind these firms that such coordination on hiring policies, especially when it involves agreeing on the makeup of candidate pools or discussing pay and promotion criteria, could violate competition laws if it in effect suppresses rivalry for legal talent.
FTC Chairman Andrew N. Ferguson, in articulating the agency’s position, said that any “collusion” between competitors on staffing decisions based on personal characteristics rather than individual merit can distort labour market competition influencing not just hiring but also salary and promotion decisions across the sector. The warning underscores the FTC’s broader mission to uphold competitive labour markets, reflecting recent guidance that agencies should more closely scrutinize employment practices that might restrain worker mobility or employer competition.
The timing of the FTC’s action aligns with intensified federal scrutiny of DEI programs across multiple agencies. Last year, the U.S. Equal Employment Opportunity Commission (EEOC) sent data requests and compliance inquiries to several major law firms, probing whether specific diversity initiatives might involve unlawful disparate treatment based on protected characteristics. Some firms later agreed to modify or discontinue DEI programs under EEOC oversight.
This regulatory environment has been shaped in part by executive actions under the current U.S. administration that seek to curtail DEI initiatives within federal agencies and among government contractors, framing some diversity metrics as inconsistent with merit-based hiring principles. Legal experts note the complex legal terrain firms now navigate: they must balance commitments to workforce diversity with strict civil rights protections and avoid any agreements that could come under antitrust scrutiny.
Law firms and industry groups have reacted cautiously. Some have begun revising the language of diversity programs to emphasize compliance with both antidiscrimination and competition laws, while others defend efforts to enhance representation as vital to addressing historical inequities in a profession long criticized for its homogeneity. Still, the FTC warning letters signal that even well-intended collaborative initiatives will face heightened examination if perceived as dampening competition for legal talent.
As regulators and employers engage over the legality of DEI hiring practices, the legal industry faces a period of adaptation. How firms respond whether by restructuring collaborative programs, clarifying hiring criteria, or pursuing legal challenges may set precedents for how diversity objectives and antitrust rules coexist in professional employment markets.