The debate over alleged ‘reputation laundering’ by City firms looks set to continue after the University of Cambridge drew attention to a study which suggests diversity claims made by top-grossing US firms are not as impressive as they seem.

The University of Cambridge Judge Business School issued a press release on Friday about the study,   co-authored by associate professor Lionel Paolella and published last October.

The study, based on analysis of 167 US law firms and 1,400 buyers of legal services over 12 years, found recruitment of more women to meet the gender diversity preference of prospective clients  occurred only in the non-equity ranks of law firms that have a two-tier structure.

In an article published on the university’s website last Thursday, Paolella said the finding ‘suggests that firms may bolster the lower rung of partnership tiers to send diversity signals to prospective clients, while still not disrupting the higher echelon of a firm that in fact lacks diversity’.

The study’s findings also suggest that firms ‘may substitute racial diversity for gender diversity when signalling virtue alignment with buyers of their services’, he added. ‘This suggests firms act strategically regarding diversity management in ways that “emit diversity-conforming signals”’.

Paolella’s article is likely to reignite debate on allegations that City firms are engaged in ‘reputation laundering’.

Writing for The Conversation website in February, Dr Louise Ashley, a prominent equity, diversity and inclusion adviser, claimed City firms’ efforts to improve diversity and inclusion in the capital’s business centre had failed because they were never meant to work.

Colin Passmore, chair of the City of London Law Society, hit back at the allegations, writing on his LinkedIn page that he was ‘surprised and more than a little disappointed’ by Ashley’s comments and urging Ashley to ‘reflect on her conclusions and perhaps celebrate the fact that some significant and genuine initiatives are well under way’.